Key Drivers for Modern Procurement 1

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  • 8/4/2019 Key Drivers for Modern Procurement 1

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    Procurement

    Key drivers for modern

    procurement

    An SAP Survey ConduCted withthe ProCurement LeAderS network

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    4 Transforming Procurement 4 o 5 Ab s 5 k gs 6 Salg a Cllg

    tg Calza

    8 Pc ejs m P c a Bsss iga

    9 Pc a Fac A Bg rlasp

    10 Sppl Cllaba12 illg illgc Scg12 Pac14 tclg Gas val16 Sp Aalss n Bs Pacc18 Ssaabl a Cpa Scal

    rspsbl

    20 Conclusion20 Calza20 Bsss iga a

    Cllaba20 Sppl Cllaba20 ipac tclg

    Pc20 m Pc

    ogazas21 F o m21 Ab Pc Las

    n

    content

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    Overview

    m pc calls sags a gazaal scs gag s al bsss. Pc pac,

    llgc, a cllaba a s sg a as pc gazas a abl a a bsss l al l sal al. tsac ps , ccb Pc Las n cjc SAP, xas

    sss a pc.i a s cc Aplma2010, as 320 pcxcs ab a sags ag a a pc gazas a asgsls a bac c c a sagc a las a

    .

    Alg cs b spsss pc gaza s c l sags,cl css, a paal apcss ccs, sss ss aabl a cpa scal sp sbl c g pac.A cs s l alplcs b als sg a sp

    pls a sg algplcs ssaabl a scalspsbl. m a , cpasa lg acss glbal spplcas s xcllc sas g sag

    a a bs paccs a s gs saas.

    t sc pcgazas s als cagg aa call. t s a ap a call l gaza acalz pc sag abls

    g cl a saaza calz asacs b sll allslcal pcasg xc. ts c alz scs p pcgazas ga gagp a b l sags gaza.

    Alg calza, s alsa g ga b pc a s gaza.As pc pas a c l xps, saaza,a pcss ccs, s ga cllaba ccg spcall ac. i a, cllaba sppls s bcg a pa as gazas l pz sppl ca pac.

    Pc s als acg a pc gaza as ga as sagc bsss a b. t asa g pc ga za as as a asac

    pcss. m pcgazas a as ablg gaza as a l acg s sagc bjcs cs cg, g cpa scalcs, a sg a sa gs a ssaabl a ca pa a .

    Pc llgc pcasg sag s als ggaj cag. hg qal llgc

    s bcg sag aaagg sppl s. ma a , as pas cag css a pcg, s bcg ccal acg pcgals spp bsss bjcs.

    t pac clg abl pc s als cg g. k aas cs appl g clg cl scg, spplaag, pc, a spaalss. As pa s cs c

    lg, a pll s casgl p. t ass c b pcxcs g s a a l a cs cca qc pl assca . o CPo sas, t b sa a sbcg a pa.t pac cag s gg asa as. . . . Cpas a ap

    transforming procurement

    drivinG ChAnGe in A StrAteGiC roLe

    Pc s sagc a b. icas gl cs a ba ll c, s gag

    al pc a s clsl ga s bsss, spcall ac.

    4

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    clgs a qcl cagg bsss qs.

    t s a ga cs sp s bl a aalss cs sagspps a pal xp

    s. Sp aalss s casgl as al pc ga za a as a bs pacc acpc pac.

    As a pc gaza s , sls a a sagc l g cag a lag a acg cpa gals g cllab a, pac, a llgc.

    About the survey

    ts aalss s bas 320spss glbal pcxcs a s cc gAplma 2010. eg pc

    sps a pc as c spsbl, a 9% sa spplca aag. rsps all s scs (s Fg 1), 71% psg cpas saal xcs 1 bll a54% psg cpas aaal pc sp xcss 1 bll. t gazas p s s s ac pl aaag 245 pcasg ll qals (Ftes).

    Key findings

    t gs 2010 s aas lls.Gal ogazas a apl calzg

    pc acs as sa lg a cs cl bc .

