Brief presentation on IDP - taking Procurement to the next level by contributing to innovation. It requires a differentiated approach for the procurement business models

1. Innovation Driven Procurement
How to organize Procurement for a strong contribution to innovation
22 February 2011

2. The maturity shift away from the ‘comfortable’ managing phase towards
leading the value chain is a big change in the procurement business model
Recognizing Understanding Managing Mastering Leading
Price Spend Performance TCO Value
• Objectives and plans • Procurement strategy
• Strategy co-developed • Integrated strategy for
Procurement • Non-existing
limited to departmental aligned with overall
with internal customers the E2E value chain
Strategy actions business strategy
• Internal integration • External integration
• Savings realization • Functional optimization
• Manage internal & • Align internal &
• Sourcing • Analyzing spend external compliance external parties • Network, connect and
Core Activities manage value
• Negotiating • Managing P2P process • Cross functional • Cross-functional extraction
collaboration integration
Radical change in maturity
 Procurement is embedded as opposed to added on top of business functions
 More focus on value drivers, less focus on procedures and compliance
 More pro-active management of projects, less re-active management of spend categories
 More collaboration, less organizational and functional boundaries
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3. Early involvement will enable Procurement to add value when the potential
impact is greatest
Procurement involvement in innovation Traditional Involvement
• Product Development (R&D, marketing, etc.) tends
Cost reduction to involve suppliers early on
opportunities
• Procurement is involved once specifications are
(nearly) fixed and the potential impact on costs is
limited to negotiation gains
Innovation Driven Traditional • Late involvement of Procurement may speed up
Procurement Procurement initial design phases, but will require additional effort
Involvement Involvement in later stages and it may cause conflicts
Innovation Driven Involvement
• Innovation teams including early Procurement
Supplier Involvement
involvement are critical to leverage supply market
capabilities from the start
• A shared value proposition for the external client will
Life cycle allow Procurement to focus on the right targets
value
determined • Supplier involvement is based on the full life cycle
and is a based on a strategy balancing R&D and
Concept stage Project stage Prototype stage Revision stage Product stage
Procurement interests
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4. Earlier Procurement involvement in Innovation requires a higher level of
maturity
Required actions in innovation processes Required Procurement maturity
 Idea and concept stages
• Merging with R&D/Marketing Cost reduction
opportunities
• Managing a network of potential partners
• Scouting innovation
 Prototype and revision stages
• Managing co-development with strategic
partners Increase in required Procurement maturity
• Managing supplier involvement
• Defining supplier strategy
 Product stage
• Managing incremental improvement
• Managing supplier performance Value
determination
• Ensuring security of supply
Idea Concept Prototype Revision Product
stage stage stage stage stage
Procurement needs different business models to support the full spectrum of innovation
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5. Procurement needs a stronger focus on external customer needs and provide
a differentiated modes of service, each with a different business model
Major changes for procurement Different service modes for procurement
OPEN
 Procurement is embedded in innovation teams,
with different types of support based on the
degree of supplier involvement (openness) and Supplier
involvement Full support
the capability of procurement experts support
OPENNESS OF
INNOVATION
 Procurement gains access to insight in external
customer needs through innovation teams
 Procurement targets focus on contribution to Process Development
external customer needs Support Support
CLOSED
LOW CAPABILITY HIGH
Each support mode requires a different business model
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6. We bring innovation and procurement experts together using our rich
knowledge base of IDP business models
Our three step IDP approach
 Assess  Develop  Roll-out
- The fit between the - Future business models - Pilot in high profile
innovation strategy and for different service innovation projects
procurement support modes - Deploy differentiated
- Procurement maturity - Future operating models, service modes in
as-is and to-be including: procurement
- Barriers to collaboration • Team structures - Roll-out operating
• Key activities models
• Target structures
• Required Competences
2-3 weeks 4-8 weeks X weeks
IDP enables procurement functions to generate value: the future of procurement
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7. Robbert den Braber | Capgemini Consulting
Managing Consultant Procurement Transformation
Robbert.den.Braber@Capgemini.com
+31 (0) 6 15 03 09 01
@InnoProc | Innovationdrivenprocurement.blogspot.com
www.capgemini.com/consulting
Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group Copyright © 2009 Capgemini. All rights reserved.