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How value-oriented is your procurement? - Findings of the 2012 survey of top managers

„How value-oriented is your procurement?“ is the central question, which was answered by top managers of 111 companies in the context of the latest ConMoto study. Topping the list of the 8 analyzed industry cluster is the automotive industry, with the “wooden spoon” going to the construction industry.
Published on: Mar 4, 2016
Source: www.slideshare.net


Transcripts - How value-oriented is your procurement? - Findings of the 2012 survey of top managers

  • 1. ConMoto Study HOW VALUE-ORIENTED IS YOUR PROCUREMENT? FINDINGS OF THE 2012 SURVEY OF TOP MANAGERSHighlights• Procurement: Driving trillions• Value-oriented procurement – more than just savings• Procurement benchmark as the ideal launchpad for defining future fields of action• Evaluation of procurement: Internal and external per- ception• Tried-and-tested success factors leading to value- oriented procurement• Benchmark template for eight industry clusters
  • 2. ConMotoStudy HOW VALUE-ORIENTED IS YOUR Procurement? Page 3 PREFACE Page 4-26 HOW VALUE-ORIENTED IS YOUR PROCUREMENT? – 2012 SURVEY OF TOP MANAGERS Executive Summary – Core Findings Procurement as a competitive Factor – Driving Trillions CON MOTO_____________________ Value-oriented Procurement – More than just Savings Study Design – Participants and Industrial Structure Findings – Status Quo in Procurement Success Factors – Learning from Procurement Innovators Appendix – Industrial Benchmark Template Page 27 AUTHORS Page 28 CON MOTO Value-oriented Procurement Our Company Your Contacts PREFACE AUTHORS 2
  • 3. ConMoto Study Preface PREFACE Over 16 trilli- everyday acts and deeds. In this context, of all the on euros and factors involved, excellent employees across all le- more than vels of the purchasing and procurement system are 70 percent pivotal cornerstones that secure supply, build bene- of revenue: ficial relations with suppliers and service providers, these are at- and negotiate the best-possible prices. tention-grab- bing figures. One thing is clear: the pressure is increasing. Decli- The numbers ning vertical integration, shorter product lifecycles, in question increased product and process complexity, shorter refer to the time-to-market and consequently shorter reactionvolume of goods and services purchased within times call for purchasing departments to adapt rea-the EU 27. Phenomenal figures which reflect the dily and swiftly, find creative responses to the chan-significance of procurement in general and its im- ging general conditions, and carve out innovativeportance for corporate success in particular. solutions.Numerous conversations with decision-makers Working in partnership within the value-added net-have revealed that, above all, the value propositi- work is also gaining in importance in the light ofon that procurement delivers to the success of a intensive debates surrounding corporate gover-company is a frequent and hotly-disputed guiding nance, risks and compliance. The need for indivi-principle. Many know from their own experience dual, holistic and, above all, sustainable solutionsthat procurement can contribute significantly to a is heightening the demands faced by future-orien-company’s value. Others only suspect that it does. tated purchasers. As an essential value driver withinOnly a small handful, however, have actually been the company, procurement must have an absoluteable to “grasp” its actual value. command of three key areas: “Strategy and Innova- tion”, “Networks, Cooperation and Integration” plusAs simple as it may sound, the question “How “Processes, Technology and Standards”.value-oriented is your procurement?” needs tobe answered in concrete terms and backed up by On this subject, our 2012 survey of top managersfacts, figures and data. Only by doing so can the holds a mirror up to those with responsibility, high-performance, the “added value” of purchasing, be- lighting the situation as it stands with regard to pro-come tangible and assessable. But what exactly curement. The findings provide you with the idealdoes value-oriented procurement mean? basis for continuing to work towards value-oriented procurement and for defining future tasks and fieldsOn the one hand, we perceive it to be the contributi- of action using the best in the industry as youron it makes towards lowering material/non-person- benchmark.nel and process costs, reducing the amount of ca-pital required, and minimizing procurement risks by With this in mind, we wish you all the speed andpursuing active supplier management. On the other endurance you will need as you compete to remainhand value-oriented procurement creates connec- sustainably competitive and, of course, also thetions and drives forward processes, thus helping to very best of success!entrench innovation, ecology and sustainability inYours sincerely,Andreas R. Voegele Jörg Blecker Thomas Fortmeier 3
  • 4. ConMotoStudy HOW VALUE-ORIENTED IS YOUR PROCUREMENT? – 2012 SURVEY OF TOP MANAGERS Executive Summary – Core Findings Driven by volatile markets and fiercer competition, nagement”. Only four percent of all companies the climate is becoming increasingly harsher. Com- surveyed stated that they made full use of their panies are forever being forced to adapt to new cir- suppliers’ innovation potential and value-added cumstances if they want to achieve success and not reserves. Even the “model industry”, the automo- be left behind. tive sector, has significant room for improvement. When it comes to ensuring future competitiveness, As a company’s value added and vertical integra- this leaves them very much open for attack. Other tion falls, the significance of procurement incre- striking revelations: close to one third of the com- ases in inverse proportion. For several years now, panies have either no or only a patchy procurement material and non-personnel costs have accounted strategy in place. for a steadily rising share of revenue, which, in the automotive sector, for example, already stands at Issues such as “Employee Qualifications”, “Decisi- around 70 percent. Procurement is responsible for a on Efficiency”, “Organization and Procurement Pro- major portion of the costs incurred in virtually every cess” received mid-table rankings: not bad, but still sector. As a result, it has significant leverage on the a clear sign that they could also do far better. value of a business. The sway factor that received the best score by far First-rate value-oriented procurement management was “Performance Management”. The top 25 per- involves far more than the procurement of goods cent of the companies in all the industry clusters and services at the lowest possible prices. The na- included in the sample measure and report on their ture of the working partnership between suppliers purchasing performance every month on a regular and internal requisitioners is of prime importance: basis. not just in terms of supply guarantees but also with regard to innovation and product development. Another finding of the study: the internal versus Here, the early inclusion of procurement has today the external perception of procurement diverge become the state of the art. Ultimately, all activities markedly. This reflects the all-too-natural tendency need to be seen in the context of an overriding pro- for people to give their own area of responsibility curement strategy which in turn is derived from the a higher rating (internal perception) than the rating company‘s strategy. given by someone who is further removed (external perception). Accordingly, board members and ma- “How value-oriented is your procurement?” is the naging directors consider purchasing less “mature” question which top managers from 111 companies than procurement managers do their area. Only on have answered based on eleven core statements. the question of development potential do the deci- In this study, the ConMoto Consulting Group has sion-makers more or less share the same opinion: summarized the findings as well as future fields of they all believe that there is still much to be done. action and the success factors which lead to value- oriented procurement. This leaves us with the question of what needs to occur for such potential to be tapped as swiftly Across all companies and industry clusters, the ove- and sustainably as possible. The study was able to rall grade awarded was a “C”, although the indivi- confirm the formula for success applied by procure- dual grades awarded diverged significantly. Topping ment innovators as a kind of “value-oriented DNA”. the list is the automotive industry, with the “wooden The twelve core building blocks which guarantee spoon” going to the construction industry. Some companies operative excellence in procurement companies lag far behind and still have a great deal have been extracted from the year-long project and of groundwork ahead of them, whilst others have management experience of ConMoto‘s procure- already adopted a highly professional approach. ment experts. In addition to these building blocks, However, even in these companies, there is still sig- e.g. “Decision Efficiency” or “Human Resource Ma- nificant room for improvement in various areas, i.e. nagement”, the study also highlights a selection of they can still considerably increase their results and implementation examples. liquidity. It can be said that the value-added potential of As important as supply management may be, it was procurement has a long way to go before it is fully rated poorly by the managers that were surveyed, realized. More than ever, a first-rate value-oriented finishing bottom of the table, even behind the sway procurement management system holds the key to factors “Intensifying Competition” and “Risk Ma- a company‘s success. 4
