Leading procurement organizations are delivering twice as much cost reduction as typical companies and driving competitive advantage through supplier-driven innovation and risk management. They have continued to advance since 2011 by more closely integrating with business units, expanding their use of leadership practices, and achieving breakthrough financial results. Typical companies have only sustained gains made since 2011 and are missing opportunities to further increase impact.
Strategic Vs Tactical Procurement Shifting Focus Towards Value CreationGregStoller
Applying tactical versus strategic sourcing has huge implications on budgets, resources, value delivery and many other factors; the attached offers some insight in deciding which to apply
Strategic Vs Tactical Procurement Shifting Focus Towards Value CreationGregStoller
Applying tactical versus strategic sourcing has huge implications on budgets, resources, value delivery and many other factors; the attached offers some insight in deciding which to apply
meer dan 50% van de waarde van inkoop wordt bepaald door de mens en organisatie. investeren in ontwikkelen van mensen loont en selecteer op competenties en talent
This lecture slide was prepared for my guest lecture session in Bina Nusantara University's undergraduate program of International Business Management. It discussed the role of procurement function in an organisation, and how the function has been continuously evolved to meet market expectation by engaging business partners, as well as intra-company stakeholders. It shares top tips of how buyer can create value-add to the business from the book “Value-Added Purchasing” written by Eberhard E. Schening, PhD. Enjoy this as a part of your learning journey!
Business Strategic Management PowerPoint Presentation SlidesSlideTeam
This deck consists of total of fourty six slides. It has PPT slides highlighting important topics of Business Strategic Management PowerPoint Presentation Slides. This deck comprises of amazing visuals with thoroughly researched content. Each template is well crafted and designed by our PowerPoint experts. Our designers have included all the necessary PowerPoint layouts in this deck. From icons to graphs, this PPT deck has it all. The best part is that these templates are easily customizable. Just click the DOWNLOAD button shown below. Edit the colour, text, font size, add or delete the content as per the requirement. Download this deck now and engage your audience with this ready made presentation. http://bit.ly/2Sr7JIB
Strategic Sourcing is a print, apparel and promotional products business that takes charge and helps all sized businesses benefit from scale of economy.
Strategic Sourcing’s platform is twofold; first, our aim is to help all sized businesses. With our association with numerous buying groups, affiliations with overseas manufacturers and internal sourcing structure Strategic Sourcing has the ability to accredit fantastic cost savings no matter the size of the purchase. We have the ability to let small and medium sized businesses make purchases of essential procurement and marketing products they were never able to in the past.
Secondly, we have built a better mouse trap for independent sales associates that allows the associate to do what they do best and that is sell. Strategic Sourcing has taken the approach of servicing our sales associates with dedicated customer service representatives that handle all back end operations. Starting with quoting, presentations to invoicing, collections and order follow up. With our SOP, MIS back end system we have the ability to embrace our sales associates with the service they truly need and entertain our customer service representatives with a system that will not bog them down with tedious additional system entrees. Our system is enabled to take a quote and use it as a flow through to the final stage of each job. Additionally, we have enabled a better commission structure that promotes our sales associates to strive for superior results.
With our two fold approach we offer a win win business model.
Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organization is progressing towards the achievement of its strategic goals.
Balances financial and non-financial measures
Balances short and long-term measures
Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
Leads to strategic focus and organizational alignment.
EFFECTS OF SUPPLIER EFFECTIVENESS ON ORGANIZATION PERFORMANCE AT KENYA SEED C...paperpublications3
Abstract:Achieving competitive advantage in this competitive business environment is a challenge many managers face. Most organizations are faced with the delays in product delivery, ability of suppliers to concert their operating environment to create value. The supplier ineffectiveness, which affects organizational performance, which is as a result of reluctance to develop suppliers, build relations, and establish quality management and failure to use strategies which make suppliers a competitive advantage tool is a challenge. Even the process of developing suppliers, selection and retention has not helped either. The study was carried out to establish the effect of supplier effectiveness on organizational performance at Kenya Seed Company, Kitale. The main objectives which guided the research included: to establish the effects of Supplier agility on organizational performance; to investigate the process visibility on organizational performance; to find out the effect of supplier willingness on organizational performance and to determine effect of supplier capabilities on organizational performance. To explore these, a cross sectional study design was used. The target population was 360 from which 190 sample size was deduced for the study. Data was collected using focused group discussions and small groups discussions self-administered questionnaires, interview guides and content analysis to investigate the effect of supplier effectiveness on organizational performance. Findings showed that supplier effectiveness has significant positive and negative effects on performance. It was found that all the four components of supplier effectiveness influence the three dimensions of performance. The study also found out that where supplier effectiveness is high, the performance on organization is also higher, especially in areas that are affected by suppliers even though they may be internal to the buyer organization. It was therefore concluded that supplier effectiveness is an essential strategic tool for performance improvement. Hence organizations need to build relations that enhance supplier effectiveness so that performance of both the suppliers and buyer organizations can realize the benefits of this relationship in the supply chain network.
Supplier relationship management srm research 2013tdolder
Over the last twelve years that we have conducted the Supplier Relationship Management (SRM) Survey, the market for SRM has steadily grown and companies continue today to invest in these critical applications. The growth in this market is a testament to the importance of this survey.
