Driving Value Through the Procurement Process

APQC released the results of its latest study, Supplier Category Management: Driving Value Through the Procurement Process.

Audit, tax, and advisory services provider KPMG LLP served as the research champion and provided subject matter expertise for the project.

Over the last decade, procurement has been successful in building structured processes, generating cost savings, and expanding visibility into overall spend. APQC’s 97-page report, available at http://www.apqc.org, identifies 14 key category management best practices grouped in four areas that are necessary for procurement to become a true partner and sustainable value driver for business. The four focus areas of the report include:
• strategic implications,
• resource commitment and talent management,
• category-specific processes and tools, and
• extending supplier relationships.

Notable findings revolve around identifying supply chain risk, both at the category or market level and within key suppliers, as well as talent management concerns that procurement organizations must address. These best practices include the following:
• Implement category risk management to monitor external market risks at the market or category level.
• Conduct supplier risk assessments as part of the strategic sourcing process and on an ongoing basis.
• Provide opportunities for career progression and skills acquisition through clearly articulated and differentiated requirements across the procurement organization.

The report also features in-depth case studies from three organizations with proven success in category management—ATMI, FMC Technologies, Inc., and Merck. These organizations demonstrate meaningful alignment between procurement and the overall business structure, with each procurement function earning its “seat at the table” as a true partner in both driving business planning and contributing to organizational results.

“The rate of change required of the procurement function to keep pace with business demands continues to accelerate. Our research study provides compelling insights about how organizations are transforming procurement into a function that is truly aligned with, and contributing to, bottom-line business value,” said APQC project manager Erin L. Williams, Ph.D.

“While the procurement technology market has exploded with offerings over the past decade and most mature procurement organizations have built solid processes and enabling technology, human capital has actually become a scarce and valued resource,” said Patti Muldowney, director, business effectiveness, KPMG. “This study illustrates what procurement organizations can do to invest in the talent necessary to develop the strategic perspectives, business skills, and breadth of knowledge to be able to take that next step to becoming a true business partner.”

Added Rick Eklund, director, supply chain at ATMI, “The diversity of the companies participating in APQC’s category management study has been immensely valuable. You would think the different industries would be totally different, but we all fight the same battles and need to do the same things.”

An executive summary and the full best practices report are available for download at apqc.org.

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