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Procurement 4.0 requires operational excellence

Cross-industry CAMELOT study on the future of procurement

Mannheim, February 14th, 2017 – Businesses still have trouble with implementing Procurement 4.0, which puts procurement in a strategic, value-adding role. With a constant flow of new trends and paradigm shifts like Industry 4.0, digitalization and blockchain technology, many businesses seem to be losing sight of what’s important in the here and now. For instance, when businesses implement Procurement 4.0, they often do the second step before the first – which is providing sustainable operational excellence as the foundation for value-adding procurement. These are the results of the cross-industry study “How to Achieve Procurement Excellence” by the consulting specialist CAMELOT Management Consultants in cooperation with the University of Cologne.

“Innovation and new trends are key driving forces for future business success. However, businesses have to be careful to avoid losing focus and becoming fragmented,” says Dr. Josef Packowski, Managing Partner at CAMELOT Management Consultants. A wide range of businesses in a variety of industries were surveyed for the study, from large corporations to mid-sized companies.

The following result stands out from the rest: All of the surveyed businesses agree that procurement – at an average material cost share of at least 55% – must take on a much more strategic role than it has in the past. “The study also clearly shows that the surveyed businesses agree on the key points for the future of value-adding procurement; however, implementation of these points often lags behind their attributed level of importance,” says study author Alexander Frisch, Head of Sourcing at CAMELOT Management Consultants. For instance, many businesses see transparent, reliable master data and company-wide spend cubes as key factors.” The study shows, however, that many businesses are still lagging in implementing these measures.

In regards to other performance parameters, study participants demonstrated a high level of concern with cost optimization. In comparison to best-in-class companies, however, most survey participants did not see the full importance of innovation management as a tool for looking beyond material costs to institute future-oriented cost optimization in procurement. As a further performance driver, the study identified the need to develop the skills of procurement personnel. This includes both recruitment measures and the implementation of internal and external trainings to increase employees’ skill levels.

Success factors for supplier management: Kaizen teams with suppliers and integrated planning

In the analysis of supplier management, the most important factors for success were shown to be strategic partnerships, cross-company ‘kaizen’ or tandem teams, and integrated planning with the suppliers. Even though the progressive method of kaizen teams (6.1 points on a 7-point scale) is rated as more important than integrated planning (5.8 points on a 7-point scale), the latter is currently more broadly implemented than the teams, despite the fact kaizen teams are an ideal platform and a prerequisite for further optimization.

Guideline: Six steps to high-performance procurement

For businesses that want to optimize their procurement, the study offers a concrete six-point plan based on the results. You can order the complete study free of charge at www.camelot-mc.com.


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