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
"We analyze the video streaming experience. We are gathering the user behavior in real time from the user devices and we analyze how users experience the video streaming," explained Eric Kim, Founder and CEO at Streamlyzer, in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
"This is specifically designed to accommodate some of the needs for high availability and failover in a network managed system for the major Korean corporations," stated Thomas Masters, Managing Director at InfranicsUSA, in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Enterprise IT has been in the era of Hybrid Cloud for some time now. But it seems most conversations about Hybrid are focused on integrating AWS, Microsoft Azure, or Google ECM into existing on-premises systems. Where is all the Private Cloud? What do technology providers need to do to make their offerings more compelling? How should enterprise IT executives and buyers define their focus, needs, and roadmap, and communicate that clearly to the providers?
"We are an all-flash array storage provider but our focus has been on VM-aware storage specifically for virtualized applications," stated Dhiraj Sehgal of Tintri in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
"We are a leader in the market space called network visibility solutions - it enables monitoring tools and Big Data analysis to access the data and be able to see the performance," explained Shay Morag, VP of Sales and Marketing at Niagara Networks, in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
According to Forrester Research, every business will become either a digital predator or digital prey by 2020. To avoid demise, organizations must rapidly create new sources of value in their end-to-end customer experiences. True digital predators also must break down information and process silos and extend digital transformation initiatives to empower employees with the digital resources needed to win, serve, and retain customers.
Amazon has gradually rolled out parts of its IoT offerings in the last year, but these are just the tip of the iceberg. In addition to optimizing their back-end AWS offerings, Amazon is laying the ground work to be a major force in IoT – especially in the connected home and office. Amazon is extending its reach by building on its dominant Cloud IoT platform, its Dash Button strategy, recently announced Replenishment Services, the Echo/Alexa voice recognition control platform, the 6-7 strategic...
Organizations planning enterprise data center consolidation and modernization projects are faced with a challenging, costly reality. Requirements to deploy modern, cloud-native applications simultaneously with traditional client/server applications are almost impossible to achieve with hardware-centric enterprise infrastructure. Compute and network infrastructure are fast moving down a software-defined path, but storage has been a laggard. Until now.
We're entering the post-smartphone era, where wearable gadgets from watches and fitness bands to glasses and health aids will power the next technological revolution. With mass adoption of wearable devices comes a new data ecosystem that must be protected. Wearables open new pathways that facilitate the tracking, sharing and storing of consumers’ personal health, location and daily activity data. Consumers have some idea of the data these devices capture, but most don’t realize how revealing and...
IoT solutions exploit operational data generated by Internet-connected smart “things” for the purpose of gaining operational insight and producing “better outcomes” (for example, create new business models, eliminate unscheduled maintenance, etc.). The explosive proliferation of IoT solutions will result in an exponential growth in the volume of IoT data, precipitating significant Information Governance issues: who owns the IoT data, what are the rights/duties of IoT solutions adopters towards t...
Get deep visibility into the performance of your databases and expert advice for performance optimization and tuning. You can't get application performance without database performance. Give everyone on the team a comprehensive view of how every aspect of the system affects performance across SQL database operations, host server and OS, virtualization resources and storage I/O. Quickly find bottlenecks and troubleshoot complex problems.
Whether your IoT service is connecting cars, homes, appliances, wearable, cameras or other devices, one question hangs in the balance – how do you actually make money from this service? The ability to turn your IoT service into profit requires the ability to create a monetization strategy that is flexible, scalable and working for you in real-time. It must be a transparent, smoothly implemented strategy that all stakeholders – from customers to the board – will be able to understand and comprehe...
Between 2005 and 2020, data volumes will grow by a factor of 300 – enough data to stack CDs from the earth to the moon 162 times. This has come to be known as the ‘big data’ phenomenon. Unfortunately, traditional approaches to handling, storing and analyzing data aren’t adequate at this scale: they’re too costly, slow and physically cumbersome to keep up. Fortunately, in response a new breed of technology has emerged that is cheaper, faster and more scalable. Yet, in meeting these new needs they...
Complete Internet of Things (IoT) embedded device security is not just about the device but involves the entire product’s identity, data and control integrity, and services traversing the cloud. A device can no longer be looked at as an island; it is a part of a system. In fact, given the cross-domain interactions enabled by IoT it could be a part of many systems. Also, depending on where the device is deployed, for example, in the office building versus a factory floor or oil field, security ha...
An IoT product’s log files speak volumes about what’s happening with your products in the field, pinpointing current and potential issues, and enabling you to predict failures and save millions of dollars in inventory. But until recently, no one knew how to listen. In his session at @ThingsExpo, Dan Gettens, Chief Research Officer at OnProcess, discussed recent research by Massachusetts Institute of Technology and OnProcess Technology, where MIT created a new, breakthrough analytics model for s...