Sourcing and procurement

Today’s CPOs face a much more complex landscape, characterized by economic uncertainty, continued supply chain disruption, and the need to meet changing consumer values and expectations. It means CPOs need to not only optimize costs, but also boost the resilience of the value chain, while simultaneously responding to new customer and business needs–and developing more sustainable approaches to what the organization spends. What’s more, as the gatekeepers of a company’s third-party relationships, CPOs occupy a pivotal position in the future growth agenda. To meet all these imperatives, CPOs must reimagine how they operate, using digital procurement and closed loop spend management to optimize costs, increase value and support future growth

Closed loop spend management (CLSM) is a new way to think about what the organization is spending. It aims to "close the loop" between procurement on the one hand, and planning, budgeting and other finance activities on the other. It’s holistic, transforming the whole organization and establishing new and more collaborative ways of working with digital technology, real-time data, artificial intelligence, and pervasive connectivity. It supports an end-to-end transformation across indirect and direct cost categories while boosting the efficiency, resilience, agility, and sustainability of the supply chain.

With a sourcing and procurement strategy driven by CLSM, companies can enhance their business in five key ways. First, they can take out cost faster and more sustainably with a zero-based mindset. Second, they can drive deeper efficiencies and identify new value with a new data-driven operating model. Third, they can make sourcing “sustainable by design”, embedding responsible practices and providing visibility into the carbon footprint of procurement decisions. Fourth, they can use CLSM’s flexibility to support their own pace of change—a crucial capability in choosing the right time to make a pivot to new sources of growth. And finally, they can drive forward with the intelligent automation and data-driven decision making they need to work leaner, smarter, more flexibly, and more collaboratively.

Accenture has developed a robust and iterative model to help companies implement a CLSM approach. Its agility and speed mean they can begin generating value in just a few weeks—while its robustness means they’ll sustain that value over time.

The model has two core elements. The first, spend transformation, focuses on optimizing procurement’s value by re-examining expenditure through a “zero based” lens. The second, new ways of working, looks to bring procurement, finance, and the rest of the business together in a new operating model that uses digital technology and intelligent automation.