The supply chain procurement function has a big opportunity to take a leading role in addressing some of the most challenging issues organizations face today. Unethical labor practices. Getting to net-zero emissions. Recruiting top talent. Enabling unique customer experiences. All while keeping businesses resilient by controlling costs. In short, procurement is poised to add new value that betters business, society and the planet.
But what does that value look like? And what progress has procurement made toward generating it? Accenture research sought to answer those questions—and here’s what we found.
About the Research
Accenture conducted a survey to explore procurement’s new role in delivering value beyond cost savings and compliance, including:
Possible challenges that are holding procurement organizations back
Role of automation in driving value
Ways companies can transform procurement from being cost and compliance driven to value driven
senior procurement executives
Elevate every decision with intelligent procurement
Setting new priorities, but not seeing them through
We asked executives about their top priorities now and in three years. They listed typical concerns such as supplier contracts and supply chain demand planning. But they also mentioned non-traditional priorities such as sustainability and workforce diversity and inclusion. Yet most procurement organizations are still spending more time on traditional activities.
Percentage of time respondents spend on an activity
Without the time to devote to new priorities, procurement’s impact on the business is limited. Overall performance was mostly described as “fair.” Procurement leadership has fulfilled its traditional role. It has driven cost reduction, compliance and risk management, but not much else.
Slow progress and missed opportunities
Many procurement organizations still lack modern technology tools and platforms. This prevents them from collaborating effectively. It also means they have trouble capturing and using data to make better decisions and deliver new kinds of value. And it makes it difficult for them to reduce and variabilize structural and operational costs to release cash.
Procurement’s missed opportunities to add value
of respondents said task-oriented innovations happen on a case-by-case basis when working with the ecosystem on innovation.
reported that procurement has a passive role in developing products and services; focused on current suppliers and only approaches new suppliers during market research for a sourcing exercise.
said procurement still pulls manual reports from the enterprise resource planning (ERP) system on an as-needed basis to understand third-party spend.
said they have no defined inclusion and diversity playbook or policy.
Unlocking procurement’s potential
What will it take to increase the value procurement brings to the broader business? Procurement organizations need improved data, technology and practices. But first they must chart the course. They have to define and quantify the value procurement can bring to the business, supplier management, customers and society clearly and holistically. Using a tool like the Procurement 360 Value Meter, CPOs and the broader C-suite can clearly define both financial and non-financial value. They can also establish metrics for consistently tracking and measuring that value with all stakeholders.
With the Procurement 360 Value Meter, businesses can align on targets for the procurement function across six dimensions of value.
Deliver sustainable savings across pricing, consumption and inventory. Identify new opportunities to reinvest these savings across the business.
Give your people the tools, skills and confidence they need to unleash human ingenuity. Help prepare their place in the workforce of the future.
Provide engaging and seamless experiences for all stakeholders.
4. Inclusion & diversity
Accelerate responsible sourcing practices that consider factors such as diversity, ethics, labor practices and location to deliver long-term value.
Thread sustainability into procurement activities. Design for transparency, traceability, and circularity while supporting net-zero operations.
Create sustainable operations and supplier ecosystems. Earn stakeholders’ trust and gain the license to operate, grow and innovate.
The value-creation journey never ends
How do organizations take advantage of procurement’s new value opportunities?
Gain alignment and clarity. Define, measure, and agree on what “value” means.
Move to an intelligent, data-driven operating model. Create future-ready procurement operations.
It’s time for procurement to seize the moment.
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