In addition to an overview of the major players in the market, the vendor survey shares the experiences, issues and questions that we see daily as procurement professionals implementing and optimizing SRM. Within the document, our expert colleagues share their views and experiences on SRM, resulting in cutting-edge opinion that offers a unique perspective on different facets of SRM. Major themes include the Seven Strategies for Future Procurement, Procurement and Sustainability, Usability and Demand Management, Supply Chain Finance and Procurement and Innovation.
Furthermore, the reader can find vendor profiles describing the participating vendors in greater detail. The descriptions cover information related to their specialization, the total scope of their offering, their distinguishing characteristics compared to competitors, the types of solutions offered (SaaS/In-house etc.), implementations and markets targeted.
The Importance of Supply Network Development and Firm’s Capabilities in Build...YogeshIJTSRD
This paper discusses the advantages and importance of supply chain network development and firm’s capability to enhance competitive advantage. Supplier network supply network plays an importance role for the company so that they will be able to play a more active role and optimal in the management and operation of the network of suppliers that include product design, production, suppliers, marketing and distribution. In large companies, a strong distribution network is needed, as well as in small and medium scale companies. Companies are required distribution network that is robust in the entire territory of Indonesia. To succeed in this objective, Companies need a distribution strategy, which is an area of marketing strategy aimed primarily at increasing sales and the number of customers to support sustainable growth. Robertus Sigit Haribowo Lukito | Lena Ellitan "The Importance of Supply Network Development and Firm’s Capabilities in Building Business Performance: A Theoretical Review" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-3 , April 2021, URL: https://www.ijtsrd.com/papers/ijtsrd39903.pdf Paper URL: https://www.ijtsrd.com/management/strategic-management/39903/the-importance-of-supply-network-development-and-firm’s-capabilities-in-building-business-performance-a-theoretical-review/robertus-sigit-haribowo-lukito
Magazine Publishers' Transformation: The Time to Act is Now! Value Partners
By Demetrio Di Martino, Partner of the Singapore office, Charles Monteux, Senior Engagement Manager of the São Paulo office and Mark Weston, Business Analyst of the London office. January
meer dan 50% van de waarde van inkoop wordt bepaald door de mens en organisatie. investeren in ontwikkelen van mensen loont en selecteer op competenties en talent
This lecture slide was prepared for my guest lecture session in Bina Nusantara University's undergraduate program of International Business Management. It discussed the role of procurement function in an organisation, and how the function has been continuously evolved to meet market expectation by engaging business partners, as well as intra-company stakeholders. It shares top tips of how buyer can create value-add to the business from the book “Value-Added Purchasing” written by Eberhard E. Schening, PhD. Enjoy this as a part of your learning journey!
Business Strategic Management PowerPoint Presentation SlidesSlideTeam
This deck consists of total of fourty six slides. It has PPT slides highlighting important topics of Business Strategic Management PowerPoint Presentation Slides. This deck comprises of amazing visuals with thoroughly researched content. Each template is well crafted and designed by our PowerPoint experts. Our designers have included all the necessary PowerPoint layouts in this deck. From icons to graphs, this PPT deck has it all. The best part is that these templates are easily customizable. Just click the DOWNLOAD button shown below. Edit the colour, text, font size, add or delete the content as per the requirement. Download this deck now and engage your audience with this ready made presentation. http://bit.ly/2Sr7JIB
Strategic Sourcing is a print, apparel and promotional products business that takes charge and helps all sized businesses benefit from scale of economy.
Strategic Sourcing’s platform is twofold; first, our aim is to help all sized businesses. With our association with numerous buying groups, affiliations with overseas manufacturers and internal sourcing structure Strategic Sourcing has the ability to accredit fantastic cost savings no matter the size of the purchase. We have the ability to let small and medium sized businesses make purchases of essential procurement and marketing products they were never able to in the past.
Secondly, we have built a better mouse trap for independent sales associates that allows the associate to do what they do best and that is sell. Strategic Sourcing has taken the approach of servicing our sales associates with dedicated customer service representatives that handle all back end operations. Starting with quoting, presentations to invoicing, collections and order follow up. With our SOP, MIS back end system we have the ability to embrace our sales associates with the service they truly need and entertain our customer service representatives with a system that will not bog them down with tedious additional system entrees. Our system is enabled to take a quote and use it as a flow through to the final stage of each job. Additionally, we have enabled a better commission structure that promotes our sales associates to strive for superior results.
With our two fold approach we offer a win win business model.
Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organization is progressing towards the achievement of its strategic goals.
Balances financial and non-financial measures
Balances short and long-term measures
Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
Leads to strategic focus and organizational alignment.
