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Procurement 2015: Benchmarking the Best-in-Class Webinar Slides

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Nine out of 10 CPOs believe their procurement and sourcing teams could be doing better. That’s according to a recent study by Andrew Bartolini of Ardent Partners, and he explains why in the slides from the recorded webinar. Andrew shares keen insights and key performance and operational benchmarks that he captured in his study, CPO Rising 2015: The Agility Agenda.

If you find yourself in that 90-percent segment of CPOs, you’ll appreciate this in-depth look at how you can improve your team’s performance, including:

The key drivers that enable best-in-class performance
The use of statistics in benchmarking performance
The strategies and approaches needed to improve processes, operations, and results

Published in: Business
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Procurement 2015: Benchmarking the Best-in-Class Webinar Slides

  1. 1. 1 PROCUREMENT 2015: BENCHMARKING THE BEST-IN-CLASS Andrew Bartolini Chief Research Officer Ardent Partners May 14, 2015
  2. 2. 2 AGENDA  Introduction  The State of Procurement 2015  Benchmarking the Best-in-Class  Recommendations Copyright © 2015 - Ardent Partners Ltd.
  3. 3. 3 INTRODUCTION
  4. 4. 4  Chief Research Officer, Ardent Partners  Publisher, CPO Rising & Payables Place Summary  Recognized expert in sourcing, procurement, AP, and supply management  Advisor to solution providers & CPOs alike around the world  Presented more than 200 times in seven countries  Benchmarked 10,000+ enterprises across all facets of their supply management operations  Published 1000+ research reports, analyst insights, articles, and other briefs  Named a “Pro to Know” by Supply and Demand Chain Executive three times Experience Decade plus as Industry analyst. Leadership roles in sales, marketing, and services at Ariba and Commerce One. Rich experience in strategic sourcing, business process transformation, and software implementation. Background also includes consulting and investment banking. Education  MBA – Indiana University  BA – College of the Holy Cross ANDREW BARTOLINI Copyright © 2015 - Ardent Partners Ltd.
  5. 5. 5 Ardent Partners is a research and advisory firm focused on defining and advancing the supply management strategies, processes, and technologies that drive business value and accelerate organizational transformation within the enterprise. ARDENT PARTNERS Copyright © 2015 - Ardent Partners Ltd.
  6. 6. 6 www.cporising.com CPO RISING: GLOBAL RESEARCH & ANALYSIS FOR CPOS Copyright © 2015 - Ardent Partners Ltd.
  7. 7. 7 October 20 & 21 — Boston, MA Join us for Ardent Partners’ CPO Symposium This exclusive event promises valuable networking opportunities and the interactive exchange of ideas Don’t Miss Out on the Procurement Event of the Year! Visit www.cporising.com for more details C o p y g h © 2 0 1 5 A d e n P a n e s L d
  8. 8. 8 Research Report  Goal (I): Capture the strategies, performance, and intentions of Chief Procurement Officers in 2015 (and beyond)  Goal (II): Present a clear and comprehensive view of the “State of Procurement”  Goal (III): Identify the strategies and levers that drive Best-in-Class results Approach  Utilize a web-based survey to capture responses from 318 CPOs and other procurement executives  Interview 26 leading CPOs (and ex-CPOs) to add context and understand critical and emerging trends  Leverage experience and orientation of a leading analyst team RESEARCH PROCESS Copyright © 20145- Ardent Partners Ltd.
  9. 9. 9 TODAY’S PRESENTATION Report Demographics 318 Respondents o 72% VP or Director-level o 82% work in procurement o 63% from large enterprises o 61% North America; 26% EMEA o 28 industries o Interviewed 26 CPOs Copyright © 2014- Ardent Partners Ltd.
  10. 10. 10 THE STATE OF PROCUREMENT 2015
  11. 11. 11 “Procurement is an incredibly important part of the business. You need to get that right.” ~ Sam Walsh, CEO, Rio Tinto THE CEO’S VIEW OF PROCUREMENT Copyright © 2015 - Ardent Partners Ltd.
  12. 12. 12 CPO REPORTING IN 2015 Copyright © 2015 - Ardent Partners Ltd. CFO, 32% CEO, 22% COO, 19% Supply Chain, 7% Shared Services , 6% Line of Business , 4% President, 2% Other, 7% © Ardent Partners - 2015
  13. 13. 13 THE CPO’S TOP PRESSURES IN 2015 Copyright © 2015 - Ardent Partners Ltd. 51% 27% 25% 21% 18% Find more savings Increase overall effectiveness and influence Better communicate value and performance Increase the percentage of spend under management Better align procurement with business goals and needs © Ardent Partners - 2015
