We found great takeaways from an SAP white paper called “Enabling Profitable Growth Through Procurement: Transforming The Sourcing & Procurement Organization.”
It started with the typical high-level, fundamental stuff about procurement contributing to competitive advantage. It then focused on how much harder it is to get Sales to contribute the same degree of profit impact as Procurement.
This was what the publication advocated:
- Aligning the sourcing and procurement organizational model to meet business needs
- Managing spend and suppliers strategically
- Focusing on employees
- Implementing cutting-edge technology
Here’s an interesting excerpt:
“After acquiring the right people, top-performing organizations train and nurture their employees, offering educational and certificate programs to enhance their skills…almost 62% of sourcing and procurement employees [in leading organizations] had formal training in negotiations, compared to 45% for other companies.”
Here’s my takeaway from this: Sixty-two percent seems a bit low. That means that over 1/3 of the people negotiating procurement contracts aren’t even trained!
- Some interesting research results were cited, including:
- how the average company has centralized about 69% of its sourcing and procurement functions (hopefully that doesn’t mean PO cutting) and;
- how the study found that companies implementing a category-aligned organizational approach were more efficient in terms of full-time equivalents per billion in spend.
Become a member of one of the world’s largest procurement associations today.
Recommended Reading
- Savings Strategy Development
- Cost Savings Strategy
- What’s the Role of Your Purchasing Strategy
- Cost Savings Definitions
- Category Savings Assessment Questionnaire
- Leveraging Procurement for Fiscal Impact
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