Click here to close now.




















Welcome!

News Feed Item

New Book By McKinsey Experts Highlights Increasing Importance Of Procurement In Setting Business Strategy

Authors Show Why Procurement Is Uniquely Positioned To Help Lead During The Next Decade

NEW YORK, Feb. 12, 2014 /PRNewswire/ -- Across industries, leaders and managers may be missing a critical piece of the big picture:  the increasing importance of procurement to the bottom line success or failure of their companies.  In fact, 80% of a typical company's expenditures go toward procured goods and services, and procurement is often the single function that makes decisions around all external costs.  Therefore, it is uniquely positioned to help lead in taking advantage of the global opportunities that will occur in the next decade, say McKinsey & Company experts Peter Spiller, Nicolas Reinecke, Drew Ungerman, and Henrique Teixeira in PROCUREMENT 20/20:  Supply Entrepreneurship In a Changing World (Wiley).

Based on McKinsey research - including more than 1,500 global procurement studies and in-depth examinations of more than 700 organizations - the authors show that best-practice procurement consistently lowers costs, identifies growth opportunities, and helps insulate companies from a variety of hazards - including weather events, price shifts, and the complexities of environmental and regulatory issues.

At the heart of PROCUREMENT 20/20 is the authors' in-depth analysis of five global megatrends that will transform business over the next decade, and how a company's procurement team can take advantage of them to create even more value.

The Great Global Rebalancing:  Sourcing will take place across the entire world; regional "white spaces" that exist today will disappear.  The future of the sourcing organization therefore is global and multicultural.  Sourcing footprint considerations will become increasingly multidimensional and dynamic.  Sourcing decisions will have to be made against the backdrop of an integrated company footprint including manufacturing, sales, and R&D.  Procurement is in a prime position to lead these integrated company-footprint considerations given its deep cross-functional nature and thorough understanding of global and local markets.

The Productivity Imperative:  Integrated companies will increasingly turn to external functional specialists that provide individual slivers of the company's value chain at superior performance - the result of economies of skill and scale.  The management of a company's end-to-end value chain will cross more company perimeters, requiring new management principles and attention to control value creation.  Procurement is best positioned to assume the role of "orchestrating" the end-to-end chain since CPOs control the supplier relationship and are deeply embedded with their cross-functional value chain partners.

Big Data and the Global Grid: Available data and communication bandwidth will continue to increase by orders of magnitude in the next few years.  Big data and the global grid will have a profound impact on businesses by enabling new insights, collaboration at scale, and superior, data-driven decision making.  Already, procurement uses internal and external data for decision making and communication bandwidth for supplier integration and management.  The advent of even more data and bandwidth will strengthen and expand procurement's role.

The Volatile New Normal:  Procurement will have to manage not only the increasing scarcity of raw materials but also substantially greater volatility that will have a significant impact on a company's profitability and ability to do business.  Defensive strategies, such as hedging or recovery plans, will be part of the solution, but not all of it.  Agile procurement will allow CPOs to cope with risks; doing this well will also allow them to capture opportunities and create a competitive advantage by better managing sourcing risks.

The New Economic Drivers:  Environmental, social, and regulatory (ESR) issues will become increasingly important, presenting procurement with new costs, risks, and opportunities.  Governments and consumers will make fast and significant decisions on ESR; as a result, functions including procurement will have to anticipate and prepare.  To incorporate ESR into sourcing decisions sustainably, procurement must define a comprehensive approach based on "total impact of ownership" considerations.

"In the decade ahead, procurement's role will be more important than ever in maintaining constant supply, best cost, reduced volatility, faster and improved innovation, and positive corporate brand-image," explain the authors.  Insightful and forward-thinking about the role of procurement, PROCUREMENT 20/20 lights the way.

About the authors of PROCUREMENT 20/20: Peter Spiller is an Expert Principal in McKinsey's Frankfurt office and leader of the firm's European, Middle East, and Africa Purchasing and Supply Management practice. Nicolas Reinecke is an Expert Principal in McKinsey's Hamburg office.  Drew Ungerman is a Director in McKinsey's Dallas office and a leader of the firm's Americas Purchasing and Supply Management practice.  Henrique Teixeira is an Expert Principal in McKinsey's S‹o Paulo office.

PROCUREMENT 20/20:  Supply Entrepreneurship In A Changing World is published by Wiley and is available at most booksellers or at
http://www.amazon.com/Procurement-20-Supply-Entrepreneurship-Changing/dp/1118800087

For further information, please contact Felicia Sinusas at 212-620-4080 or [email protected].  Visit www.wesmanpr.com.

