2. IN THE PAST FEW DECADES, THE
PROCUREMENT ORGANIZATION HAS
UNDERGONE A DRAMATIC EVOLUTION.
It has grown from the “purchasing department” of old to a more
strategic function that delivers greater value beyond haggling and
contracting. Accompanying that evolution has been a noted shift
in both the organization’s structure and its workforce. Today, with
digital technologies sweeping across companies and industries,
even more is expected from Procurement and, hence the people
who work in it. How should Procurement respond? A small group of
companies provides some useful guidance. These companies are
changing their Procurement organizations, skills, and behaviors to
deliver more with less while navigating the challenges of digitization.
Companies have long used technology advancements to help
employees do their jobs better. Today, that increasingly means
supporting the workforce with powerful digital tools. However,
while digital certainly increases productivity and effectiveness,
it challenges the status quo in organization structure and required
skills. Indeed, according to Accenture Strategy research, 78 percent
of business leaders expect their organizations to be a digital
business in the next three years.1
However, 44 percent believe a
lack of appropriate skills will be a key barrier to transformation.2
2 | GETTING ON THE PATH TO WORKFORCE MASTERY
3. 3 | GETTING ON THE PATH TO WORKFORCE MASTERY
This hurdle certainly exists in the Procurement organization. In
recent years, Procurement has made significant strides in applying
technology, including digital, to improve workforce efficiency
and reduce the function’s costs. These steps are accelerating
as the technology becomes cheaper and more commercialized.
However, many companies still have a long way to go to develop
the organization structure and talent base necessary to generate
the value business leaders now expect.
For instance, in many companies, Procurement still has too many
staff performing manual, non-value-adding work. Moreover, many
still try to do all activities in-house. Furthermore, Procurement’s
interaction with the business in most companies remains a
transactional affair; no embedded Procurement practitioners
work to improve collaboration on purchasing decisions. And, the
Procurement staff too frequently comprises generalists with limited
finance skills and little to no analytics capabilities. This makes it
difficult for them to identify more, and more impactful, cost-saving
opportunities.
THE UPSHOT: IN MOST COMPANIES,
PROCUREMENT’S COSTS ARE
STUBBORNLY TOO HIGH AND ROI
IS UNACCEPTABLY LOW.
4. This fact is borne out by a comprehensive Accenture Strategy
research effort, which sought to understand the maturity of
companies’ Procurement capabilities across 13 key dimensions
(Figure 1). Only a small group of companies we studied—the
7 percent we deemed the “masters”—demonstrated highly mature
Procurement capabilities. These capabilities enable masters to
perform well across the board: They execute the basics brilliantly
and tap into differentiating capabilities that drive ROI and deliver
new value for the enterprise.
HOW MASTERS
APPROACH THE
PROCUREMENT
WORKFORCE
4 | GETTING ON THE PATH TO WORKFORCE MASTERY
5. ECOSYSTEM MANAGEMENT
The active management
and use of all players in the
Company’s ecosystem ranging
from mature providers,
start-ups, non-profits
and academia to drive
enterprise-wide objectives.
DEMAND MANAGEMENT
The evaluation of strategic
spend opportunities and
should-costs, that integrates
with the company’s broader
budgeting process (i.e.,
Zero-Based Budgeting).
ACCENTURE STRATEGY’S PROCUREMENT MASTERY
RESEARCH FRAMEWORK
FIGURE 1
NEW
TRADITIONAL
INSIGHT MANAGEMENT
The adoption of advanced
analytics and market
intelligence that dives
insights throughout the
entire Source-to-Pay process,
while enabling better and
faster decision-making.
RISK & REGULATION
The constant monitoring of
third party imposed risks
to the Company’s business
activity across multiple
dimensions incl. financial
viability, security, continuity,
price, regulatory changes.
FINANCE & CONTROL
Procurement’s ability to
generate value on behalf of
the Company, how it tracks
cost transparency and its
ability to influence financial
discussions as well as the P&Ls
of the businesses it supports.
DIGITAL
The Organization’s capacity
to craft next-generation
purchasing experiences
that are on-demand and
human-centered, yet enabled
by a combination of emerging
and mature technologies.
PROCUREMENT STRATEGY
The Organization’s vison, goals
and objectives, as well as the
overall operating model that is
uses to fulfill these across
process, people, technology
and performance
management.
CATEGORY MANAGEMENT
The plan that Procurement
organizations use to manage
the pipeline of recurring and
net-new initiatives, prioritize
projects, and identify
value-add opportunities.
SOURCING MANAGEMENT
The defined methodology and
process of assessing business
needs for goods and services,
defining a go-to-market
strategy, select suppliers,
negotiate and implement
contract(s).
