Procurement’s Next Frontier · data and enabling both procurement and business users to solve...
Transcript of Procurement’s Next Frontier · data and enabling both procurement and business users to solve...
Procurement’s Next FrontierThe Future Will Give Rise to an Organization of One
Copyright © 2014 Accenture All rights reserved. 2
IntroductionAccenture Sourcing & Procurement Research
2007 2009 2011 2015 …
1 http://www.accenture.com/SiteCollectionDocuments/PDF/HHP_brochure_low10_07_07.pdf
2 http://www.accenture.com/SiteCollectionDocuments/PDF/South%20Africa/Accenture-Compulsive-Contributors-More-is-asked-and-more-is-delivered.pdf
High Performance through Procurement1
Procurement Masters saved 10 times
what it costs to run procurement
“It pays to be good.”
Compulsive Contributors2
Procurement Masters expanded their
focus to generating value beyond cost
savings
“More is asked and more is delivered.”
Procurement’s Next Frontier
The Future Will Give Rise to an
Organization of One
“A New Digitally Driven, Strategically
Focused Procurement Organization.”
Accenture Sourcing & Procurement Research Background
2008 2010 20132012 2014
Copyright © 2014 Accenture All rights reserved. 3
Future of Procurement
PoV52 executive interviews
Our research was designed to understand the business and procurement trends that
would substantially affect procurement organization globally in the next 5 to 7 years.
IntroductionAccenture Sourcing & Procurement Research
Copyright © 2014 Accenture All rights reserved. 4
Digital platforms and technologies are expected to totally transform the way most
procurement organizations do business
IntroductionAccenture Sourcing & Procurement Research
Cost of
Procurement(as % of spend)
2020201520112007
Insightful Spend
Understanding(as % of spend)
Contract/Policy
Compliance(as % of spend)
Controlled
Suppliers(as % of suppliers)
0,2%
100%
98%
100%
1,0%
10%
40%
0,7% 0,6%
20% 60%
40% 50% 70%
80%50%
Smaller, more cost-efficient
procurement organization supported
by digital platforms and technologies
Full control through close cooperation
with strategic suppliers in the ‘virtually
integrated enterprise’
Cognitive systems to support
procurement professionals increasing
compliance, automation and quality
Extended use of advanced analytics
together with the industrial internet of
things leading to meaningful spend
insights
internal
external
Copyright © 2014 Accenture All rights reserved. 5
Executive SummaryThe Procurement Organization of One
Four key digital technologies will give rise to a procurement organization of one:
cognitive systems, analytics, cloud computing and the industrial internet of things
Key trends leading to the future of procurement:
1
2
3
4
5
6
5
2
6
4
3
1
The future procurement organization will consist of a group of
procurement professionals embedded in the business connected back
to a smaller, core-decision making team supported by technology.
Companies will establish a more intimate relationship with a small
group of strategic suppliers, creating a ‘virtually integrated
company’, boosting top line growth through more effective innovation
Future procurement cloud’s advantage will go beyond process and
technology standardization and low cost to enhanced usability and
more effective use of content
The industrial internet of things will reshape the procurement
function offering increased traceability, enhanced use of analytics and
challenging the status-quo of key procurement processes
The expanded use of advanced analytics will benefit the procurement
function on different domains
Cognitive systems will take over routine, manual work resulting in
cost savings through automation, increased quality, consistency &
compliance and augmenting faster and better decision making
Copyright © 2014 Accenture All rights reserved. 6
Virtually Integrated EnterpriseThe Three-Tier Supplier Ecosystem
Supported by digital technologies a more intimate relationship will be established
with the company’s strategic suppliers, creating a virtually integrated enterprise
Company
Uncharted
Suppliers
Transactional
Suppliers
Suppliers that are currently
unknown but may provide
relevant products, services and
innovation
Key suppliers that will be
treated as part of the company
Focus on operational efficiency
through a high degree of
automation
Strategic
Suppliers
Virtual
Supplier Room
Virtual Supplier
Room, Analytics
Virtual Supplier Room,
Cognitive Agents, Analytics
VIRTUAL INTEGRATED ENTERPRISE
Companies will rely more heavily on a small group of strategic suppliers in order to
significantly boost top line growth through more effective innovation
Copyright © 2014 Accenture All rights reserved. 7
Virtually Integrated EnterpriseThe Virtual Supplier Room
The virtual supplier room will serve as a virtual gathering place for the company and
its suppliers to connect and exchange ideas
Copyright © 2014 Accenture All rights reserved. 8
The future procurement organization consists of a group of procurement professionals
embedded in the business and connected back to a smaller, core-decision making team
Organization of OneThe Procurement Organization of the Future
A small, central, decision-
making core team supported by
advanced technology (e.g.
cognitive computing, the 5 apps,
…) focusing on higher-level
cross-business unit
procurement requirements.
Procurement professionals
fully embedded in the
business, addressing business
issues while applying
procurement knowledge.
Non-strategically differentiating activities will be conducted by
technology (virtual agents) and/or the virtually integrated enterprise.