EFFECTS OF SUPPLIER EFFECTIVENESS ON ORGANIZATION PERFORMANCE AT KENYA SEED C...paperpublications3
Abstract:Achieving competitive advantage in this competitive business environment is a challenge many managers face. Most organizations are faced with the delays in product delivery, ability of suppliers to concert their operating environment to create value. The supplier ineffectiveness, which affects organizational performance, which is as a result of reluctance to develop suppliers, build relations, and establish quality management and failure to use strategies which make suppliers a competitive advantage tool is a challenge. Even the process of developing suppliers, selection and retention has not helped either. The study was carried out to establish the effect of supplier effectiveness on organizational performance at Kenya Seed Company, Kitale. The main objectives which guided the research included: to establish the effects of Supplier agility on organizational performance; to investigate the process visibility on organizational performance; to find out the effect of supplier willingness on organizational performance and to determine effect of supplier capabilities on organizational performance. To explore these, a cross sectional study design was used. The target population was 360 from which 190 sample size was deduced for the study. Data was collected using focused group discussions and small groups discussions self-administered questionnaires, interview guides and content analysis to investigate the effect of supplier effectiveness on organizational performance. Findings showed that supplier effectiveness has significant positive and negative effects on performance. It was found that all the four components of supplier effectiveness influence the three dimensions of performance. The study also found out that where supplier effectiveness is high, the performance on organization is also higher, especially in areas that are affected by suppliers even though they may be internal to the buyer organization. It was therefore concluded that supplier effectiveness is an essential strategic tool for performance improvement. Hence organizations need to build relations that enhance supplier effectiveness so that performance of both the suppliers and buyer organizations can realize the benefits of this relationship in the supply chain network.
Supplier relationship management srm research 2013tdolder
Over the last twelve years that we have conducted the Supplier Relationship Management (SRM) Survey, the market for SRM has steadily grown and companies continue today to invest in these critical applications. The growth in this market is a testament to the importance of this survey.
In addition to an overview of the major players in the market, the vendor survey shares the experiences, issues and questions that we see daily as procurement professionals implementing and optimizing SRM. Within the document, our expert colleagues share their views and experiences on SRM, resulting in cutting-edge opinion that offers a unique perspective on different facets of SRM. Major themes include the Seven Strategies for Future Procurement, Procurement and Sustainability, Usability and Demand Management, Supply Chain Finance and Procurement and Innovation.
Furthermore, the reader can find vendor profiles describing the participating vendors in greater detail. The descriptions cover information related to their specialization, the total scope of their offering, their distinguishing characteristics compared to competitors, the types of solutions offered (SaaS/In-house etc.), implementations and markets targeted.
The Importance of Supply Network Development and Firm’s Capabilities in Build...YogeshIJTSRD
This paper discusses the advantages and importance of supply chain network development and firm’s capability to enhance competitive advantage. Supplier network supply network plays an importance role for the company so that they will be able to play a more active role and optimal in the management and operation of the network of suppliers that include product design, production, suppliers, marketing and distribution. In large companies, a strong distribution network is needed, as well as in small and medium scale companies. Companies are required distribution network that is robust in the entire territory of Indonesia. To succeed in this objective, Companies need a distribution strategy, which is an area of marketing strategy aimed primarily at increasing sales and the number of customers to support sustainable growth. Robertus Sigit Haribowo Lukito | Lena Ellitan "The Importance of Supply Network Development and Firm’s Capabilities in Building Business Performance: A Theoretical Review" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-3 , April 2021, URL: https://www.ijtsrd.com/papers/ijtsrd39903.pdf Paper URL: https://www.ijtsrd.com/management/strategic-management/39903/the-importance-of-supply-network-development-and-firm’s-capabilities-in-building-business-performance-a-theoretical-review/robertus-sigit-haribowo-lukito
Magazine Publishers' Transformation: The Time to Act is Now! Value Partners
By Demetrio Di Martino, Partner of the Singapore office, Charles Monteux, Senior Engagement Manager of the São Paulo office and Mark Weston, Business Analyst of the London office. January
Infrastructure and new energies from planning to realization_Value PartnersValue Partners
9th Italian Energy Summit: the opening speech of the roundtable devoted to “Infrastructures and new energies: from support plans to projects realization”. By Ruggero Jenna, director of Value Partners and leader of the Singapore office.
The European Commission’s new rule on credit cards will cut 200 million commissions in Italy: will a subscription fee be introduced? With a contribution by Gabor Friedenthal, Dep. Managing Director, and Daniele Pontecorvo, SEM
Il nuovo scenario dei servizi di pagamento post-PSD_Value PartnersValue Partners
A speech by Alessandro de Cristofaro, senior manager of Value Partners, at the 2009 edition of CARTE. The speech is devoted to the new scenario of payments systems after the introduction of Payment Services Directive (PSD).
Even if China's GDP growth slows to 5.5%, personal consumption is projected to increase by about half to $6.5 trillion, by 2020. But growth is only a part of the story: demographic, social, and technological forces will transform China's consumer economy.
These slides present results from The Boston Consulting Group’s 2015 Big Data and Trust Consumer Survey of more than 8,000 consumers in the US and the top five European economies (France, Germany, Italy, Spain, and the UK) and the results of BCG’s 2015 Big Data and Trust Company Survey of the data stewardship practices of 140 companies in eight industries.
HR / Talent Analytics orientation given as a guest lecture at Management Institute for Leadership and Excellence (MILE), Pune. This presentation covers aspects like:
1. Core concepts, terminologies & buzzwords
- Business Intelligence, Analytics
- Big Data, Cloud, SaaS
2. Analytics
- Types, Domains, Tools…
3. HR Analytics
- Why? What is measured?
- How? Predictive possibilities…
4. Case studies
5. HR Analytics org structure & delivery model
Today’s leaders are poorly served by conventional management theories and practices. Instead of helping executives manage the growing complexity of business, the supposed solutions only seem to make things worse. A new book from BCG outlines a better approach to managing complexity. The approach is called smart simplicity, and it hinges on six simple rules.