    Pc s sagc a b. icasgl csa ba ll c, s gag al pc a s clslga s bs ss, spcall ac.

    t sss ssaabl ascal spsbl a sll gg pac sp spaal psss a a

    Figure 1: Respondents by Title, Region, Industry, and Revenue

    Title Region

    RevenuesIndustries

    dc

    maag

    ulsF abag

    isalaacg

    ral

    tlccas

    halca

    ol accals

    Baga acal scs

    Paaccal

    12%

    Asa

    n Aca

    ep

    15B

    5B10B

    o 10B

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    cpas a sls cl. i as bc gazas x plcs sppls, qg sg p a spsbl p c plc; , aj sppls a sll l sl a.

    illgc A a ga cs s bg plac

    cllc cag laa, pp cpas cag a alsc a a cpa ll l lgc scg blg las as.

    t al clg pc as sg, spcall aas sp aalss, sa gc scg, pc, sppl

    aag, a scg.

    t a l s gg pac. o a clgbs cl cs css, abl pl apl, pcas l, a abl pgaqcl a aaag cal. ts a ccal ac s ablg pc.

    Sp aalss cs gacg as a ccal p c pcss. m cpasa lagg sp aa la scg sags a cs a al l asg pc s all pac bsss s pac cs.

    Pac Acss spg cpas,

    pac cs a bg s

    cssl as pc

    pac, xcp cs sags as a pcag aag sp, c s cpas ac. t aj cpassa a a bl 10%sags ll s c.

    k cs a cpas a sgcl sp aag,Ftes p bll sp, cs sas ac, sppl pac, assaabl. isgl, qs Po ccl s l bg a s lss a 24% .

    Sccss al pcas s bg c aac b a as aj cpa s; , cag ll a a sls a al aalz.

    Cllaba Sppl cllaba s cgz

    a as a a pzgcpa pcsss a ascallpg sppl ca pacb bas s cpa.

    ial cllaba acc s als xpag a b cg pa ;, pp sll appas xs cag clsl

    a scg plas a pacsas ll as g j pcssps.

    Streamlining and ControllingThrough Centralization

    o s aac cags s pc sags las as s apl cagggazaal sc pcasgpas, a cla a

    s calza. i 2008

    Cs sags as a pcag aag sps a kPi cssl s asg pc

    s all bsss pac.

    6

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    (35.7%) sp s pcasg gazas lla calz l, c a apcasg css a b cpas al bsss s.B 2010 s pp as plg

    lss a 6%. (S Fg 2.)

    msl, s s a a c lgaza, b calzasacs a ca b a calpcasg sag; 50% sps scb c p c gaza as c l 2010, cpa js 30% 2008. S a, as b a lsss a a cpll calzsc, c all pc s

    aag call, pp calz scs sg 20% 2008 26.6% 2010. h , 80% sps sa a pc scll bc calz,

    a qal spl b s ga cpll calz pc a s ag a c lsag. Sz cpa plas a pa; l 35.4% bssss aal xcss 1 bll

    s pc gazasbcg cpll calz , cpa 54.6% cpa s aal bl 1 bll.ts sggss a lag ga za, lss alsc bcs pl a cpll calzl.

    t ax gazaalsc b pg ls xs b pc a bsss

    s gaall casg ppla. i2008, 12.3% gazas lla ax l pcasg, spp xpc s 17.4% .

    i s ss, s s acalza s ga. i baga acal scs, xapl,61.5% cpas ll ac l pc sag 2010, p 36% 2008, l

    als 50% s pcasgbcg cpll calz , p js 20% 2008.

    A b acs a g s aa classc cal z pcasg l, c cas s bsss sllg pcasg sa gs. ts acs cl csla a g cl xp, pc a pcss sa

    aza, a ga gagp as cpas s aca sal pcsag as a a apg gb l sags gaza.

    0%2008 2010 F

    C l

    Key takeaways

    dcalz l:

    i 2008, a 35% ll sl i 2010, s a cas lss a 6%

    C l l: i 2008, 30% s s l i 2010, s cas a 50% i , a 80% a plag

    c l calz ls i bag a acal scs, s

    cas 36% 2008 a 61% 2010

    max

    20%

    40%

    60%

    80%

    100%

    dcalzCalz

    There is an increasing focus on tighter control of expenditure, product and process standardization, andgreater negotiating power.

