Matthew Merker, Senior Analyst, Management Consulting Research with ALM Consulting Intelligence caught up with David Schannon, Partner, Bain & Company to discuss the firm's Procurement Consulting Practice, including trends in the market, the impact of digitization and the next evolution of procurement consulting.
ALM Intelligence: Tell us about Bain & Co.'s Procurement Practice?
Schannon: At Bain & Company, we believe that a company's external spend can be one of the greatest sources of value that is often not managed to full potential. Bain's procurement practice addresses this by helping companies transform their procurement functions to be more strategically focused, accelerating the procurement organization up the maturity curve and driving a step-change in value to the bottom line. We typically engage with CPOs, CFOs, and business unit leaders on transformational savings programs focused on improving spend holistically, using both "Buy Better" (price negotiation, supplier selection) and "Spend Better" (demand management, specification optimization, total system cost reduction) levers. We bring procurement together with finance and decision makers in the business to both optimize spend and ensure savings is tracked into budgets and in the P&L. We heavily emphasize capability building, setting our clients up to continue generating value over time, long after we are gone.
ALM Intelligence: What are the major trends that you are seeing?
Schannon: One major trend is an increasing interest and emphasis on Digital Procurement. The use cases and benefits are becoming clearer, and executives are expected to be operating in a digital world. Meanwhile, according to Bain's research, 80 percent of procurement executives believe they are not engaging enough with new digital solutions. This universe of technology solutions and tools is exploding and procurement teams are often struggling to navigate this landscape and craft a coherent plan. Another trend we are seeing is around agility. As businesses, supply chains, and the broader macro-economic and geo-political landscapes are changing more rapidly than ever before, procurement executives are recognizing the need to be more agile and have the ability to change course on a moment's notice.
ALM Intelligence: How is Bain adapt-ing to these trends?
Schannon: On the digital front, we are increasingly supporting clients on the topic of Digital Procurement, in two ways. First, we are helping clients create a digital strategy and roadmap for how to use digital technologies to improve the effectiveness and efficiency of the procurement function. Second, we are helping elevate our clients' procurement teams' role in supporting the broader businesses' digital vision. With their knowledge of supply markets and access to innovative suppliers, strategically oriented procurement teams can play a significant role in helping their companies accelerate innovation. On the agility front, we are helping clients shift their resources from focusing mainly on reactive, operational work to more strategic, proactive work such as category management. This allows procurement teams to be more agile, as they are spending more time anticipating risks and disruptions, and setting their supply base up to be able to adapt if changes are required.
ALM Intelligence: How do you keep the human element in procurement?
Schannon: The digitization of procurement processes will be a huge unlock for companies who have struggled to move up the maturity curve. Most procurement organizations are resource constrained, and have to focus too much of their resources' time on operational procurement, leaving less resource available for strategic procurement activity.
ALM Intelligence: What's the next evolution in procurement consulting?
Schannon: Most firms that do procurement consulting have a heavy focus on optimizing within the confines of the world of procurement. As procurement organizations are increasingly getting the basics right within their silo of control, consulting firms will need to demonstrate an ability to drive cross-functional value—understanding the broader business context and establishing procurement as a true influential business partner— in order to stay relevant to their clients.What are the major trends that you are seeing?
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