The Journey to value: Transforming procurement to drive the enterprise agendaFarid Djaouani
The link between procurement performance and enterprise success is widely accepted and well documented; our 2013 CPO study found, for example, that companies with high-performing procurement organizations have higher profit margins than companies with underperforming procurement departments. Indeed, while many CPOs have led companies to dramatic increases in revenue or impressive levels of profitability, few are adequately recognized for these achievements. Those CPOs—the ones we call procurement role models—drive top-line revenue, bring innovation into the company and improve competitive advantage. They contribute to overall enterprise success and, as a result, certainly deserve a seat at the corporate leadership table. To identify procurement operations worthy of such praise, as well as to understand the underpinnings of their success, the IBM Institute for Business Value and Economist Intelligence Unit surveyed 1,023 CPOs from organizations with annual revenue in excess of US$1 billion. We also took a close look at the 100 companies that achieved the most impressive revenue and profit performance relative to their industry peers so that we could understand the strategies and actions that account for their uniquely valuable contributions to the enterprise.
5 transformative strategies to unlock more-procurement_value_ardent partnersBravoSolution
The current generation of procurement professionals has witnessed first-hand a period of unrivaled advances for their profession as market forces and new technologies combined to pull procurement to the center of business operations and business results. While the foundation of procurement's future will be built upon the past, the strategies and approaches that drive new successes will be markedly different. This report looks at the transformative strategies that will unlock procurement's next wave of value.
Effects of Supplier Relationship Management on the Performance of Organizatio...iosrjce
This study was aimed at filling these gaps on how supplier relations management could be used to
enhance the performance of the sugar industry in Kenya. The study was guided by the following research
objectives, to: determine the effect of the organization structure in the performance of an organization,
determine the effect of value measurement on the performance of an organization, determine the effect of
collaboration on the performance of organizations and finally determine the effects of technology in the
performance of an organizations. The study adopted a survey and targeted the management and the
procurement staff of the three selected sugar companies in western Kenya which are Mumias, West Kenya and
Butali Sugar Companies. The study targeted the 25 departmental staff in the three companies’ and inclusive of
the three procurement managers who head the respective procurement departments in the companies. A total of
25 respondents were therefore targeted. The research employed a census study design. The sample size of the
study comprised of 25 respondents. The questionnaires were issued to the procurement staff through their
respective managers.
EFFECTS OF SUPPLIER EFFICIENCY ON PROCUREMENT PERFORMANCE IN KENYA SEED COMPA...paperpublications3
Abstract: Recruitment and keeping qualified suppliers is very important in procurement performance in any organization. However, many factors affect a firm's ability to determine and select the most efficient supplier. This study was undertaken with the main objective to assess the supplier selection and evaluation practices in the Kenya Seed Company. The study was guided by three specific objectives; to establish the criteria used for supplier evaluation in the Company; to find out the challenges of implementing Supplier Evaluation in the Company and to determine the relationship between Supplier Evaluation Criteria and procurement Performance in the Company. It employed a descriptive research design. The target population was 250 employees in the Company. A sample of 154 was selected to give response to the study. The response rate was 100%. Questionnaires were used to collect data which was analyzed using SPSS software version 20. Findings revealed that the Company base their selection on following criteria; quality of the supplier services , financial position of the supplier, flexibility of the supplier, supplier efficiency in service delivery, supplier charges, constitution and the PPOA guidelines, supplier technical capability, supplier profile, experience of the supplier in offering certain services/products as well as compliance with procurement procedures. However, supplier evaluation in these organizations is faced by several challenges including corruption, incompetent procurement officers, inefficiencies in procurement processes, lack of incentives, pressure of implementing PPOA and PPDA guidelines, cost of implementing procurement systems as well as maintaining procurement system greatly affects supplier selection process. The study recommended that the management of the Company need to effectively design the most effective evaluation criteria that would facilitate its procurement performance that ensured only most competent suppliers are selected and competent personnel are in place to manage supply chain processes in the organizations.
Conquering the Supply Chain Effective Frontier - 27 NOV 2017 - ReportLora Cecere
Executive Overview
Over the course of the last decade, retailers made more progress on costs and inventory turns than manufacturers. In the rush for technology adoption, we commonly find companies overstating what is possible because they are not clear on the historical trends, and often mistakenly coached to overcommit by industry consultants to justify technology investments.
In studying supply chain metrics, we find that each industry has a definitive pattern. Few are linear. To set reasonable goals, the definitions need to be very industry specific. That is the goal of this report.
In developing supply chain strategy, one of the first objectives is defining what is possible. This involves delineating the metrics, establishing reasonable targets, and rates of improvement. In the review of strategy documents for clients, we find that most companies are not clear on any of these critical sets of assumptions. This report is designed to help. We start with the definition of metrics and then share industry progress for the period of 2006-2016. This report ends with recommendations and conclusions.
• Report Details: This report is based on the analysis of orbit chart charts showing year-over-year supply chain performance at the intersection of operating margin and inventory turns for twenty industries for the period of 2006-2016. The goal is to help supply chain leaders to understand what is possible.
• Objective: As supply chain leaders attempt to define supply chain excellence, they need guidance on industry supply chain performance and overall trends for benchmarking. The goal is to help supply chain leaders make better decisions.