    Figure 2: The Centralization of Procurement

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    Procurement Enjoys More Promi-nence and Business Integration

    As pc acs bc calz, a als bcg a p spc

    gazas. i 2008 l 12.7% pc pas cs a sagc, ba ll c.ta pp as ala s 20% 2010 a s s blg aga , 40%. (S Fg 3.)

    As pcs al pl ss,s s s ll ga s bsss. Lss a 20% sps scb a pcs cllaba bsss as pac a css

    0%

    Key takeaways

    Sagc, ba ll c: i 2008, a 12% i 2010, a 20%

    i , ll bl 40%

    Bac c c: dcas 10% lss a 2%

    20%

    40%

    60%

    80%

    100%

    Sagc, ba ll c

    rps a spp b ban a ba ll csa

    Bac c c2008 2010 F

    Figure 4: Procurements Integration with Business

    Key takeaways

    Pac a css cllaba: i 2008, lss a 20% i 2010, a 50% i , ll b a 95%

    k ab ags a pc pssal:

    ilcg a xc ccaslls: 63%

    Cag aag capabls: 43% Cag lg a xpc: 32% Pc xpc: 27%

    Pac a css

    racoccasal pac

    ra0%

    20%

    40%

    60%

    80%

    100%

    2008 2010 F

    As procurement becomes more centralized, it is increasingly viewed as more strategic.

    Procurement is dramatically improving its proactive and consistent collaboration with the rest of the company.

    Figure 3: Procurements Increased Internal Prominence

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    2008. B 2010 s pp as alalap 50% a s s xc g 95% . (S Fg 4.)Sal sps als a pls sp sgca as cllabag bsss

    as c as 40% alg gals a scplac.

    Paps as a c sl s cas ba ll s, qas sps scbpcs ps cpa 2010 as sagca 2008 (s Fg 5). rlcgs cas sagc pac a abs a a sg

    as pc ps sals, s Fg 4. t caac scs lcg a xccca slls a cagaag abls a b a pa a caacscs cag lg a xpc

    a sl ac c pcxpc cs qs a pcpssal.

    Procurement and Finance A Budding Relationship

    i pacla, pcs lasp ac s bcg sg,as a sa lg a cs cl pcasgss (s Fg 6). t pp sps scbg cllaba b pc aac as pa s

    18.7% 2008 47.9% 2010. A72.6% sps bl ll b pa .

    t sss c pc a

    ac cllaba 2010 a qallspl b ca cs c ags, sg bgs, ag pcss ps. ias alas s, . ol 12.7% sps sa a pca ac g g pcss ps 2008. i2010 a pp as cas 38.8% a s s sg 48.6% .

    nal qas sps scbpcs ps cpa 2010as sagc a 2008 paps a csl ba ll s.

    Figure 5: Procurements Position Within the

    Company.

    Lss sagcm sagc

    Ab sa

    25%

    72%

    3%

    Procurement is viewed as more strategicby 72% of the respondents.

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    t gals c pcpas a s clsl csaas a als ac la. msps (40.8%) sa a glcs cg c pccss a a , ll bpg sbl sp (37.8%)a sppg bsss s ax z bg pac (35.8%). (SFg 7.)

    Supplier Collaboration

    m a pcasg xpsa alzg pac spplcllaba as a a pzgcpa pcsss a ascallpg sppl ca pacb bas cpas. o spsa sppl cllaba asas pa 2008, lssa 11% ag as p

    a sa a. y 2010 s

    s cpll s, cgzg sppl cl laba as as pa,cpa js 7.1% sll g as pa. o 95% sp s bl a sppl cllabaas ll b pa pa . (S Fg 8.)

    ts s a s bac p b ac a gazas a gag

    g pac a gla cllaba sppls. i 2008 l 11% gazas pacl a css l cllaba sppls, lagals 50% cllabag l acl al. ts cpas 2010 lss a 10% sll lcllaba acl al, a 32.4% cla cssl s p ac cllaba sppls.o s sps pla gag pac a css

    sppl cllaba .

    t sls a sgcal b s, sppl cllaba clal l g al s scs as. Als qa (23.7%) sps sal aac g sa a ala pacla cssl cllaba sp pls 2008, c as als cas g as s aag. Ls,76.9% sps salaacg s sppl cllaba

    as as bcg pa , cpa l 50% sps bag a acalscs. As sal a aac g scs gall a lg a qcplca sppl cas, p al sags b ga spplcllaba cpas s aaa ll b ga a cpa s basc sppl cas aacg ss.

