Learn how Top 1% of procurement excellence teams are spending their time and money in 2024
PROCUREMENT TECH : 30%
eSourcing tools continues to become commoditized and there is very little differentiation left amongst the players in the overcrowded market.
Recent players have the advantage of more responsive tech stack, lower cost and faster implementation times.
This table shows the amount of money per annum allocated by advanced Procurement Center of Excellence setups
Key Highlight:
We have seen more investments and resources being allocated to inhouse data science teams to develop more niche tools inhouse. This includes combination of low code/no code platforms for simple use cases and advanced python based data science application (using open source libraries) for medium complexity applications.
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NEGOTIATION EXCELLENCE: 35%
This is the area of Key Differentiation between high performing Procurement CoE (Centre of Excellence) setups and average setups.
Dedicated teams are now looking into every strategic sourcing events and are using advanced data analytics to craft the negotiation strategies.
Not only that, they are also doing Should cost modelling for hardware categories, using spend analytics to identify cost savings opportunities and overseeing the execution.
Key Highlight:
These specialized teams are also responsible to ensure category strategies are being executed and market tested frequently. They stress test the existing cost models to see if a better cost model can be used or remodelled for a strategic category.
Dedicated teams are now looking into every strategic sourcing events and are using advanced data analytics to craft the negotiation strategies. Not only that, they are also doing Should cost modelling for hardware categories, using spend analytics to identify cost savings opportunities and overseeing the execution.
OPERATIONAL EXCELLENCE: 20%
Interestingly the advanced procurement excellence setups spend only 20% of their budget and time on operational excellence activities.
The reason that they are able to do so is primarily due to their focus on Hyperautomation. A variety of tools and strategy is adopted to make execute this is combination of Process mapping, Robotic process automation (from Procurement Tech Stack), Low Code/No Code platform development (from Procurement Tech Stack), Internal development using Python (from Procurement Tech Stack).
Key Highlight:
A dedicated outsourcing desk is also made available to support administrative and tactical activities.
SUSTAINABILITY and SUPPLIER MANAGEMENT: 15%
Scope 3 and Supplier management are becoming interconnected. The high performing setups are now addressing Scope 3 reduction by measuring the emissions (bottom up) and then setting up the emission reduction targets as part of their sourcing process and contractual conditions. These SLAs are then reviewed in terms of performance management.
A new area of value addition is quickly emerging where Procurement Excellence functions are now commercializing their digital expertise either through new product designs or co-development of digital platforms.
Key Highlight:
Almost all setups are careful to avoid “Greenwashing” their way into claiming Net Zero status. One can not just buy their way into Net Zero status and all such investments and platforms must be avoided.
SUMMARY
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