• Hypothesis: Each industry is unique and a good supply chain has different characteristics based upon the specific industry it is in, the product it creates and the customers it serves. Our aim is to help supply chain leaders understand relative industry performance. As shown in this report, each individual industry is charting a unique path on supply chain performance.
Disruptive Innovationen in der FinanzwirtschaftSemalytix
The Largest Independent Payment Infrastructure
- Germany is still extremely cash-driven
- Especially Low-Income Population Extensively Uses Cash
- Germany’s Largest Independent Payment
Infrastructure
- Strong Partner Network Allows for a Rollout of Services
across Europe
von Prof. Dr. Hans-Gert Penzel, ibi research an der Universität Regensburg GmbH
Verändertes Zahlverhalten wird stark im Einzelhandel geprägt
Innovationszyklen im Zahlungsverkehr seit dem Jahr 2000
SEPA als Regulator-getriebener Standard - wird vom Endkunden eher als Bedrohung empfunden
E-Commerce explodiert – und verlangt nach E-Payments
Bei Zahlungen im E-Commerce dominieren die „neuen Oligarchen“
Marktführer PayPal
Retail in africa still the next big thingSemalytix
The African Retail Development Index (ARDI) ranks the top countries in Sub-Saharan Africa for retail expansion. Based on A.T. Kearney's Global Retail Development Index, the ARDI identifies not only the most attractive markets today, but also those that offer the most potential in the future. The 2015 ARDI ranks the leading 15 nations and reconfirms the region’s potential arising from not just oft-discussed markets like Nigeria and Ghana, but also small, dynamic markets such as Gabon and mid-sized but fast-growing countries like Angola.
Bip connected risks investing in a divergent worldSemalytix
A.T. Kearney issued its first Foreign Direct Investment (FDI) Confidence Index® in June 1998, in the shadow of the 1997 Asian financial crisis. Despite jitters following economic collapse in Southeast Asia, businesses saw investment opportunity in the Americas, Western Europe, Russia, and East Asia, and the United States took first place. Here we are in 2015, with the United States first place in the Index again and business executives still tormented by a recent global financial crisis. Today’s investors must account for divergent monetary policies in large developed economies, alongside a surging U.S. dollar and a sustained commodity super-slump. Developed and developing markets alike are moving in unexpected ways.
Yet, amid growing divergence and multiplying risks, there is genuine excitement in the global business community. It starts with the growing belief that the combined strength of the U.S. and Chinese economies—first and second in this year’s FDI Confidence Index—can buoy the world economy while others get back on track. And there is genuine dynamism elsewhere if you know where to look. Numerous countries are opening up long-guarded sectors to privatization and foreign investment. Downturns and fluctuations in other countries are creating opportunities for mergers and acquisitions. And new free-trade agreements are already in place or close at hand, even if the U.S. political environment will continue to frustrate its reliable engagement.
Risk has been a constant since the inception of this Index. The challenge for all global business leaders remains how to think beyond the last crisis while seeking to avoid the next. Those that take a “wait and see” approach often find that their competitors—whether small businesses or country governments—do not hold back in seeking positive growth. Our view is that opportunities abound for those that know where to look, aided by strategic foresight and analysis.
The world is more complicated now than it was in 1997. Global interconnectedness has created a more competitive and complex landscape. Technologies, ranging from unconventional energy extraction to predictive and even prescriptive analytics, are changing the game and increasing the probability of strategic disruption in every sector and corner of the world.
The complexity of risk and opportunity in 2015 underscore the importance of the insights contained in this year’s FDI Confidence Index. As always, we welcome any input you may have regarding the Index, its scope and our analysis.
Nach einem eher verhaltenen Jahr 2013 nahmen 2014 M&A-Transaktionen in der Öl- und Gasindustrie deutlich zu. Angesichts des weiter sinkenden Ölpreises und der Entscheidung der OPEC gegen eine Drosselung der Fördermengen werden 2015 noch intensivere M&A-Aktivitäten in der gesamten Wertschöpfungskette stattfinden. Diese strategischen Deals sind für die Unternehmen wichtig, um Wertzuwächse zu erzielen, sich für kommende Marktturbulenzen zu rüsten und die Wettbewerbslandschaft zu ihren Gunsten zu formen.