  14. 14. 14 TOP CPO STRATEGIES (SAVINGS PRESSURE OR NO SAVINGS PRESSURE) Copyright © 2015 - Ardent Partners Ltd. 44% 36% 26% 22% 36% 21% 17% 29% Improve use of technology (buy new and/or improve current) Improve staff capabilities Optimize current systems and processes Improve collaboration with suppliers No Savings Pressure Savings Pressure © Ardent Partners - 2015
  15. 15. 15 THE CPO’S TOP PRIORITIES (NEXT 3 YEARS) Copyright © 2015 - Ardent Partners Ltd. 42% 39% 33% 28% 27% Savings Processes Compliance Innovation People © Ardent Partners - 2015
  16. 16. 16 WHAT’S HOLDING PROCUREMENT BACK? Copyright © 2015 - Ardent Partners Ltd. 57% 31% 29% 26% 37% 35% 35% 38% Staff/Talent constraints Budget constraints Lack of technology infrastructure (i.e. gaps) Challenges aligning processes and systems 2014 2015 © Ardent Partners - 2015
  17. 17. 17 WHAT WILL DRIVE PROCUREMENT FORWARD? Copyright © 2015 - Ardent Partners Ltd. Technology Usage and Intentions 37% 48% 42% 16% 50% 40% 28% 39% 29% 38% 42% 33% 30% 37% Automated Spend Analysis eSourcing Automated Contract Management (Repository) Automated Contract Management (Authoring) eProcurement ePayables (AP Automation) Business Network Currently Use Plan to Use © Ardent Partners - 2015
  18. 18. 18 PROCUREMENT PERFORMANCE BENCHMARKS
  19. 19. 19 2015 PROCUREMENT BENCHMARKS Copyright © 2015 - Ardent Partners Ltd. Metrics Market Average Spend under management 61.4% Savings 2014 (Actual) 6.0% Savings 2015 (Target) 6.6% Addressable spend that is sourced 47.9% © Ardent Partners - 2015 Value Drivers
  20. 20. 20 2015 PROCUREMENT BENCHMARKS Copyright © 2015 - Ardent Partners Ltd. Metrics Market Average Spend that is contract compliant 55.2% Transactions that are contract compliant 63.0% Contracts stored in a central, searchable repository 57.4% Percentage of catalog-based spend 14.3% PO-based spend 63.0% © Ardent Partners - 2015 Compliance Metrics
  21. 21. 21 2015 PROCUREMENT BENCHMARKS Copyright © 2015 - Ardent Partners Ltd. Metrics Market Average Suppliers representing 80% of total spend 21.9% Enabled suppliers 29.2% High-risk suppliers 6.5% © Ardent Partners - 2015 Supplier Metrics
  22. 22. 22 BUT, SHOULD YOUR PROCUREMENT DEPT. BE DOING BETTER? Copyright © 2015 - Ardent Partners Ltd. 90% 3% 7% Yes No Not Sure © Ardent Partners - 2015
  23. 23. 23 THE CPO’S TOP DRIVERS FOR FUTURE SUCCESS Copyright © 2015 - Ardent Partners Ltd. 44% 48% 53% 53% 66% Better team execution Better communication plan Larger and/or more talented staff New (or improved) technology Earlier engagement on sourcing opportunities © Ardent Partners - 2015
  24. 24. 24 BEST-IN-CLASS PROCUREMENT DEFINITION Copyright © 2015 - Ardent Partners Ltd.
  25. 25. 25 PROCUREMENT METRICS (BEST-IN-CLASS V. ALL OTHERS) Copyright © 2015 - Ardent Partners Ltd. © Ardent Partners - 2015 Metrics Best-in- Class All Others Spend under management 90.0% 53.1% Savings 2014 (Actual) 6.7% 5.8% Savings 2015 (Target) 6.6% 6.6% Addressable spend that is sourced 61.8% 43.9% Spend that is contract compliant 66.3% 51.7% Transactions that are contract compliant 73.8% 59.7% Contracts stored in a central, searchable repository 68.9% 53.9% Percentage of catalog-based spend 14.5% 14.2% PO-based spend 79.2% 58.6% Suppliers representing 80% of total spend 18.8% 22.6% Enabled suppliers 36.7% 27.3% High-risk suppliers 8.4% 5.6%
  26. 26. 26 BEST-IN-CLASS TECHNOLOGY ADVANTAGE Copyright © 2015 - Ardent Partners Ltd. © Ardent Partners - 2015 25% 38% 52% 14% 38% 46% 33% 40% 47% 64% 24% 55% 55% 48% Business Network ePayables (AP Automation) eProcurement Automated Contract Management (Authoring) Automated Contract Management (Repository) eSourcing Automated Spend Analysis Best-in-Class All Others
  27. 27. 27 BEST-IN-CLASS CHARACTERISTICS Copyright © 2015 - Ardent Partners Ltd. © Ardent Partners - 2015
  28. 28. 28 RECOMMENDATIONS
  29. 29. 29 RECOMMENDATIONS  Develop a spend under management “pipeline”  Work to get engaged earlier on sourcing opportunities  Deploy new and improved technology  Use technology to make collaboration a habit within the enterprise  Use business networks to make collaboration a habit across the supply chain Copyright © 2015- Ardent Partners Ltd.
  30. 30. 30 For more information please visit: www.ardentpartners.com & www.cporising.com Contact Info Andrew Bartolini Chief Research Officer abartolini@ardentpartners.com @andrewbartolini Copyright © 2015- Ardent Partners Ltd.

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