Hackett Group Report on Procurement Trends: Part II

The Hackett Group’s research identified an array of procurement strategies and capabilities most strongly correlated with high performance and success of the procurement organization.

By Patrick Burnson, Executive Editor

July 29, 2015

World-class procurement organizations excel at cost reduction and deliver services at 17 percent lower cost than typical companies, while requiring 26 percent fewer staff, The Hackett Group’s research found. At the same time, they operate at dramatically higher levels of effectiveness, delivering superior stakeholder satisfaction, in part because they have successfully transformed into truly customer-centric organizations.

The Hackett Group’s research identified an array of procurement strategies and capabilities most strongly correlated with high performance and success of the procurement organization. World-class procurement organizations continue to invest in activities that elevate their role to that of a trusted advisor, moving beyond the traditional role of procurement as a gatekeeper. Delivering greater value is key, and procurement organizations that are viewed as a true business partner report 68 percent higher savings than those viewed as gatekeepers, reflecting higher effectiveness at both cost reduction and cost avoidance.

Patrick Connaughton, Senior Research Director, The Hackett Group, told SCMR in an interview that it was a surprise to learn how many procurement organizations have in place a very structured approach for segmenting their internal stakeholder community to make sure the most influential ones receive the right level of service.

“We have seen very sophisticated supplier segmentation models, but applying the same concept to procurement’s internal stakeholders is not something that has gotten a lot of attention previously,” he said. “We do plan to explore these stakeholder (or customer) segmentation models in a lot more detail in future research.”

World-class procurement organizations become deeply embedded in their stakeholders’ teams, the research found. Procurement organizations that have improved stakeholder alignment report 28 percent higher savings than those that don’t. World-class procurement organizations also commit dedicated resources to act as a liaison between procurement and the business nearly twice as often as typical organizations, and are better prepared to adjust alignment between procurement’s goals and stakeholders objectives as requirements change.

To achieve world-class performance, The Hackett Group recommends that procurement organizations take a structured approach to improving the customer experience, focusing in four areas. First they should identify and understand key stakeholders, and segment their internal customers based on attributes such as importance and level of influence within the organization. In addition to seniority, issues such as language, culture, and even personality should be taken into account. Next, procurement organizations can develop formal customer satisfaction surveys tailored to key stakeholders, taking care to use a variety of ad-hoc and structured approaches to gain deeper insights.

Procurement organizations should also analyze the results of customer satisfaction surveys, and ensure that stakeholders understand their feedback is being valued and utilized. Finally, procurement can improve their level of customer service by taking a holistic view, and by implementing self-service tools to answer common inquiries and provide real-time visibility into order status.