    Figure 6: Increased Collaboration with Finance

    0%

    Key takeaways

    v pa: i 2008, lss a 20% i 2010, a 47% i , ll b a 72%

    tpcs cs a spl b: Cs c ags Sg bgs ig pcss ps

    i 2008, 12.7% i 2010, 38.8%

    20%

    40%

    60%

    80%

    100%

    v pa

    n paipa

    2008 2010 F

    Relationship with finance is growing stronger, driven by the increased focus on process streamliningand cost control.

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    Figure 7: Rating Procurement Goals

    Figure 8: Importance of Supplier Collaboration

    Key takeaways

    Sppl cllaba: i 2008:

    m a 34% as pa

    Lss a 11% as pa i 2010: m a 35% cgz as

    pa i :

    m a 95% s sppl cllab a pa pa

    iss: m a 76% aacg

    p as pa ol 50% bag a acal

    scs

    0%

    20%

    40%

    60%

    80%

    100%

    2008 2010 F

    The importance of supplier collaboration increased dramaticallyfrom 2008 to 2010.

    Key takeaways

    tp pc gals: rcg c pc

    css: 40%

    ipg spsbl: 38%

    maxzg bsss bgs: 36%

    dcasg cpc css: 33%

    rcg cas p g capal: 30%

    o pc gals: rcg pc

    ac: 7% (as las pa gal)

    Pc ac

    Qal cl a sppl

    L cs c scg

    Scs spSppl csla

    Pc pcsss

    Sppl s

    Cac aag acplacSppl lasps

    Cas g capal

    ic pc css

    Bsss bgs

    Sp sbl

    dc pc css

    0% 10% 20% 30% 40% 50%

    Top procurement goals are increasingly more closely related to finance.

    v pa

    n paipa

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    t s ll c, a, s cpas asall pc sp (lss a500 ll aall) p ac sppl cllaba a s cpa cpas a

    c lag pc sp (a 5 bll). A 80% b sc as as pa .

    Intelligent Intelligence Sourcing

    A aj cag pcasgsag a as a plac g las as s a ccpas appac cllc cag la a. o al

    sps sa a ll al pc gag cag la llgc 2008, lss a qa ag a

    al sc a a cpa llca . t as la, ,als al (47.9%) sps a a ca al sc a acpa ll ga sc a , lag l 18.8% cpas

    al pc plac. i , ab 60% spss ag a al cpasc ca cag laa gag, l 15.5% sa ll sc s jb a pa. (S Fg 9.)

    i s xacl a s ll gc s ga a , aj al a aag llgccss a a (sc as

    cag cs s a cpcg) a acal a absppls (sc as cas l, ag, asls). Als qa sp

    s pacl cllc a ab cps ba,sc as sals pcasg p ac. (S Fg 10.)

    hg qal llgc s as

    ccal ca pc gals,spcall s sppl s a ag a g b pcg.

    Performance

    wl l cssl s pac ca (kPi) bsps s cs sags as a p cag aag sp a 89%,sal kPis a s b acpas, clg sppl p

    ac scs (71%), al cssasac (75%), a pcFte p sp (66%). Sps gl, qs Po ccl s a

    Figure 9: Methods of Gathering Category-Relevant Intelligence

    Key takeaways

    i 2008: m a 50% a al

    pcs ol 25% a a cpa sc

    ca a gag i 2010:

    m a 47% a a ca cs Lss a 19% a al pcs

    i :Ab 60% cpas s ag

    al cpa scs ca cag la a gag

    n al pc

    dca sc a a lcal llosc a pa

    dca al sc a acpa ll

    0%

    20%

    40%

    60%

    80%

    100%

    2008 2010 F

    Focus on and investment in category-relevant information gathering has increased.

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    Figure 10: Type of Intelligence Gathered and Method of Gathering

    Key takeaways

    iall (aag): m a 40% s acal

    a cas l, ag, sls m a 40% s cllc aal

    a aag ,xpas, cpa scal spsblc, a s

    m a 50% s cpa sals a pcasg p ac

    m a 70% s l aa cag cs s,c pcg

    A spsg 15% a cs

    ial (aag)

    3 paial (aag)

    n cllc

    High-quality intelligence is increasingly viewed as critical to procurement goals.

    Figure 11: Key Performance Indicators Used to Measure Procurements Business Impact

    Key takeaways

    A 71%, cs sags as % aagsp s s cssl s kPi

    52% abl bsss s scs sags p cags

    o p kPis:

    maag sp: 49% Sppl pac: 30% Cs sasac: 29% rqs Po:

    Spsgl, s lss a 24%

    39% as s kPi a all

    kPi s s

    kPi s cssl skPi s ss s

    0%

    10%

    30%

    50%

    70%

    90%

    20%

    40%

    60%

    80%

    100%

    managdspnd

    Cssavngs

    roi

    Supplpfanc

    Cussasfacn

    rqusnPo

    Ftep$

    Susanably

    Cost savings at % of managed spend is the most consistently used KPI.

    Facala

    Aala

    Cpa

    maa

    100%

    0%

    25%

    50%

    75%

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    as cssl b l 24%, ab 40% asg s pakPi a all. (S Fg 11.) S sp s ca a as aac xcss 50 kPis glal pcsl ca cs

    a pcsss, l s sa cs js p a a ll s b baa bsss.

    As sags a a ccal kPi ssps, als as a sags c .A abl 52% sps sa asags a all b s bbsss s, l 68% sa a sa gs a cpa

    bsss bgs. ts ca c aa cas a paps s cags sp (sc asag) bsss s a all s, l s (sc asc sppls) a .

    S sps ca a sals casgl pa asglbal sppl ca s a asg al sppl s. ossa a a s a gal; spc call, asg sppl l

    bgg a gazas a pac as a sbg acl . i a cass,sppls a as xps ls a a xpc l a as pa scs .(S Fg 12.)

    Technology Gains Value

    t s clg as sg al pc

    gaza. ol 17.2% sp s a clg as a pa abl pcgaza 2008, cpa 48.2% cgzg as pa 2010. Ls, als qa

    clg as pa pcasg bac 2008, a ppa as sc s lss a 4%.o 70% sps acl g a clg ll b a pa abl pc

    gazas, lag js 2.3%sll blg as plac pcasg .(S Fg 13.)

    Ab sagc pac pc gaza a s clapac bsss bjcs, xc cs, t s sc pp sgcacs sags b g l jsa b a ls sa it bg

    gs pc bcas a s b cpa s.ogazas c plablg clgs pc sag a as c al cs sp.

    Sppl paca s

    Cag sp aalss

    Cac alz sags

    Aggga gasags

    Key takeaways

    m a 69% s agggaga sags as a paas

    o p aas: Cac alz sags: 52%

    Cag sp aalss: 40% Sppl pac a s: 30%

    10% 0% 20% 40% 60%10% 30% 50% 70%

    Aggregated negotiated savings is the top measurement used for individual procurement-driven initiatives.

    Figure 12: Measurement of Individual Procurement Initiatives

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    Figure 13: Importance of Technology in Enabling Procurement

    0%

    Key takeaways

    v pa: i 2008, lss a 17% i 2010, a 56% i , ll b a 70%

    20%

    40%

    60%

    80%

    100%

    n pa

    v paipa

    2008 2010 F

    Technology continues to grow in importance in most companies.