 

SOURCE McKinsey & Company

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Any Ops team trying to support a company in today’s cloud-connected world knows that a new way of thinking is required – one just as dramatic than the shift from Ops to DevOps. The diversity of modern operations requires teams to focus their impact on breadth vs. depth. In his session at DevOps Summit, Adam Serediuk, Director of Operations at xMatters, Inc., will discuss the strategic requirements of evolving from Ops to DevOps, and why modern Operations has begun leveraging the “NoOps” approa...
Too often with compelling new technologies market participants become overly enamored with that attractiveness of the technology and neglect underlying business drivers. This tendency, what some call the “newest shiny object syndrome,” is understandable given that virtually all of us are heavily engaged in technology. But it is also mistaken. Without concrete business cases driving its deployment, IoT, like many other technologies before it, will fade into obscurity.
Organizations from small to large are increasingly adopting cloud solutions to deliver essential business services at a much lower cost. According to cyber security experts, the frequency and severity of cyber-attacks are on the rise, causing alarm to businesses and customers across a variety of industries. To defend against exploits like these, a company must adopt a comprehensive security defense strategy that is designed for their business. In 2015, organizations such as United Airlines, Sony...
The Internet of Things is in the early stages of mainstream deployment but it promises to unlock value and rapidly transform how organizations manage, operationalize, and monetize their assets. IoT is a complex structure of hardware, sensors, applications, analytics and devices that need to be able to communicate geographically and across all functions. Once the data is collected from numerous endpoints, the challenge then becomes converting it into actionable insight.
Puppet Labs has announced the next major update to its flagship product: Puppet Enterprise 2015.2. This release includes new features providing DevOps teams with clarity, simplicity and additional management capabilities, including an all-new user interface, an interactive graph for visualizing infrastructure code, a new unified agent and broader infrastructure support.
Consumer IoT applications provide data about the user that just doesn’t exist in traditional PC or mobile web applications. This rich data, or “context,” enables the highly personalized consumer experiences that characterize many consumer IoT apps. This same data is also providing brands with unprecedented insight into how their connected products are being used, while, at the same time, powering highly targeted engagement and marketing opportunities. In his session at @ThingsExpo, Nathan Trel...
Amazon and Google have built software-defined data centers (SDDCs) that deliver massively scalable services with great efficiency. Yet, building SDDCs has proven to be a near impossibility for ‘normal’ companies without hyper-scale resources. In his session at 17th Cloud Expo, David Cauthron, founder and chief executive officer of Nimboxx, will discuss the evolution of virtualization (hardware, application, memory, storage) and how commodity / open source hyper converged infrastructure (HCI) so...
In their Live Hack” presentation at 17th Cloud Expo, Stephen Coty and Paul Fletcher, Chief Security Evangelists at Alert Logic, will provide the audience with a chance to see a live demonstration of the common tools cyber attackers use to attack cloud and traditional IT systems. This “Live Hack” uses open source attack tools that are free and available for download by anybody. Attendees will learn where to find and how to operate these tools for the purpose of testing their own IT infrastructu...
The web app is agile. The REST API is agile. The testing and planning are agile. But alas, data infrastructures certainly are not. Once an application matures, changing the shape or indexing scheme of data often forces at best a top down planning exercise and at worst includes schema changes that force downtime. The time has come for a new approach that fundamentally advances the agility of distributed data infrastructures. Come learn about a new solution to the problems faced by software organ...
With the Apple Watch making its way onto wrists all over the world, it’s only a matter of time before it becomes a staple in the workplace. In fact, Forrester reported that 68 percent of technology and business decision-makers characterize wearables as a top priority for 2015. Recognizing their business value early on, FinancialForce.com was the first to bring ERP to wearables, helping streamline communication across front and back office functions. In his session at @ThingsExpo, Kevin Roberts...
IBM’s Blue Box Cloud, powered by OpenStack, is now available in any of IBM’s globally integrated cloud data centers running SoftLayer infrastructure. Less than 90 days after its acquisition of Blue Box, IBM has integrated its Blue Box Cloud Dedicated private-cloud-as-a-service into its broader portfolio of OpenStack® based solutions. The announcement, made today at the OpenStack Silicon Valley event, further highlights IBM’s continued support to deliver OpenStack solutions across all cloud depl...
Red Hat is investing in Tesora, the number one contributor to OpenStack Trove Database as a Service (DBaaS) also ranked among the top 20 companies contributing to OpenStack overall. Tesora, the company bringing OpenStack Trove Database as a Service (DBaaS) to the enterprise, has announced that Red Hat and others have invested in the company as a part of Tesora's latest funding round. The funding agreement expands on the ongoing collaboration between Tesora and Red Hat, which dates back to Febr...
With the proliferation of connected devices underpinning new Internet of Things systems, Brandon Schulz, Director of Luxoft IoT – Retail, will be looking at the transformation of the retail customer experience in brick and mortar stores in his session at @ThingsExpo. Questions he will address include: Will beacons drop to the wayside like QR codes, or be a proximity-based profit driver? How will the customer experience change in stores of all types when everything can be instrumented and a...
The Internet of Things (IoT) is about the digitization of physical assets including sensors, devices, machines, gateways, and the network. It creates possibilities for significant value creation and new revenue generating business models via data democratization and ubiquitous analytics across IoT networks. The explosion of data in all forms in IoT requires a more robust and broader lens in order to enable smarter timely actions and better outcomes. Business operations become the key driver of I...
While many app developers are comfortable building apps for the smartphone, there is a whole new world out there. In his session at @ThingsExpo, Narayan Sainaney, Co-founder and CTO of Mojio, will discuss how the business case for connected car apps is growing and, with open platform companies having already done the heavy lifting, there really is no barrier to entry.