Procurement Outsourcing Future trends
§ Currently, procurement organizations are facing complexities
globally, which is pushing the companies to try for many new fronts in terms
of:
o
Shareholder returns
o
Sustainability
o
Compliance to industry
regulation
o
Quality performance
o
Reduction in cost
§ An
important step conducted by several companies are:
o
Educating stakeholders on the
benefits of procurement involvement.
o
increased cost savings
o
Reduced Supply risk
o
Improved market intelligence
o
Financial
savings
Value proposition of Procurement, shows the
transformation of Procurement outsourcing industry form present to the future.
§ The shift in the present model of procurement outsourcing, aims to
create a more efficient and high-powered organization.
§ Organizations achieve these objectives by changing in the internal
processes such as consulting services, new technology and outsourcing.
Some of the characteristics of procurement
transformation model are:
§ Shift from cost-only to cost + value model.
§ It has a broad agenda, different from incremental improvement.
§ Involves collaborative efforts to target performance based results.
§ Duration of complete transformation is long and so, the benefits are
not realized instantly.
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Traditional
Procurement
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Future of Procurement
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Speed-to-market end product
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Operational excellence
Supplier innovation
Brand recognition and top-line growth
Market Intelligence
Risk management
Integrated view
|
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Timely delivery of goods and services
Supplier management
B2B enabler for internal requirements
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Standardized end-to-end process scope
Access to better expertise
Access to best-in-class technology
Demand management
Compliance
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Securing optimal price points
Operating cost reduction
Identifying savings opportunities
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TCO reduction
Enhanced spend visibility
Harmonization between realized and contracted savings
Additional bottom line savings by managing tail-end spend
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The roles and
responsibility of procurement vary due to several internal and external forces.
§ Scale of operations – Larger the scale of operations, greater is the
expanse of procurement’s effect.
§ Industry – Industry which an expertise caters to, will impact the
nature and goal of its procurement.
§ Geographic considerations – Regulations and business environment
vary across nations, which will affect the functioning of procurement.
§ Organizational
Structure – Which organizational structure to follow centralized, decentralized
or a hybrid structure.
PO
service provider overview
§ The global procurement outsourcing market is growing at YOY growth
of 12% reaching US$ 2.20 billion in active annual contract value in 2014.
§ More than 50% of the market share is dominated by major players like
Accenture and IBM and other players like GEP, Infosys and Xchanging are
competing with the major players increasing their share to around 20% in 2014.
§ Service providers have been following the trends in various sectors,
which allows the market to continue at a YOY growth rate of around 10-12%.
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§ The main region of contribution will be North America and EMEA,
which will continue to be the major contributor of PO industry (approx. 75%).
The Procurement Journey
Technology and
process innovations have helped procurement increase its value within the
organization. 
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Trends evolving in the procurement
outsourcing industry, which accounts for its growth are:
§ Globalization of world economy
§ Demographics
§ Changing consumer demand
§ Natural resources and environmental pressures
§ Regulation and activism
§ Technology
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