|By PR Newswire||
|February 12, 2014 02:19 PM EST||
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
SOURCE McKinsey & Company
Digital Transformation is the ultimate goal of cloud computing and related initiatives. The phrase is certainly not a precise one, and as subject to hand-waving and distortion as any high-falutin' terminology in the world of information technology. Yet it is an excellent choice of words to describe what enterprise IT—and by extension, organizations in general—should be working to achieve. Digital Transformation means: handling all the data types being found and created in the organizat...
Jul. 29, 2015 04:00 PM EDT Reads: 1,063
The essence of cloud computing is that all consumable IT resources are delivered as services. In his session at 15th Cloud Expo, Yung Chou, Technology Evangelist at Microsoft, demonstrated the concepts and implementations of two important cloud computing deliveries: Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). He discussed from business and technical viewpoints what exactly they are, why we care, how they are different and in what ways, and the strategies for IT to tran...
Jul. 29, 2015 03:15 PM EDT Reads: 365
The Internet of Everything (IoE) brings together people, process, data and things to make networked connections more relevant and valuable than ever before – transforming information into knowledge and knowledge into wisdom. IoE creates new capabilities, richer experiences, and unprecedented opportunities to improve business and government operations, decision making and mission support capabilities.
Jul. 29, 2015 03:15 PM EDT Reads: 230
The Internet of Things is not only adding billions of sensors and billions of terabytes to the Internet. It is also forcing a fundamental change in the way we envision Information Technology. For the first time, more data is being created by devices at the edge of the Internet rather than from centralized systems. What does this mean for today's IT professional? In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists addressed this very serious issue of pro...
Jul. 29, 2015 03:00 PM EDT Reads: 1,251
The Software Defined Data Center (SDDC), which enables organizations to seamlessly run in a hybrid cloud model (public + private cloud), is here to stay. IDC estimates that the software-defined networking market will be valued at $3.7 billion by 2016. Security is a key component and benefit of the SDDC, and offers an opportunity to build security 'from the ground up' and weave it into the environment from day one. In his session at 16th Cloud Expo, Reuven Harrison, CTO and Co-Founder of Tufin,...
Jul. 29, 2015 03:00 PM EDT Reads: 464
Container technology is sending shock waves through the world of cloud computing. Heralded as the 'next big thing,' containers provide software owners a consistent way to package their software and dependencies while infrastructure operators benefit from a standard way to deploy and run them. Containers present new challenges for tracking usage due to their dynamic nature. They can also be deployed to bare metal, virtual machines and various cloud platforms. How do software owners track the usag...
Jul. 29, 2015 02:30 PM EDT
With SaaS use rampant across organizations, how can IT departments track company data and maintain security? More and more departments are commissioning their own solutions and bypassing IT. A cloud environment is amorphous and powerful, allowing you to set up solutions for all of your user needs: document sharing and collaboration, mobile access, e-mail, even industry-specific applications. In his session at 16th Cloud Expo, Shawn Mills, President and a founder of Green House Data, discussed h...
Jul. 29, 2015 02:30 PM EDT Reads: 284
In a recent research, analyst firm IDC found that the average cost of a critical application failure is $500,000 to $1 million per hour and the average total cost of unplanned application downtime is $1.25 billion to $2.5 billion per year for Fortune 1000 companies. In addition to the findings on the cost of the downtime, the research also highlighted best practices for development, testing, application support, infrastructure, and operations teams.
Jul. 29, 2015 02:17 PM EDT
Discussions about cloud computing are evolving into discussions about enterprise IT in general. As enterprises increasingly migrate toward their own unique clouds, new issues such as the use of containers and microservices emerge to keep things interesting. In this Power Panel at 16th Cloud Expo, moderated by Conference Chair Roger Strukhoff, panelists addressed the state of cloud computing today, and what enterprise IT professionals need to know about how the latest topics and trends affect t...
Jul. 29, 2015 02:00 PM EDT Reads: 1,163
"Our biggest growth area has been the security services, the managed services - the things that differentiate us in the market that there is no client that's too small and there's no client that's too big," explained Paul Mazzucco, Chief Security Officer at TierPoint, in this SYS-CON.tv interview at 16th Cloud Expo, held June 9-11, 2015, at the Javits Center in New York City.
Jul. 29, 2015 02:00 PM EDT Reads: 331
SYS-CON Events announced today that HPM Networks will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. For 20 years, HPM Networks has been integrating technology solutions that solve complex business challenges. HPM Networks has designed solutions for both SMB and enterprise customers throughout the San Francisco Bay Area.
Jul. 29, 2015 01:45 PM EDT Reads: 417
Containers are changing the security landscape for software development and deployment. As with any security solutions, security approaches that work for developers, operations personnel and security professionals is a requirement. In his session at DevOps Summit, Kevin Gilpin, CTO and Co-Founder of Conjur, will discuss various security considerations for container-based infrastructure and related DevOps workflows.
Jul. 29, 2015 01:00 PM EDT Reads: 1,054
Countless business models have spawned from the IaaS industry. Resell Web hosting, blogs, public cloud, and on and on. With the overwhelming amount of tools available to us, it's sometimes easy to overlook that many of them are just new skins of resources we've had for a long time. In his General Session at 16th Cloud Expo, Phil Jackson, Lead Technology Evangelist at SoftLayer, broke down what we've got to work with and discuss the benefits and pitfalls to discover how we can best use them to d...
Jul. 29, 2015 01:00 PM EDT Reads: 1,944
"We do data integration for B2B also application to application, and we do data management and enable Big Data," explained Pat Adamiak, Vice President, Product Marketing at Liaison Technologies, in this SYS-CON.tv interview at 16th Cloud Expo, held June 9-11, 2015, at the Javits Center in New York City.
Jul. 29, 2015 12:00 PM EDT Reads: 326
The Cloud industry has moved from being more than just being able to provide infrastructure and management services on the Cloud. Enter a new era of Cloud computing where monetization’s services through the Cloud are an essential piece of strategy to feed your organizations bottom-line, your revenue and Profitability. In their session at 16th Cloud Expo, Ermanno Bonifazi, CEO & Founder of Solgenia, and Ian Khan, Global Strategic Positioning & Brand Manager at Solgenia, discussed how to easily o...
Jul. 29, 2015 11:00 AM EDT Reads: 355