Subscribe to our free, weekly email newsletter!


A.T. Kearney analysts see shift in procurement strategies

image

A.T. Kearney’s 2010 Indirect Procurement Study found that although once overlooked, indirect procurement organizations have come a long way and are increasingly recognized as having significantly more value to contribute.

By Staff
July 20, 2010

A.T. Kearney recently released the results of a global study, which suggests that indirect procurement categories like IT, marketing and advertising, facilities management, MRO, Logistics and professional services, have become increasingly important to Chief Procurement Officers and their organizations.

According to the Global management consulting firm, The Indirect Procurement Study (IPS), identifies how leading organizations are managing the procurement of indirect goods and services. Respondents to the study included procurement executives from 94 multinational companies with a combined indirect spend of $134 billion.

“We conducted the first Indirect Procurement Study in 2007 and there were high expectations among the respondents for the adoption of advanced practices like outsourcing of indirect procurement, advanced data analytics and benefits tracking,” said Jan Fokke van den Bosch, A.T. Kearney Procurement and Analytic Solutions vice president and study co-leader. “The 2010 study shows that the adoption of these advanced techniques have taken place at a much slower rate than anticipated,” spokesmen added. “The good news is that with the financial crisis and recession, executives managing indirect procurement have gained substantial influence within their organizations.”


Key findings in the study include:

  • Indirect spending accounts for 60 percent of third-party spend in non-manufacturing companies, more than 90 percent in the financial services industry and sometimes 50 percent of spend in manufacturing organizations.
  • Rather than using advanced data analytics techniques such as predictive modeling to deliver highly useful future insights, indirect procurement groups are too often analyzing data to track historical trends.
  • The most successful indirect procurement organizational model was a central-led organization with collaboration across business units. Users of this model achieved savings greater than 10 percent over the last two years in 47 percent of categories.
  • More than two-thirds of respondents measure such financial and internal key performance indicators such as addressable spend, identified savings and addressable categories. But less than half of the respondents track compliance management metrics such as spend integrity or accuracy and supplier commitments, scorecards and reviews.
  • Outsourcing of procurement has shifted focus from business process   outsourcing to close collaboration with managed service providers for   specific spend categories like facility management, fleet and travel. 

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

UPS today announced diluted earnings per share of $1.32 for the third quarter 2014, a 13.8% improvement over the prior year period. Operating profit increased 8.3%, resulting from balanced growth across all three segments.

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement (NAFTA) partners Canada and Mexico increased 4.4 percent from August 2013 to August 2014 at $100.6 billion.

As expected, global trade dipped from August to September but still saw annual gains, according to data issued this week by Panjiva, an online search engine with detailed information on global suppliers and manufacturers.

Transportation and logistics merger and acquisition (M&A) activity in the third quarter saw annual gains, which were driven by smaller deals in the trucking logistics, shipping, and passenger air sectors, according to data issued in the Intersections report by PwC this week.

With the holidays rapidly approaching, it appears retailers are not quite done getting inventory set up and on the shelves in time for what is expected to be a fairly active shopping season. That much was evident based on recent data for September volumes issued by the Port of Los Angeles (POLA) and the Port of Long Beach (POLB).

Article Topics

News · Supply Chain · A.T. Kearney · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA