Innovation Driven Procurement Brief


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

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Innovation Driven Procurement Brief

  1. 1. Innovation Driven ProcurementHow to organize Procurement for a strong contribution to innovation22 February 2011
  2. 2. The maturity shift away from the ‘comfortable’ managing phase towardsleading 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 Copyright © 2010 Capgemini. All rights reserved. 2
  3. 3. Early involvement will enable Procurement to add value when the potentialimpact 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 Copyright © 2010 Capgemini. All rights reserved. 3
  4. 4. Earlier Procurement involvement in Innovation requires a higher level ofmaturity 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 Copyright © 2010 Capgemini. All rights reserved. 4
  5. 5. Procurement needs a stronger focus on external customer needs and providea 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 Copyright © 2010 Capgemini. All rights reserved. 5
  6. 6. We bring innovation and procurement experts together using our richknowledge 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 Copyright © 2010 Capgemini. All rights reserved. 6
  7. 7. Robbert den Braber | Capgemini Consulting Managing Consultant Procurement Transformation +31 (0) 6 15 03 09 01 @InnoProc | Consulting is the strategy and transformation consulting brand of Capgemini Group Copyright © 2009 Capgemini. All rights reserved.