Procurement 20/20 Supply Entrepreneurship in a Changing World

Since the publication of Peter Kraljic's noted article, "Purchasing Must Become Supply Management," the procurement function has come a long way. Companies are discovering procurement as a productivity driver, managers are building careers in procurement, academics are devoting research efforts and publications to the topic, and conferences are spreading learning from global developments. Today, with external spend at 85 percent of the total cost base of the average Fortune 500 company, CPOs and their organizations are more important than ever. For years, the environment for procurement was predictable: prices continually rose, the world developed new sourcing markets in the Far East, cross-functional work within companies was initiated, economies of scale were achieved. That characterization is no longer accurate; it describes procurement of the past. In Procurement 20/20, the authors start at the discontinuities of the past ten years and take a look into the future. With research results from McKinsey's Global Institute, they identify the new environment in which procurement will have to operate. The world will be global in both sales and supply, companies will increasingly leverage functional specialists in their end-to-end value chain, big data and the global grid will reshape the way we create insights, volatility and scarcity will require agile operations, and governments and consumers will drive CPOs to buy differently through legislation and new spending behavior. This new environment poses both a challenge and an opportunity for CEOs and their CPOs. They can defend the status quo or proactively seek strategies for this future. They can create global organizations, develop powerful supply networks, utilize the power of data-driven insights, master volatility, and participate in environmental, social, and regulatory changes. They can be ahead of the curve¿by becoming supply entrepreneurs. In this book, CEOs and CPOs will find compelling arguments for the changes to come, as well as sustainable strategies for conquering the challenges and turning them into opportunities. The journey starts with best practices today and extends to strategies for the future and ways to implement them. Procurement 20/20 is a corporate officer's handbook for the coming decade.