Accenture Strategy’s client experience and benchmarks show that 50 to 60 percent of tech companies’ S&P organizations should be strategically focused on growth. The vast majority of S&P programs, however, are still bound to a cost-only mind-set. With that unbalanced approach, one-third of future revenue streams are at risk.
One way tech companies can achieve a healthier growth/cost balance is by establishing a dedicated new product development sourcing function. When S&P works alongside (and unifies) product engineering and sales:
Future revenue is protected.
Engineering time is reduced by 20 percent.
New business win rates rise by 10 percent.
Supplier collaborations become the source of up to 50 percent of product innovations.
Tech companies that fail to use S&P strategically during the NPD process, in contrast, incur 30 percent higher product costs. That increases the likelihood they will lose new product wins to competitors.
To position S&P as a new source of growth and competitive advantage, technology leaders need to:
Commit to treating S&P as a strategic discipline, push for new practices, and gain the buy-in of affected groups.
Invest in new partnership models that enable engineering, sales and sourcing resources to collaborate during new product development.
Empower Chief Procurement Officers (CPOs) to: