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Create a world-class procurement team to minimise cost and risk

Industry Insights

Create a world-class procurement team to minimise cost and risk

All buyers strive to have a world-class supply chain and be held in high regard by suppliers and fellow buyers alike.

But this isn’t the only advantage of having a globally respected business, as world-class procurement teams are also better at keeping their outgoing costs down, in part due to their ability to form stronger relationships with their suppliers, as well as their customers.

This is one of the findings of a new report from the Hackett Group, entitled ‘The World-Class Performance Advantage: How Procurement Organizations are Reinventing the Stakeholder Experience’, which also found that buyers with stronger and more collaborative supply chains tend to spend 17 per cent less than their business counterparts.

Last year, the organisation published a similar report – ‘Five characteristics of world-class procurement teams in 2014’ – that we discussed in a blog post. We thought it’d be interesting to see what’s changed over the past 12 months in procurement and how Achilles supply chain solutions can help make buyers achieve stronger supply chains in 2015.
What makes a world-class buyer?

Supplier visibility is key to creating a world-class supply chain, with 2014’s report showing that 89 per cent of world-class procurement teams had a wide range of information on their suppliers, in comparison to fewer than half of those not deemed to be best in class.

A visible supply chain – something that can be achieved via Achilles Supply Chain Mapping or our community model – allows buyers to minimise cost, as well as risk.

Last year’s report primarily focused on the importance of harnessing data and tapping into innovation to strengthen a supply chain, but this year, there is a greater emphasis on how the value buyers can provide to their customers can help make them world-class.

Chris Sawchuk, global procurement advisory leader at the Hackett Group, commented: “Our research finds that world-class procurement organisations have made major strides in terms of finding ways to become true client-focused service providers.”

“As typical procurement organisations strive towards these same goals, success will hinge on their ability to market themselves in new ways to build awareness. They need to learn how to speak the language of the business, change how they’re viewed, build trust and gain permissions to take on higher-value work over time.”

How do world-class buyers fare in comparison to their counterparts?

This year’s research focused on the fact world-class procurement teams are exemplary at keeping costs to a minimum while still delivering a high standard of service, with the average monetary saving of these firms coming in at 17 per cent in comparison to their counterparts. Impressively, the Hackett Group found that they managed to achieve this with 26 per cent fewer staff than others.

What’s more, the customers of world-class buyers tended to report greater levels of satisfaction, possibly due to the fact that these procurement departments had higher levels of productivity and efficiency – something the Hackett Group believes is down to them keeping their customers’ best interests at the centre of all their operations.

How can Achilles help make your organisation stronger?

Firstly, it’s important for procurement teams to consider what issues would concern their customer. For example, controversy relating to corporate social responsibility, sustainability, compliance with modern slavery rules and conflict minerals can all lead to potentially irreversible financial, reputational and legal damage if they are brought to the attention of customers.

Therefore, ensuring suppliers are validated through third-party due diligence checks is invaluable, with the Achilles pre-qualification questionnaire allowing buyers to find out their suppliers’ stance on the aforementioned areas before officially making them part of their supply chain.

The information that is gathered is then placed into our industry-centric cloud-based communities, allowing buyers to make better-informed decisions about their supply chains, subsequently keeping cost and risk to a minimum.

By ensuring they have a visible supply chain and keeping their customers as the main focus of everything they do, buyers can put themselves one step closer to being regarded as world-class when it comes to supply chain management.

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