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In conversations with the CPO’s: Key Procurement Takeaways Part II

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They say there’s nothing better than hearing it from the horse’s mouth. So we had conversations with CPOs from Europe and discussed their take on the challenges, trends and best practices in procurement.
In the previous blog, I shared four key takeaways from the conversations.

Here are next three of 11 key takeaways from conversations with European procurement leaders:

  • Track Savings Vs Market

Our discussions with CPOs reveal that procurement organizations’ use multiple and sophisticated methods of tracking procurement cost savings. While it was once considered acceptable to measure cost savings based only on results achieved in competitive sourcing events or contract negotiations alone, some 40-60% of procurement groups now also look at realized savings based on transaction values and actual consumption and hard savings based on budget reductions.

  • Invest in Best of Breed Tech and Integration

Most of the CPOs we interviewed have had mixed success in upgrading their procurement technology infrastructures with the largest subset of study participants classifying their current setups as a mix of standalone, legacy ERP or homegrown solutions not considered best of breed. Among companies reporting high spend under management (SUM) and cost savings rates, 42% have invested in integrated suites, while 23% use best-of-breed procurement solution mixes. Integrated suites are most popular with companies reporting the highest

procurement process and contract compliance rates, which is a function of the greater ease with which their integrated systems enable them to measure and report on compliance.

  • Don’t Shy away from Standardization and Change

Nearly across-the-board the number-one strategic entry point for enterprise procurement groups is using spend analysis to identify opportunities for competitive sourcing or re-sourcing of spend categories. High savers were 2X more likely to put early focus and energy into standardization — identifying approved items for purchase, implementing preferred suppliers and so forth. Very high savers are 6X more likely to emphasize standardization before focusing on competitive sourcing/re-sourcing, re-negotiation, supply base rationalization or other procurement strategies.

Stay tuned as in the next blog, last in the series, I’ll share the final four key procurement takeaways as told by the CPOs.



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