  • 5. ConMotoStudy ConMoto Maturity Model for Value-oriented Procurement In order to better categorize the current situation rate the status quo as regards levels of procurement that prevails in the companies that were surveyed, maturity. Example: if, across all nine core sway fac- ConMoto has developed a maturity model for value- tors, the average grade of a company is 3.8, it will oriented procurement. be classified as a Level III “Active” company in the maturity model. The individual development stages The classifications are shown in figure 16 and illust- found in the model are listed as bullet points below. Bringing up the Rear Midtable Leading Group Level VI Level V Level IV Innovative Level III Value Networked Performer Level II I Provider Level I Active Mover and Reactive Shaker Disorganized 6.0 - 5.5 5.5 - 4.5 4.5 - 3.5 3.5 - 2.5 2.5 - 1.5 1.5 - 1.0 Level of Procurement Maturity Worst Case First-rate Value-oriented Procurement © ConMoto Consulting Group GmbH Level I „Disorganized“ • Procurements are made by the requisitioner and are disorganized • The procurement processes are not clearly defined Level II „Reactive“ • Reactive procurement; order handling takes centre stage • Sourcing decisions are pre-empted by the requisitioner • Insufficient market research is conducted Level III „Active“ • Proactive procurement with defined procurement structures • Required volumes are not bundled through projects and/or throughout the group • Procurement invites bids for required scope Level IV „Networked Mover and Shaker“ • Procurement department is accepted as an internal partner of equal standing • The requisitioners involve procurement early on and of their own volition • The procurement processes are documented and are part of everyday company life • The required volume is bundled through projects and/or throughout the group • Procurement is the main point of contact for suppliers Level V „Performer“ • Procurement department is a process driver • Professional procurement processes lead to good procurement performance • A systematic, universal, coordinated and hands-on procurement strategy is in place • A decision-making body (sourcing committee) has been established • Sourcing decisions are coordinated internally with the process partners and reached by consensus Level VI „Innovative Value Provider“ • Procurement department is a process shaper • Highest possible decision efficiency in all procurement processes • The procurement strategy is refined on an ongoing basis; procurement is a learning organization • Suppliers are systematically included in the innovation process • As a successful value-added manager, procurement is both an innovator and value driver at the same time Figure 16: ConMoto maturity model for value-oriented procurement 1 8
  • 6. ConMoto Study WWW.CONMOTO.DE CON MOTO Your Contacts ConMoto Consulting Group GmbH, Munich Boschetsrieder Str. 69 Value-oriented Procure-WWW.CONMOTO-CONSULTING.COM D-81379 Munich ment Tel.: +49 (0)89 78066-0 Fax: +49 (0)89 78066-101 Our achievements over the past two years ConMoto Consulting Group • Managed double-digit, multi-billion GmbH, Stuttgart procurement volume Gerokstr. 11 • Over 1.3 billion euros in savings D-70184 Stuttgart Prof. Dr.-Ing. Andreas R. Voegele Tel.: +49 (0)711 76779-0 • Over 3,000 individual measures Managing Director Fax: +49 (0)711 76779-205 implemented Tel.: +49 (0)711 76779-100 • Decision efficiency in procurement Fax: +49 (0)711 76779-101 ConMoto Consulting Group lastingly improved voegele@conmoto.de Ges.m.b.H, Vienna • Lean structures and processes Schottenring 16 created A-1010 Vienna Tel.: +43 (0)1 5850274-0 • Specific employee qualifications Fax: +43 (0)1 5850274-11 Our achievements – ConMoto Consulting Group Your value added GmbH, St. Gallen Notkerstr. 10 CH-9000 St. Gallen Our Company Tel.: +41 (0)71 2440871 For more than 20 years, ConMoto Con- Fax: +41 (0)71 2431881 sulting Group, which, since 2011, has Jörg Blecker also included Agamus Consult, has Senior Partner ConMoto Consulting Group been supporting companies to secure Tel.: +49 (0)89 78066-153 and improve their competitiveness and Fax: +49 (0)89 78066-101 GmbH, Shanghai sustainability. Around 80 consultants, blecker@conmoto.de Unit 1606, Time Square distributed across our offices in Mu- 93 Huai Hai Zhong Rd. nich, Stuttgart, Vienna, Bratislava, St. Gallen and Shanghai, work competent- CHN-200021 Shanghai ly and with commitment to realize the Tel.: +86 (0)21 614152-75 best possible benefits for our clients. Fax: +86 (0)21 614152-76 We create advantage! This is the guiding approach of our Agamus Consult s.r.o., consultancy. Bratislava Our consultants with managerial ex- ´ Na vršku 8 perience and entrepreneurial thinking SK-811 01 Bratislava realize sustainable enhancements in Tel.: +421 (0)2 54413304 value for our customers. Using innova- Fax: +421 (0)2 54410635 tive methods and working hand in hand Thomas Fortmeier with you, we systematically implement Partner strategies and change structures and E-mail: info@conmoto.de processes effectively for the success Tel.: +49 (0)711 76779-233 Fax: +49 (0)711 76779-205 Web: www.conmoto.de of your company. fortmeier@conmoto.de www.conmoto-consulting.com

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