Over-the-Top Video (OTTv) in the Middle East: How to Win the MarketSemalytix
With growing demand among Middle East viewers for online video content, new players cast in the Netflix mold are competing with traditional TV companies for a market potentially worth $1 billion by 2020. Around the world, over-the-top video (OTTv) is becoming more mainstream.1 These services as a share of total television viewing have doubled globally over the past 12 months and exceed 30 percent in some developed economies. In the United States, 75 million households have an active OTTv subscription, compared to 32 million just four years ago. Fueling this trend is the emergence of an abundance of user-friendly OTTv services, coupled with the increasing quantity and quality of content available online. Netflix launched its streaming service in 2007. As of April 2014, it was being used by 50 million people in 41 countries. Hulu, the OTTv service from NBC Universal, Disney, and Fox, now has six million paying U.S. subscribers. More pay TV operators are offering multiscreen packages to their subscribers and online-only packages to nonsubscribers in a bid to compete head-on with Netflix and similar services. In the Middle East, OTTv is still nascent by global standards. Fewer than 100,000 homes subscribe to dedicated commercial OTTv services—less than 1 percent of television-viewing households.2 Yet despite the low penetration, interest is strong—as suggested by the popularity of online short video services such as YouTube—and a flurry of new services has emerged (see figure 1). Etisalat introduced its eLife TV app on iOS in 2013, just one year after MBC's Shahid TV app became the top downloaded app in the Middle East App Store. Istikana and icflix, which follow a Netflix model, launched the region's first major standalone OTTv services in 2011 and 2013 respectively. OSN recently followed by announcing the launch of Go by OSN for non-pay TV subscribers. In 2014, beIN SPORTS relaunched its OTT service and began selling multiscreen subscriptions, and MBC partnered with Samsung to launch Shahid on smart TVs. - See more at: http://www.atkearney.com/paper/-/asset_publisher/dVxv4Hz2h8bS/content/over-the-top-video-ottv-in-the-middle-east-how-to-win-the-market/10192?#sthash.6QbS8wM6.dpuf
Going Digital: The Banking Transformation Road MapSemalytix
The leaders in digital banking are more client-centric, tech-savvy, and inclusive—and are fundamentally changing to deliver the best results.
Most banks today want to become digital banking leaders—after all, that's where the customers are. And for much of the past decade as digital banking has taken hold, most leading traditional banks have incorporated strong digital strategies.
So what separates the digital banking leaders from the laggards? A new A.T. Kearney study on digitization, in conjunction with Efma, seeks the answer and finds three main findings: the leaders understand the importance of mobile in a digital strategy, they are developing more agile operating models, and, most notably, they have tackled the need for internal culture shifts (see sidebar: About the Study).
With top-down implementation, these leaders have set their paths toward becoming more client-centric, more tech-savvy, and more inclusive. As the market evolves even more rapidly through the end of the decade, all banks will have to adapt to a disruptive model in people and IT—the two engines of retail banking—and must fundamentally adapt to deliver the best results.
This paper looks at the trends and the path forward.
The Evolving Digital Journey
Most banks began their digital journey years ago and have clear digital strategies, yet even those are facing major changes. In particular, as more customers use their mobile phones and tablets to do their banking, and omnichannel takes hold in financial services, the mobile experience is becoming a crucial aspect of digital strategy that banks must address.
Secondly, to keep up in this fast-changing market, traditional banks will have to adapt their operating models. In particular, changes in IT, new products and services development, and changing expectations for time-to-market will be key factors going forward.
Perhaps the most important step, however, is that banking in the digital age requires a drastic, profound reset of how banking staff reacts to customer needs. This means thinking customer first, rather than by channel; as one panelist puts it, "Banks think in channels, but customers don't." It means being conscious that small digital players can gain market share faster and in a manner that is more disruptive to traditional banks' models. It means understanding that organizational silos pose significant obstacles to creating new solutions for customers. Most importantly, it means looking inward, changing organizational beliefs and habits to facilitate clients and drive digital innovation.
A new spirit of banking—led by top executives—will lead the way to addressing market changes, becoming more agile, and improving openness in day-to-day business.
- See more at: http://www.atkearney.com/latest-article/-/asset_publisher/lON5IOfbQl6C/content/going-digital-the-banking-transformation-road-map/10192?_101_INSTANCE_lON5IOfbQl6C_redirect=#sthash.oKsJGij3.dpuf
Nutraceuticals: The Front Line of the Battle for Consumer HealthSemalytix
Nutrition products can be an inexpensive and safe solution to tackle important unmet health needs.
Consumer healthcare has become the battleground where pharmaceutical and consumer goods firms compete for growth. With more people around the world dying from obesity than starvation, poor nutrition is now recognized as a major risk factor for chronic diseases. Most health systems are ill-equipped to deal with this trend.1 Increasingly, patients are being encouraged to take part in their own treatments, and a consumer market has been developing midway between the supermarket-based world of consumer goods companies and the scientific, pharmacy-based world of pharmaceutical firms.2
The front lines of this battle are nutritional products that have been proven to help prevent or cure disease. These "nutraceuticals" present a tantalizing opportunity for breakthroughs to prevent and manage common health problems, offering consumer-focused solutions to issues that are currently addressed only by pharmaceutical interventions—or not at all.3 However, despite being a hot spot for growth, they still suffer from the same challenges as the rest of the sector, with market growth barely keeping up with the rise in gross domestic product.4
In this paper, the third in our Winning the Battle for Consumer Healthcare series, we delve further into the nutraceuticals market to understand the opportunities and barriers to growth. We also look at the successes and challenges faced by both consumer goods and pharmaceutical companies as they struggle to gain the upper hand in this exciting new market.
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1. 1Procurement-Powered Business Performance
Assessment of Excellence
in Procurement Study, 2014
Procurement-Powered
Business Performance
Leaders use procurement to catalyze lasting, superior
business performance through excellence in managing
categories, suppliers, and teams.
2. Over the past 20 years, businesses have come to expect increasing value from
procurement. Our recently completed global Assessment of Excellence in
Procurement Study finds that:
• Leading companies get twice as much measurable cost reduction as typical
companies, while capitalizing on their supply base for competitive advantage
through supplier-driven innovation, risk management, and
other means.
• Since 2011, progress in the typical company has leveled off, leaving executives
to ask: “What’s next for procurement?”
