Becoming a Procurement Change Agent A Global Survey of Procurement - PowerPoint PPT Presentation

Becoming a Procurement Change Agent A Global Survey of Procurement and Change Management July 2014 Confidential

Introductions – Meet Your Panelists A Look at the Survey Priorities & Initiatives Procurement Effectiveness Supplier Management Data & Technology Some Differences by Region (US v. UK) Live Q&A 140702 Iasta CIPS event.pptx 2

Your Panelists James Jenkinson – Vice President, Efficio James has been with the firm since 2001. He has over 17 years of experience in procurement, operations and supply chain management. James works across both our Consulting and Managed Services units and is responsible for our technology offering and providing customised solutions to our clients. James holds a B.B.S from Massey University in New Zealand and a Honours degree from the University of California, Berkeley. Constantine Limberakis – Director of Sales & Marketing, Iasta As the director of sales and marketing enablement at Iasta, Constantine is focused on strategic efforts for creating brand awareness and promoting new ideas around Iasta’s products and services. With over 15 years of experience in the software and consulting industry, he’s held various roles in sales, marketing, market research, and product development. Constantine holds a BA in History from the University of Illinois at Urbana- Champaign and an MBA / Masters in Public & International Affairs from the University of Pittsburgh. 140702 Iasta CIPS event.pptx 3

Introductions – Meet Your Panelists A Look at the Survey Priorities & Initiatives Procurement Effectiveness Supplier Management Data & Technology Some Differences by Region (US v. UK) Live Q&A 140702 Iasta CIPS event.pptx 4

Survey Demographics – By Job Role VP / Director of Sourcing 34% Category Manager 22% Roles represented mid – Upper level procurement professionals with 18% Sourcing Manager  44% VP / Directors Sourcing or CPO  48% noted as a Manager 10% CPO  8% represented Executives outside procurement 8% Other Executive 8% Contract Manager 140702 Iasta CIPS event.pptx 5

Survey Demographics – Company Size 25% Enterprise: $5B+ Large: $1B - $5B 32% Company size focused on mid-large enterprises  32% represented companies $1B - $5B revenue 15% Medium: $250M - $1B  25% represented companies over $5B  26% represented companies $50M and $1B 11% Small: $50M - $250 14% Very Small <$50M 140702 Iasta CIPS event.pptx 6

Survey Demographics – By Industry 14% 9% 11% Engineering, Professional Construction, Retail Services and Operations 8% 5% 5% Consumer Industrial Utilities Products Machinery Other industries included  Food Manufacturing 3%  Public Sector 4%  Oil & Gas 3%  Banking & Financial Services 3%  Healthcare 3%  Life Sciences 1%  Restaurant & Hospitality 2%  Defense & Security 1%  Higher Education & Research 3%  Insurance 4%  Sports & Entertainment 1%  Other 6%  High Tech 4%  Media 2%  Telecommunications 4%  Industrial Machinery 5%  Mining 1%  Travel & Transportation 4% 140702 Iasta CIPS event.pptx 7

Survey Demographics – By Geography 38% 20% 42% Rest of the World Based in United States Based in United Kingdom  France 1%  Germany 3%  Belgium 1%  Brazil 2%  India 3% 58% of the respondents were  Ireland 3% from the US (38%) and UK (20%)  Italy 2%  Mexico 1%  Spain 1%  Norway 1%  Sweden 1%  Netherlands 4%  Denmark 5%  Canada 4%  Other Europe 3%  Other South America 2%  Other Asia 1% 140702 Iasta CIPS event.pptx 8

Introductions – Meet Your Panelists A Look at the Survey Priorities & Initiatives Procurement Effectiveness Supplier Management Data & Technology Some Differences by Region (US v. UK) Live Q&A 140702 Iasta CIPS event.pptx 9

Increasing the Rate of Savings is a Top Priority What is your procurement team's top priority for 2014-2016? 67% Comments Enterprise (> $5B)  Large organisations value Large ($1B to $5B) Medium ($250M to $1B) operational efficiencies just as Small ($50M to $250M) much as cost savings 50%  Large companies are better equipped to work cross-functionally 43% which allows that to address 39% operational efficiencies more 33% effectively 30%  It was interesting to see how the 25% 25% “small” companies value building supplier risk strategies, which is 17% typical of our smaller clients who 15% 14% 14% depend on a handful of suppliers to 11% 8% deliver very specific products 5% (20%-30%) 4%  Smaller companies may be more risk-aware for their business Increaseing the rate of Driving wider Building more Improving supplier (5%-10%) cost savings (identified operational efficiencies strategic supplier risk management and realised) through procurement relationships capabilities 140702 Iasta CIPS event.pptx 10