SUPPLIER MANAGEMENT
The capacity to strategically
and effectively manage all
elements of the interaction
and collaboration,
performance, risk and
innovation with third party
providers.
CONTRACT MANAGEMENT
The active management of
an agreement throughout
its lifecycle from contract
set-up to administration,
management, and termination.
REQUISITION TO PAY
The oversight of order
processing, beginning at the
time of requisition, following
receipt of the products or
completion of the defined
service and ending with the
payment to the supplier
PROCUREMENT
WORKFORCE
The quality, capabilities and
number of resources used to
fulfill the services
Procurement delivers on
behalf of the Company.
5 | GETTING ON THE PATH TO WORKFORCE MASTERY
6. One of the key aspects we studied was workforce: how the function
is organized and structured, and the skill sets required to support
the enterprise’s strategy and vision. Just as in other areas, we found
a clear distinction between masters and other companies.
At a high level, masters are highly adept at shaping their
Procurement workforce and organization to maximize the impact
for the broader business and the people involved. That’s because,
in these companies, the C-suite can answer important questions
across three dimensions: organization, talent management, and
ROI (see box). It’s also because they excel in using technology to
further increase Procurement’s ROI. Digital technology continues
to penetrate enterprises broadly and Procurement specifically.
As it does so, it will increasingly become a key lever to drive
business performance, and to support and empower people. As a
result, masters continue to find ways to use digitalization to shape
and leverage their Procurement workforce—specifically, across
five key dimensions (Figure 2). This enables masters to achieve an
impressive 15:1 return on their Procurement organization’s spend.
ORGANIZATION
• How should we organize to
navigate through future
challenges, including new
partners, different skills and
fewer people in different
locations?
• How many practitioners do
we have centralized and how
many embedded?
• How do we leverage an
ecosystem of BPO and
strategic supplier partners?
• What capabilities are best
outsourced and why?
THINKING LIKE A MASTER: KEY QUESTIONS TO ANSWER
TALENT MANAGEMENT
• How do we account for the
evolving and expanding role
of digital?
• What skill sets are required
to enable the overall
organization to achieve
higher business
performance?
• Can we keep pace with
digitization given
demographic challenges?
• What training can develop
the procurement workforce
into masters?
• Given the challenge that
procurement has attracting
and retaining talent, should
we invest in these skills or
buy them?
OUTCOME/ROI
• How do we calculate the
impact of digital and talent
investments?
• What drives the numerator
(value) versus denominator
(investment)?
• Over what time horizon will
the business see a return?
• How robust are the different
technologies?
6 | GETTING ON THE PATH TO WORKFORCE MASTERY
7. 7 | GETTING ON THE PATH TO WORKFORCE MASTERY
MASTERS LEVERAGE DIGITAL ACROSS FIVE KEY DIMENSIONS
TO DRAMATICALLY BOOST PROCUREMENT ROI
FIGURE 2
CONNECTEDNESS
Reach of procurement
(ecosystem)
X
=
Traditional
procurement
4%
High
performers
10%
Procurement
masters
15%
IMPACT
Savings as percent of spend
MAXIMIZER
LEVER
SUPPORTING
TECHNOLOGY
SOURCING
Purchase price
optimization
• Platform/cloud
• Social media
Traditional
procurement
20%
High
performers
60%
Procurement
masters
100%
INSIGHTS
Quality of
procurement
decisions
• Analytics
• Sensors/AI
Traditional
procurement
40%
High
performers
80%
Procurement
masters
98%
COMPLIANCE
Policy adherance
a.k.a. bottom line
impact
• Contract
analytics
• Bots
Traditional
procurement
1%
High
performers
.5%
Procurement
masters
.2%
EFFICIENCY
Procurement
operating cost
• Robotics
process
automation
• AI
WORKFORCE ROI
15:1
8. CONNECTEDNESS
MASTERS SYNCHRONISE ECOSYSTEMS
Technology helps the workforce collaborate more effectively on
two fronts: with internal stakeholders; and with suppliers and
other ecosystem participants (including consumers, independent
experts, and outsourcing providers). As they embrace ecosystems
more broadly, masters are creating new roles. One is the ecosystem
manager, who’s responsible for identifying innovative ways
for Procurement to collaborate. This could include procuring
professional services through platforms like co-match and working
with start-ups to uncover new suppliers. Some companies have
implemented alliance managers within each of their business
groups to spur internal collaboration. These managers are charged
with facilitating discussions between a Group’s CPO and CFO (or
COO) to ensure the Group achieves its budget targets and to drive
continuous improvement in the budgeting process.
Masters also use the ecosystem to help them plug talent gaps.