    Figure 14: Key Areas of Focus for Enabling Technologies

    Key takeaways

    m a 50% sp s a cs pc sp aalss

    o p aas: Scg: 40% e pc: 33% Sppl scca a

    pac aag:

    21% All lss a 10%:

    Sppl a Cac aag Sppl pal Bcag

    Sppl a

    Cac aag

    Sppl pal

    Bcag

    Sppl s aag

    Sppl sccae pc

    Scg

    Sp aalss

    0% 10% 20% 30% 40% 50%

    Spend analysis, sourcing, and e-procurement are key targets for enablement.

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    i s c clg aasps a s cs p, s sps a a sps(50.9%) sa a a xlcs pc sp aal ss. o clg aas c

    sps sa a xlcs a sagc scg (40.2%) sc as pjc aag, rFx,s acs, a l a pc (33.2%) s asacs a lcc pcass. ts aas a g p p sps sa asll ll cs cl spplpals (26.1%) a bcagaalss. (S Fg 14.)

    t qas sps a ait sag 2010 a cls plas pl a pcsls. Aga, s s s

    aa sp aalss, s sps caga l cs plg a a sp aalss sl.(S Fg 15.)

    i s a ll ap a pc sls, s pa ac s pcs ccs, ll b abl pl sss qcl. (SFg 16.)

    Spend Analysis Now Best Practice

    As ala all , pac sp aalss cs b c gz. A aj sps

    a sp aalss as a casglal pc pcss aca p aag ps sgca gas s

    cs sags a pz sp l za. As s, gazas a alsalzg al g a sal sp aa classca; 60% sps pl spaalss ls aalzg sp

    2010, cpa 40% s 2008. i 2010 qas sps sa a pcasgpas ls bsss scg ags a pps, p js al s 2008. w cplsp sbl bg sccss scg pgas, s sps g a pp sps sa pc gazasa ll sbl cpa

    sp aa as s 31.3% 2008 56.7% 2010. (S Fg 17.)

    Key takeaways

    o a sl clg: i 2008, lss a 33% a l s i 2010, a 57% a ll s

    i , a 75% s t s gl clgaas a pccl: Sp aalss Scg Sppl scca a pac

    aag e pc

    0%

    20%

    40%

    60%

    80%

    100%

    2008 2010 F

    w a/ll sw a plas

    On-demand technology continues to grow as an important enabler for companies.

    Figure 15: On Demand as a Key Deployment Model for Enabling Procurement Quickly

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    Figure 16: Key Drivers of On-Demand Deployments

    Key takeaways

    m a 44% sp s cs c ss as p b

    a clg o p aas: Abl pl qcl:

    32% ip cas l: 23% upga qcl: 21%

    Spsgl, aalabl scs as as las pa aa(7%)

    Aalabl scs

    rc paal s

    Cga a aapabl

    upga qcl

    ip cas l

    dpl qcl

    Cs css

    0% 10% 20% 30% 40% 50%

    Cost-effectiveness is a primary driver of on-demand technology.

    Figure 17: Using and Managing Spend Analysis

    0%

    20%

    40%

    60%

    80%

    100%

    whavfullvsblyfu

    cpaspnd

    daa

    Spnddaascn

    allyanagd

    wplyspnd

    analyssls

    Spnddaaslvagd

    fulasucng

    sags

    wplydaaclansng

    andnchn

    chnlgs

    spnddaa

    wkhh

    lnsfbusnss

    fnsucng

    agsanddnfy

    ppuns

    Key takeaways

    Sp aalss ls: i 2008, lss a 40% pl

    sp aalss ls i 2010, a 60% a sg

    sp aalss ls

    Sp aa sbl: i 2008, lss a 32% a ll

    sbl sp aa i 2010, a 56% a ll

    sbl sp aa

    In 2010, over 75% of companies leverage spend data to formulate sourcing strategies.

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    Figure 18: Importance of Sustainability and Corporate Social Responsibility

    0%

    Key takeaways

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    Figure 19: Importance of Inclusion of Suppliers in Sustainability Initiatives

    Key takeaways

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    Figure 20: Measurement and Impact of Sustainability and Corporate Social Responsibility

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    Key takeaways

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    ChALLenGeS And oPPortunitieS

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    Find Out More

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    About the Procurement LeadersNetwork

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    www.sap.com/contactsap

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