Copyright © 2014 Accenture All rights reserved. 9
The 5 apps will serve as the technology foundation of procurement:
Virtual Company
Mall
Supply Analytics
Virtual Supplier
Room
Virtual Category
Room
Supplier Network
A cloud-based set of pre-approved privat and public “shops”
from which the internal customer can select goods and services,
in lign with company policies, preferred suppliers and contracts.
A standard dashboard bringing together a wide variety of
data and enabling both procurement and business users to solve
specific problems or answer questions.
A virtual collaboration room enabling the company to interact
with its strategic suppliers and to foster innovation through the
virtually integrated enterprise.
A central place, driven by social media, where the category
managers will find category specific and relevant market
intelligence.
App connecting the company with the supply market and
supporting tendering, performance assessment, supplier
discovery and supplier interaction.
Organization of OneFive Procurement Apps of the Future
Copyright © 2014 Accenture All rights reserved. 10
Cloud ComputingFocus on Usability and Content
Future procurement cloud’s advantage will go beyond process and technology
standardization and low cost to enhanced usability and more effective use of content
Historcial benefits:
Lower oprational costs (SaaS)
Process and technology
standardization
Faster access to new functionalities
Future competitive advantages:
Amazon like – Usability resulting in
increased productivity and engagement
Google like – Enriched content paired
with analytics leading to better insights
Cloud computing is key to become virtually connected with the external world:
Copyright © 2014 Accenture All rights reserved. 11
Industrial Internet of ThingsFundamentally Transforming Key Aspects of Procurement
Today’s mobile device-driven market will shift to an interconnected Industrial Internet
of Things reshaping the procurement function
INDUSTRIAL INTERNET OF THINGS (IIOT)
Impact on Procurement:
Increased traceability of
products & materials
Enhanced use of
analytics to improve
decision-making
Challenging the status-
quo of key processesCombining sensor-driven computing, industrial
analytics and intelligent machine applications into a
single universe of connected intelligent industrial
products, processes and services.
Copyright © 2014 Accenture All rights reserved. 12
Riding the Analytics WaveAnalytics within the Procurement Function
An Accenture survey shows procurement as the least likely corporate function to use
advanced analytics
Structurally align with the corporate analytics center of
excellence
Invest in the proper supporting technologies (including
machine learning!)
Tackle analytics of highest value given maturity and industry
In order to benefit from the use of analytics and improve
business decision-making, procurement organizations need to:
Copyright © 2014 Accenture All rights reserved. 13
Riding the Analytics Wave5 Analytics Impacts to Procurement
Five procurement areas, in particular, look set to benefit the most from the expanded
use of advanced procurement analytics
Copyright © 2014 Accenture All rights reserved. 14
Cognitive ComputingFrom Augmentation to Automation
Intelligent and self-learning computers will become trusted ‘expert advisors’,
augmenting complex decisions and operating autonomously under human supervision
What exactly is Cognitive Computing?
Accenture defines Cognitive Computing as a
combination of multiple technologies that enable
computers to:
Perceive the world (e.g. computer vision,
audio processing or sensor processing)
Analyze and understand the collected
information (e.g. natural language or
knowledge representation)
Make informed decisions and take action
(e.g. inference engines, machine learning or
expert systems)
Copyright © 2014 Accenture All rights reserved. 15
Cognitive ComputingUse and Benefits for Procurement
Accenture research indicates that in the next five to seven years, an organization’s
routine, manual work will become increasingly handled by intelligent virtual agents
Setting up and conducting
requests for proposals
Finding relevant suppliers
Evaluating suppliers’ performance
Creating cost models and
industry cost curves
Analytics and advanced modeling
Compliance
Order fulfillment, report
generation, reporting and catalog
maintenance
Logistics, picking and packing
Benefits for Procurement
Cost savings through
automation
Increased quality,
consistency and
compliance
Augmenting faster and
better decision making
Potential target activities for Virtual Agents within
the Requisition-to-Pay cycle:
Copyright © 2014 Accenture All rights reserved. 16
Cloud Computing
Analytics
Industrial Internet of Things
Cognitive Computing
Virtually Integrated
Enterprise
Business Stakeholders
Embedded
Procurement Teams
… and supported by 4 key
digital technologies
A new digitally driven, strategically focused procurement organization
The future will give rise to a
Procurement organization of one,
collaborating closely with …
ConclusionFuture of Procurement
17Copyright © 2015 Accenture. All rights reserved.
About the Research
The research was designed to understand the business
and procurement trends that would substantially
affect procurement organizations globally in the next
five to seven years. We conducted a total of 52 one-hour,
one-to-one interviews during which we tested
several research hypotheses. Interviews were conducted
with executives across a variety of industries and
geographies. The majority of executives represent large
global multinational organizations with revenues of up
to $130 billion.
Research insights represent the views of current chief
procurement officers, chief supply chain officers, chief
financial officers, chief technology officers, a chief
executive officer and a chief strategy officer, as well as
other senior-level executives in procurement and supply
chain. We also spoke with senior executive-level digital
and technology experts.