• Leaders use procurement as a catalyst to drive durable superior business
performance through excellence in managing categories, suppliers, and teams.
3. 1Procurement-Powered Business Performance
About the Study
A.T. Kearney’s 2014 Assessment
of Excellence in Procurement
study is the eighth in the series
since 1992. The objective of this
latest study is threefold:
• Evaluate how procurement has
progressed since 2011
• Determine how ready
procurement is for the future
• Identify lessons learned from
leading procurement
organizations
The study includes input from
procurement and supply chain
executives at more than 185
companies in the manufacturing
(33 percent), process industries
(41 percent), and services (26
percent) sectors, with average
annual revenues of approximately
$15 billion. Participants are from
all regions of the world: 43
percent from Europe, the Middle
East, and Africa, 41 percent from
the Americas, and 16 percent
from Asia Pacific. Participants
completed a comprehensive
online survey with more than
1,000 elements spanning eight
dimensions of purchasing and
supply management covered by
our House of Purchasing and
SupplySM
(see figure) and were
evaluated and scored on their use
of leadership practices on each
dimension.
Companiesdesignatedasoverall
AEPleadersexhibitacombination
ofoverallstrongperformancein
theuseofprocurementpractices
acrosstheeightdimensions,
togetherwithhighfinancial
impactasmeasuredbyreturnon
supplymanagementassets,or
ROSMASM
.Additionally,leaders
were designated for each
dimension, based on those
companies scoring in the
top 20 percent.
Source: A.T. Kearney analysis
Figure
A.T. Kearney’s House of Purchasing and SupplySM
forms
the basis for the AEP study
Supply
management
strategy
Performance management
Information and
knowledge management
Human resources management
Organizational
alignment
Sourcing
and category
management
Supplier
relationship
management
Operating
process
management
The rush to cut costs in the wake of the 2008–09 Great Recession propelled procurement
organizations to the forefront at companies around the world. Faced with so much uncertainty,
companies raced to shed costs—and procurement rose to the challenge, delivering exceptional
results. With this came an increase in procurement’s stature, influence, and reach. A.T. Kearney’s
Assessment of Excellence in Procurement (AEP) 2011 study saw a doubling in the rate of benefits
achieved by the procurement functions since the 2008 study, yielding the highest percentage
gains seen in the more than two decades since we began conducting this study.1
(For
information about AEP 2014 goals and demographics, see the sidebar: About the Study.)
In 2011, we projected that this upward trajectory would continue: procurement appeared poised
to deliver even greater impact to the business. Our 2014 AEP study finds that while leading
companies continued their trajectory, most procurement organizations only sustained the gains
in influence and reach made between 2008 and 2011. In short, the typical company may be
“wasting a crisis” by not continuing to enhance one of the most powerful levers to improve
profitability and competitive advantage.
1
See “Follow the Procurement Leaders: Assessment of Excellence in Procurement Study, 2011” at www.atkearney.com.
4. 2Procurement-Powered Business Performance
The Typical Company Has Leveled Off
To be clear, procurement performance at most companies has not declined since the previous
AEP study. Figure 1 shows some key ways in which the procurement function’s status has slightly
increased since then. Procurement has kept its seat at the executive table and better aligned
itself with the overall business strategy. Most companies recognize sourcing’s unique power to
deliver major cost reduction and have mastered basic sourcing and contracting principles.
Many have even awakened to the need to measure procurement performance.
But we are not seeing the progress we expected coming out of our 2011 study. Gains from
sourcing have slowed, as multiple waves of “brute force” sourcing approaches such as volume
bundling, supplier consolidation, and competitive bidding have led to resistance from suppliers
and yielded diminishing returns. Procurement benefits as a percentage of influenced spend
have returned to the historical average following the heights reached in 2009 and 2010 (see
figure 2). The use of leadership practices for procurement has not increased substantially,
limiting companies’ ability to generate new streams of cost reduction and deliver value through
supplier relationship management (SRM). Finally, at many companies, procurement lacks the
additional influence and reach needed to achieve the next level of performance. What is holding
them back? The reasons include the lack of designated responsibility to take the lead for all
major spend categories and explore broader value creation opportunities, weak strategic and
organizational links to the rest of the business, and difficulty communicating the function’s
return on investment (ROI). Quite simply, procurement organizations at many companies have
maintained the status quo when they should have continued increasing their business impact.
Figure 1
Procurement’s stature has solidified and slightly increased between 2011 and 2014
Source: A.T. Kearney Assessment of Excellence in Procurement Study
Leadership for all key
expenditure areas
23
32 32
Mandate communicated
and accepted
19
53 55
Extended mandate to
explore broader value
creation opportunities
19
41
46
Extended mandate to
identify and recommend
new business opportunities
13
22 25
2008
2011
2014
Procurement organization stature (% of companies selecting “fully agree’’)
Source: A.T. Kearney Assessment of Excellence in Procurement Study
Figure 2
Procurement benefits are returning to the historical average
Procurement benefits (% of influenced spend)
2008
3.9
2009
7.9
2010
7.2
2013
4.3
5. 3Procurement-Powered Business Performance
The Leaders Are Showing the Way
In contrast, leading procurement organizations have found ways to advance, delivering even
greater impact since our 2011 study. Integrating more closely with the business units and
regions has increased their relevancy, influence, and impact. They have continued their journey
toward procurement excellence by expanding their use of leadership practices. They have
achieved breakthrough financial results from procurement—generating double the Return on
Supply Management Assets (ROSMASM
) performance levels compared to the typical company
and delivering benefits at a rate ten times greater than the cost of their people, technology, and
external support (see the sidebar: ROSMASM
Basics).