Companies are focused on launching company-wide savings programs in 2014 What sourcing initiatives has your team launched in 2014? Comments 72% Enterprise (> $5B)  Savings delivery is seen as the most Large ($1B to $5B) 64% 64% important, with enterprise companies Medium ($250M to $1B) 60% 58% Small ($50M to $250M) focussing on training ( which we are 55% seeing in the marketplace ) 50%  There is a lot of technology being implemented in 2014 43% 43% 42% 39%  Small companies are looking to 33% 33% specialists to regenerate their procurement functions through 25% 25% outsourcing, by implementing better 25% 22% processes, better technology and most 17% importantly better talent 15%  Larger organisations seem intently more 7% focused on CSR/Sustainability due to the public/reputational risk exposure  Important and common pattern related to Launching Significant Implementing Launching Outsourcing talent, whilst savings are very important, company-wide increases in technology to initiatives related non-core talent retention important also savings delivery training and improve to activities to programs recruiting processes CSR/Sustainability focus on strategic areas 140702 Iasta CIPS event.pptx 11

Introductions – Meet Your Panelists A Look at the Survey Priorities & Initiatives Procurement Effectiveness Supplier Management Data & Technology Some Differences by Region (US v. UK) Live Q&A 140702 Iasta CIPS event.pptx 12

Overwhelming majority of teams are measuring effectiveness based on total cost savings How is your procurement team's effectiveness currently being measured? 29% Comments 25% Procurement ROI 25%  Driving out cost savings is the most 25% tangible way of delivering benefits and 21% 25% the favourite of procurement functions Managed v. Total Spend 20% globally 17% 61%  Cost avoidance is important for larger 56% Cost Avoidance 35% companies especially for indexed 17% commodities 86% 81%  Contract compliance, delivery and cycle Total Cost Savings 70% times are harder to quantify and achieve, 92% therefore less emphasis is traditionally 29% 36% placed on these areas Contract Compliance 40% 17%  While procurement is interested in 11% savings, operational stakeholders are 19% Delivery and Accuracy 40% just as interested in decreasing delivery 42% times, increasing order accuracy and 11% reducing procurement cycle times 28% Procurement Cycle Times 30% 33% Enterprise (> $5B) Large ($1B to 5B) Medium ($ 250M to $1B) Small ($50M to $250M) 140702 Iasta CIPS event.pptx 13

Support from executives or business stakeholders is still the biggest hindrance Which is the biggest hindrance as it relates to advancing your sourcing capabilities? Comments 100 Lack of Technology 7  It is not surprising that executive and business support is still the biggest hindrance. Most, if Formal sourcing 11 not all executives do not recognise the benefits procedures provided by procurement Inability to track  This indicates that procurement has a change 19 and manage spend management issue, where procurement is still struggling to influence their internal stakeholders in a compelling way Sourcing and 22  Lack of spend visibility is still a problem commodity skills  Procurement lacks the ability to convince executives of the need for investment – • Many have invested heavily in ERP assuming this solves the issue – this does at Support from executives a high level but not at a procurement level 41 or business stakeholders • Finance and procurement need the same information connected differently; not speaking a lingua franca 140702 Iasta CIPS event.pptx 14

Procurement teams want to improve their skills for establishing stakeholder engagement Select the top three most important skills your team needs to meet procurement objectives? Comments Establishing stakeholder enagagement  Interesting observation that the top 55% skill required is influencing, which has very little to do with procurement Subject matter/category expertise 55%  Interpersonal skills are very important when trying to affect any type of change management Negotiation skills 53%  The two areas we do the most training and up skilling in are analytics and verbal / written communications Analytic skills 51%  Many procurement organisations underestimate the power of compelling presentations and Project Management 48% presenting skills but it needs to be based on strong analytics Verbal and written communication 21% 140702 Iasta CIPS event.pptx 15