Procurement’s impact on performance goes well beyond savings. Done right—with efficient operating models empowered by digital analytics and smart tools—it can drive innovation, quality, sustainability, and speed; reduce your risk position; and facilitate resilient supply chains.
With more than 930 procurement projects completed across industries and geographies over the past five years, BCG’s procurement consulting experts know how best to help teams chart a course to buying differently—and better. They blend deep sector-specific knowledge with expertise in procurement best practices—both traditional and new—as well as digital transformation.
Building relationships remains important to sourcing and procurement, but personal experience must be balanced with a rules-based process that uses digitization to speed outcomes and reduce costs. To implement an effective digital procurement strategy—and take full advantage of the opportunities that digital offers—BCG helps sourcing and procurement leaders define the core value that their function brings to the organization.
To identify the investments needed to create value—through increased savings, quality, speed, innovation, sustainability, and risk mitigation—we examine your organization’s strategic priorities and assess its digital maturity.
Using our extensive library of client use cases to speed our work—and tapping into the complementary capabilities of Inverto, a BCG specialty business that focuses on procurement and supply chain management—we then select and run use cases that match your specific needs. The results help pinpoint technology interdependencies and anticipated pain points, which in turn helps shape your custom digital roadmap. To turn that roadmap into reality, we work with BCG GAMMA to select the right digital solutions and BCG Platinion to guide broader deployment.
Procurement’s role in driving a company’s overall performance took on greater urgency in the wake of COVID-19. The pandemic exposed structural flaws in supply chains, making resilience a top priority—even if it leads to extra costs.
Our AI Supplier Risk Monitor tool gives us the end-to-end supply chain visibility needed to proactively identify risks and devise solutions, such as adding backup capacity for production and distribution or re-optimizing inventory. This visibility also clarifies options for diversifying your manufacturing and supply networks; one common solution is to create regional manufacturing and sourcing footprints that are located closer to end markets.
By Wolfgang Schnellbächer and Daniel Weise
To realize all the benefits of digital procurement—especially those most valuable in the postpandemic world—companies need a revolutionary approach.
To deliver value through savings, CPOs in all industries need to cut procurement expenditure substantially and quickly, but the conventional approach of focusing on reductions in category spending is too slow and often insufficient to generate competitive advantage. A more effective approach leverages both supplier relationships and technology and is tailored to each of the following major vendor segments:
Suppliers must comply with comprehensive legislation and directives involving the environment, society, and economics. But meeting requirements isn’t enough. Leading companies across industries are already pushing beyond mere compliance and working to implement net-zero supply chains.
To deliver value through sustainability, BCG’s procurement consulting team supports companies in:
Change management is critical to ensuring that procurement becomes a source of competitive advantage. It is integral to almost all of our procurement projects. To ensure that results are swift and sustainable, we work side by side with your teams so that they are clear on what digital procurement achieves in savings, sustainability, and competitive advantage. We are here to answer questions, integrate team-specific needs, and overcome pain points.
Managing Director & Partner
Vienna
For a German bank looking to achieve near- and long-term savings in procurement spending, we used commercial and technical levers, yielding an immediate 12% savings. By optimizing the target operating model, we developed 20 additional initiatives in governance, procurement mandate, savings tracking, and other areas.
Our strategy for CO2 reduction at a European automotive OEM emphasized procurement practices, focusing on scope 3 emissions under the Paris Agreement as the basis for new CO2 targets. We then outlined the required measures—including timing and cost—and laid out intermediate and long-term milestones.
We partnered with an international oil and gas company in Asia to create a roadmap for its digital procurement transformation. After completing our digital maturity review, we identified 11 use cases across strategic and operational procurement, prioritized efforts, and produced a detailed schedule for year-one digital implementations.
For a large energy player, we conducted a full procurement optimization program that included the design of a new, center-led operating model. The work covered key processes and a capability-building program for teams, generating savings of 10% of addressable spending.
Savings are waiting to be tapped in many areas. Banks that take an aggressive approach to improving procurement can boost net income by 3% to 4%.
For procurement organizations, today’s uncertainty has made risk mitigation and cost reduction tougher than ever. Learning lessons from the pandemic will be key to survival and sustainable competitive advantage.
Even companies with modest direct-emissions footprints can make a global impact on decarbonization by implementing nine initiatives in their supply chains.
Companies that lead the way in initiating and scaling up a transformation will gain significant advantages in cost and risk management.