For example, a global professional service firm is cooperating
with one of the world’s leading business schools to enhance the
finance skills of its employees (including those in Procurement).
Another company, a global technology company, has teamed with
a university’s supply chain program to recruit students directly
after graduation. This helps fill the company’s talent pipeline while
teaching students practical knowledge they can apply immediately
in their first jobs. Some companies are also looking for ways to tap
into the fast-growing freelance labor market.
NEXT-LEVEL SOURCING
MASTERS LEVERAGE INSIGHTS FROM PLATFORMS TO IN-
CREASE THEIR BARGAINING POWER IN CRITICAL CATEGORIES
Masters excel in managing their spend in critical categories.
This includes attending to the basics, such as putting in place
a solid category structure across the company. It also includes
1
2
8 | GETTING ON THE PATH TO WORKFORCE MASTERY
9. deploying category managers responsible for defining demand and
specification plans in line with the broader organizational goals.
Masters also use technology to generate higher sourcing savings
in specific indirect categories. For instance, masters have a
structured negotiation process that uses electronic platforms and
special supplier analytics teams. These resources provide market
and supply base intelligence, price benchmarks, and detailed cost
sheets throughout the negotiation process. Furthermore, masters
are 60 percent more likely to drive all but 1 percent of their sourcing
through e-sourcing tools, and have internal online catalogues for
designated users to place orders directly.
Sensors, paired with analytics, are helping masters improve their
performance in categories involving substantial human intervention.
One example: A mining company is working with suppliers to
develop sensors that monitor the health of its trucks to predict
failures and boost utilization. Such data can help the company fine-
tune its category strategies as well as reduce part proliferation.
Another company uses sensors, cameras, and risk-based analytics to
reduce security and theft costs from its stores.
INSIGHTS
MASTERS ASSUME LESS
Analytics are essential for driving more sophisticated decision
making and business intelligence in commodity pricing, risk
management, and product cost management. This is something
masters have been quick to recognize: They are 94 percent
more likely to use advanced analytics to identify trends, risks,
and opportunities, ultimately unlocking greater value for the
organization.
In fact, the extended use of advanced analytics combined with the
Industrial Internet of Things, is a powerful one-two punch. It can lead
3
9 | GETTING ON THE PATH TO WORKFORCE MASTERY
10. to not only 100 percent understanding of spend, but also the ability
to more accurately identify and avoid disruptions to the business.
This is precisely what one major airline has discovered through its
use of sensors, analytics, and other technologies to monitor its
aircraft fleet. With the intelligence such monitoring provides, the
airline can predict future faults and take proactive measures. Doing
so reduces the likelihood an aircraft will be sidelined for a lengthy
period for repairs.
The key point is this: Masters understand how putting insights in the
hands of the right people will deepen the Procurement function’s
market and industry knowledge. Professionals can then apply that
knowledge to improve business performance.
COMPLIANCE
MASTERS PLAY MORE
Masters use technology such as analytics to strengthen
Procurement’s relationship with the business. Doing so results
in more candid conversations, adherence to contracts, higher
compliance, and greater savings. Eventually, analytics will make
possible live budget tracking and more accurate burn-rate
monitoring as the organization consumes its budgets. As a result,
category owners will be able to more effectively and proactively
identify and correct non-compliance issues in the business.
For instance, an emerging platform that combines descriptive
and predictive analytics will soon blend with Procurement
professionals to dramatically improve compliance control. Such
a platform could compare each transaction and other purchasing
behavior with the appropriate contract to determine individual
and overall compliance, and the cost of non-compliance. This
system, combined with other relevant data, could help Procurement
executives understand current and projected compliance, as
well as pinpoint who’s responsible for non-compliance (i.e., the
4
10 | GETTING ON THE PATH TO WORKFORCE MASTERY
11. Procurement organization, suppliers, or the business). It also could
help them forecast the impact of the Procurement organization’s
compliance-management techniques.
A major bank provides one example of the beginnings of such a
platform in use today. A tool the bank built helps drive 360-degree
supplier base visibility. With such visibility, the bank can not only
conduct better supplier risk assessments, but also get a more
complete understanding of supplier performance and compliance.
Like this bank, companies and their Procurement workforce must
become skilled at leveraging platforms to spur extensive sharing
of real-time, transparent information to systematize compliance
control.
EFFICIENCY
MASTERS DELIVER MORE WITH LESS
Masters’ Procurement function costs less while generating more
business value. How? Masters have a holistic understanding of the
business’s needs and their own capabilities. As a result, they can
identify ways to use technology to automate transactional and,
to some degree, operational processes. This allows their workforce
to focus on high-value-adding activities, which is critical: Because
efficiency is the denominator in the value equation illustrated in
Figure 2, it has the highest impact of any of the levers.
