2016-07-07-奥纬咨询-Value_Sourcing_and_Supply_Chain_Journal_2016_60页_1mb

Summary of Oliver Wyman Value Sourcing & Supply Chain Journal (2016)

Core Content

The Oliver Wyman Value Sourcing & Supply Chain Journal (2016) explores the evolving role of Procurement in today's business environment, emphasizing the need for a more strategic, performance-driven, and innovative approach. The journal highlights the concept of "Spend Smarter" as a transformative initiative that goes beyond traditional cost-cutting to unlock sustainable value across all industries.

Main Viewpoints

• Procurement's Strategic Role: Procurement is no longer just about cost reduction; it is a strategic function that drives innovation, agility, and long-term value creation.
• Challenges in Spend Optimization: Companies often face significant hurdles in achieving sustainable savings due to common pitfalls such as transactional supplier management, narrow focus, and lack of performance tracking.
• Open Innovation: The journal advocates for companies to embrace open innovation by tapping into external ideas and leveraging cross-functional collaboration and digital platforms.
• Reconciliation of Sourcing Performance and P&L: There is a need for better alignment between Procurement and Finance to ensure that the financial impact of sourcing initiatives is clearly measured and communicated.

Key Information

1. Spend Smarter: Unlocking Hidden Value in Sourcing

• EBITDA Impact: Reducing external spend can significantly impact EBITDA, with potential savings ranging from 150 to 600 basis points depending on the industry.
• Common Pitfalls:
  • "Cost cutting is easy: let's stop spending" → Short-term savings without long-term sustainability.
  • "Some spend areas are not worth considering" → Overlooking "protected" categories that offer untapped value.
  • "Our Procurement department can take care of cutting costs" → Procurement alone cannot drive all savings; cross-functional collaboration is essential.
  • "We're already very cost-conscious" → Many savings opportunities require broader collaboration.
  • "Sourcing savings are self-supporting" → Savings are not sustainable without organizational integration.
  • "It's impossible to measure the value" → Poor measurement systems lead to failed initiatives.
• Key Success Factors:
  • Extend the reach by exploring sophisticated levers (price, specifications, consumption, top-line growth).
  • Create a cross-functional operating model with shared objectives and budget integration.
  • Implement a reliable performance measurement system to ensure accountability and visibility.

2. Become an Open Innovator

• Importance of Open Innovation: Companies must look beyond internal boundaries to access new ideas and technologies, especially in fast-changing markets.
• Challenges:
  • Many companies lack a clear strategy for sourcing and evaluating external innovations.
  • Internal processes and culture can hinder the adoption of external ideas.
• Recommendations:
  • Rethink procurement to include innovation as a key objective.
  • Collaborate in new and radical ways using digital platforms and idea markets.
  • Foster an open culture that encourages the adoption of external ideas and reduces resistance.

3. Reconciling Sourcing Performance and P&L

• CFO Concerns: 4 out of 5 CFOs struggle to reconcile sourcing savings with the P&L impact.
• Reasons for Disconnection:
  • Lack of shared objectives between Procurement and Finance.
  • Inadequate performance tracking and measurement systems.
• Solutions:
  • Define the level of precision required for savings tracking.
  • Establish distinct but homogeneous tracking systems between Procurement and Finance.
  • Implement a comprehensive reconciliation process with clear accountability and practical implementation.

Conclusion

The journal emphasizes that Procurement must evolve into a strategic function capable of driving innovation, performance, and long-term value. By addressing common pitfalls, adopting a cross-functional operating model, and implementing robust performance measurement, companies can achieve sustainable cost savings and open innovation. The reconciliation of sourcing performance with financial outcomes is crucial to ensure that the value generated is clearly recognized and supported across the organization.