In addition to the constant challenges of reducing external spend costs, Procurement organizations are increasingly being held accountable to support innovation, risk management and sustainability

Procurement organizations are being increasingly challenged to provide additional value to their companies. CEOs recognize that a large proportion of their cost structure (up to 2/3 in Consumer Goods) is represented by external spend and continue to look at Procurement for ways to reduce these costs. Moreover, companies are looking to Procurement, not just as a driver for cost reduction, but also as an important source of innovation, supply risk management and sustainability.

However, transforming the Procurement area from one which just carries out transactional activities into a BU that drives competitive advantage and undertakes strategic activities is not simple. Under this new mandate, we see our clients’ procurement organizations under pressure to balance and realize competing needs; from reducing procurement costs and lead times, to improving service level to other business areas, managing risks of disruption and developing innovative and sustainable solutions hand in hand with suppliers. All this whilst carrying out numerous operational tasks which absorb resource, time and effort.

To achieve this transformation to become a ‘best-in-class’ Procurement organization, multiple changes must be realized; bringing together strategy, governance, roles, processes, methodologies (such as Supplier Relationship Management, Strategic Sourcing etc.), technologies and analytical capabilities.

We help our clients develop a best-in-class Procurement model through a pragmatic approach which is sensitive to their context, goals and starting point.

Integration has supported many companies in their journey to becoming best-in-class. Depending on our clients starting point, moment or context, different challenges or ambitions with relation to the Procurement area may occur. We adapt our approach based on their needs in these varied instances, for example:

• When our clients need to lower their costs base, Strategic Sourcing is a powerful tool, which directly impacts the bottom line. We shape this tool to match the specificities of their industry all the way from screening suppliers to the RFP and negotiation process.
• When there is the need to increase suppliers’ service level or to reduce the procure-to-pay process lead time, we support our clients with a complete revision of their procurement processes and systems, comparing against best-practices and benchmarks to identify important efficiency gains.
• In moments of higher uncertainty due to climate, operational or market pressures, companies may face business and operational disruption in their supply chains, supporting the case to revise their procurement strategy, assumptions, policies and reinforce risk management. We help our clients identify their sources of risk and determine where / how they should develop alternative sourcing to make their supply chains more resilient.
• As resource pressures mount and access to natural resources becomes more restricted, organizations must implement sustainability actions along the supply chain following organizational guidelines. Alongside our Sustainability Competence Center, we make sure our clients processes and policies are designed to be responsible, avoiding sourcing from unsustainable suppliers and being in compliance with organizational or statutory sustainability standards.
• During Mergers and Acquisitions there are often triggers to transform the procurement strategy or the sourcing area due to scale gains, more negotiation power, exchanges in best practices and the possibility to capture synergies. We design and implement an optimized procurement strategy considering the changes of the new business and guaranteeing a comprehensive analysis of internal and external benchmarks.
• When procurement needs to play a more strategic role and become a relevant party in business decisions, we help our clients identify the impacts in culture, leadership, technical and non-technical competences to sustain the desired role and create a coherent roadmap for this evolutionary journey.

Our experience acting in different contexts, sectors and countries, enables us to help across these scenarios through bringing both an ‘internal and external vision’.

We can challenge your internal operation through our proprietary methodologies and analytical tools which give you greater visibility of costs of opportunities; and we help you apply the most adequate sourcing strategies and techniques for different categories based on our knowledge of the external market.

• Reduction in total purchasing costs, with a historical average of 7% to 12%. (Savings vary between categories and can be up to 30% in a given category);
• Improvement in internal service levels and reduction of on average 10% to 30% in the lead times of the purchasing processes;
• Visibility of total costs and not just raw material purchasing costs;
• Traceability and visibility of purchasing processes, increasing transparency and compliance;
• Higher resilience in the supplier’s chain through better risk management;
• Improvement in integration between Sourcing and other client areas and interface improvements;
• Promotion of Sourcing to be an enabler for sustainability actions along the supply chain;
• Higher quality of purchased products and hired services through adopting clearer metrics in contracts / SLAs.

Integration’s framework for Procurement Strategy & Transformation considers 7 pillars:

Depending on your need, we may act in some or all of the above pillars. For example, if our client wishes to undergo:

• A complete revision of the sourcing model: here we act in all 7 pillars. This is usually done when the organization wishes to transform the sourcing department to turn it from a more transactional to a more strategic area.
• Strategic sourcing: here our focus is on total cost reduction, and thus our work is linked to the pillars of Strategic Sourcing of categories, Performance Management and, if necessary, Organization. In this case, it is common that we not only support our client  in developing purchasing strategies but also during negotiations and signing contracts.
• Process revision and automation: here the focus is on the pillars of Processes and Policies, improving the department’s internal service levels, gaining efficiency and improving compliance. Often, this is also connected to the pillar of Organization, as more efficient processes and systems may lead to a different organizational structure and sizing.
• New supplier management model: acting in the Supplier Management pillar, we focus on improving relationships with suppliers, increasing resilience and implementing sustainability actions along the supply chain.

Across every project, we aim to leave a positive legacy. For us, this means preparing clients for the future through on-the-job training of the sourcing team throughout the project. This involves training sessions, joint action in defining purchasing strategies, as well as supporting negotiations up until signing – which guarantees the permanence of this knowledge in the company. Secondly, it means building together across the business, through involvement and action alongside the main stakeholders, from top management and from the client areas, ensuring the integration and implementation of joint actions.