For example, a global energy company automated more than 100
Procurement, finance, and accounting processes, which slashed
manual average handling time by 67 percent. By dramatically
speeding up activities such as invoice processing (with higher data
accuracy as an added bonus), the company has saved $2.5 million
annually.
5
11 | GETTING ON THE PATH TO WORKFORCE MASTERY
12. Masters increase ROI even further by outsourcing non-core
categories where they have only limited capabilities. A global
consumer goods company did just that, which reduced Procurement
function costs and freed up the company’s own organization to
concentrate on supplier innovation in high-impact spend area.
Furthermore, a more focused sourcing approach and the third-
party partner’s deep experience resulted in greater savings in the
outsourced categories.
Finally, workforce masters leverage technology to work with a
smaller core Procurement team and embed additional Procurement
professionals in the business. The embedded professionals spend
the bulk of their time addressing business issues while applying
Procurement knowledge. The core team uses real-time transparency
of information on demand, supply and pricing to handle business
strategy, global demand and supply, policy, compliance, and
global strategic supplier management. This innovative organization
structure reduces costs while aligning Procurement with the
business on specifications and overall category management.
12 | GETTING ON THE PATH TO WORKFORCE MASTERY
13. It’s clear from our research that the elite companies we studied—
the masters—have made dramatic progress in enhancing the
Procurement organization structure and workforce. They’ve been
able to create a workforce with the right skills to best leverage
technological advancement, as well as develop and enact strategies
to attract the right people. They also understand how to manage
an ecosystem of partners (both within and outside of the business).
The payoff can be huge. As illustrated in Figure 3, our analysis has
found that workforce mastery can generate millions of dollars in
Procurement function cost savings alone by combining digital
technology with other factors such as operating model
enhancements.
GETTING ON THE
PATH TO WORKFORCE
MASTERY
13 | GETTING ON THE PATH TO WORKFORCE MASTERY
MOVING FORWARD
14. POTENTIAL SAVINGS IN PROCUREMENT FUNCTION COSTS
VIA MASTERY PRACTICES
CONSIDERING $1 BILLION SPEND
FIGURE 3
IMPACT
Cost as percent of spend
Traditional
procurement
1%
High
performers
.5%
Procurement
masters
.2%
= $8MSAVINGS
14 | GETTING ON THE PATH TO WORKFORCE MASTERY
On the other hand, it’s equally clear the vast majority of companies
still have a lot of work to do to catch up with the masters. Where
should they start? We believe companies that successfully address
three key activities can become workforce masters within three
years.
CHALLENGE THE STATUS QUO. Before setting out on the journey
toward workforce mastery, a company needs to know its starting
point. Thus it should benchmark its own capabilities with those of
Procurement masters to understand where the gaps are and what
needs to happen to close them.
IMPLEMENT A NEW PROCUREMENT OPERATING MODEL. This
should include a new organization structure comprising a mix of
Procurement professionals fully embedded in the business and
a central, core decision-making team. It also should include an
ecosystem to augment Procurement’s internal capabilities.
USE DIGITAL AS AN ENABLER. A digital platform is critical to
supporting and fostering collaboration across the ecosystem.
Digitalized learning programs can help build key workforce skills
while keeping training costs low. And automation and intelligent
support can make transactions more efficient, free up people to
perform more value-adding work, and vastly improve decision
making.
15. There’s no doubt Procurement organizations have made a great deal
of progress in the past decade to shore up their operational house.
But with business leaders demanding more from the organization
today, it’s time to move beyond simply getting more efficient.
Companies need to take the masters’ lead: Use technology to drive
a top-to-bottom transformation of Procurement’s workforce and
operating model so they can begin generating the 15:1 ROI that
masters enjoy.
15 | GETTING ON THE PATH TO WORKFORCE MASTERY
16. JOIN THE CONVERSATION
@AccentureStrat
www.linkedin.com/company/accenture-strategy
CONTACT THE AUTHORS
Daniel Vollath
daniel.vollath@accenture.com
Erlangen, Germany
Vincent Gressieker
vincent.gressieker@accenture.com
Berlin, Germany
Ferhat Ünsal
ferhat.uensal@accenture.com
Stuttgart, Germany
CONTRIBUTORS
Kevin Doran
k.doran@accenture.com
London, UK
Ryan Pearce
ryan.s.pearce@accenture.com
Toronto, Canada
Alexis Perez
alexis.c.perez@accenture.com
Chicago, Illinois, US
16 | GETTING ON THE PATH TO WORKFORCE MASTERY