Leaders have achieved this performance by:
• Building high-performance teams as a catalyst for business alignment
• Reducing costs through category excellence
• Creating competitive advantage through supplier capabilities
• Investing in the procurement team to deliver durable superior performance
The sections below examine these four key differentiators.
Building high-performance teams as a catalyst for business alignment
Leading procurement organizations are maximizing benefits by improving performance both
internally and externally. They are closely aligning procurement with the business at the corporate,
business unit, and regional levels. They begin by developing a compelling vision for procurement
excellence that is shared at all organization levels. Leaders look ahead of the current year’s budget
to imagine and articulate how they will sustain present-day benefits, while reaching beyond
traditional sourcing to find ways to deliver value that transcends mere cost savings. As part of
this company-wide benefits and value discussion, procurement leaders communicate what the
function delivers to the company in terms that the business can understand, typically by using the
finance organization’s language to measure and share performance data. They also ensure that
their own organization is aligned by regularly engaging the entire procurement function around
the three- to five-year vision.
Leaders focus on achieving tight coordination with both internal and external organizations
through practices such as mutual goal setting with business units, regional organizations,
ROSMASM
Basics
A company’s Return on Supply
Management Assets (ROSMASM
)
score measures procurement’s
contributions to the business and
articulates those benefits in
financial terms.2
A ROSMASM
score is calculated by dividing
procurement’s Financial Results
Delivered by the Invested Supply
Management Assets, whereby:
• Financial Results Delivered =
Spend Actively Sourced * Yield *
Compliance + Additional
Benefits
• Invested Supply Management
Assets = Total Procurement
Costs
ROSMASM
offers a sustainable
framework to assess
procurement performance
management and offers insight
into supply management value
drivers. Additionally, it provides a
platform for holistic discussions
with stakeholders and a way to
benchmark performance on a
peer-to-peer basis or among
industries.
2
For more information, please see www.atkearney.com/rosma.
6. 4Procurement-Powered Business Performance
and functional stakeholders—and use reward systems that encourage cooperation among
the parties. Excellence in stakeholder relationship development and management is
recognized and nurtured as a critical foundation for success, both at the individual and
functional level.
Transparent communications around the value that procurement brings help leaders earn the
support needed to continue with and advance their value-added efforts. Leaders have earned
a much broader mandate and far greater organizational acceptance to generate value for the
enterprise. Procurement leaders share procurement performance data beyond their function
to ensure that company-wide stakeholders are kept aware of procurement’s contributions.
Finally, leaders have greater credibility with business leaders than has the typical procurement
organization—they have invested in the systems, data management, and capabilities to
ensure their benefits reports and other data are accepted and trusted by finance and other
leaders within the business.
Reducing costs through category excellence
To help portray the full array of methods at procurement’s disposal to reduce cost and increase
value, A.T. Kearney developed The Purchasing Chessboard®, a two-by-two matrix that portrays
64 of these methods—including advanced analytical approaches—mapped to different degrees
of supply and demand power in the marketplace.3
AEP study leaders systematically use more of
these methods than the average company across every chessboard quadrant, as demonstrated in
figure 3. Leaders extensively use these techniques to leverage competition and internally manage
Source: A.T. Kearney Assessment of Excellence in Procurement Study
Figure 3
Leaders use a broader set of improvement methods
High
Low
Low High
Supplypower
Demand power
7.6
1.9
12.0
4.3
4.2
1.2
11.0
5.2
The Purchasing Chessboard® (% of companies selecting “systematically used”)
Leaders
Typical companies
Key
90%
10%
50%
Change nature
of demand
Seek joint advantage
with suppliers
Manage
spend
Leverage competition
among suppliers
3
See www.purchasingchessboard.com.
7. 5Procurement-Powered Business Performance
spend. More importantly, where supply power is high, leaders employ advanced methods in order
to change the nature of demand or work with suppliers to seek joint advantage.
In addition to applying the chessboard methods to today’s spend, leaders are positioning
themselves for long-term success by developing “strategic playbooks”—plans for key
categories designed to better help the company meet its future needs and, if possible, shift
the supply-demand balance in the company’s favor. Leaders incorporate a broad set of
elements into these strategic playbooks, including continuous monitoring of supply markets
and company requirements, identification and development of alternative sources of supply,
and supply chain and logistics considerations, including contingency plans (see the sidebar:
On the Road to Category Excellence).
On the Road to Category Excellence
Over20yearsago,amultinational
company began its journey
toward category excellence.
It adopted a formal sourcing
process, which it systematically
applied over three years to the
majority of its spend. As the years
passed, the company revisited
the categories using a broader
range of improvement methods,
adding deeper category
expertise, and applying new
analytical techniques. These
additional actions gave it an
ongoing stream of additional
cost savings for several years.
But competition was beginning
to catch up, and the company
was not satisfied; it was time to
take the next leap forward in
category management to stay
ahead. That involved developing
“strategic playbooks” that would
define the moves needed over
three to five years in order to
better position the company and
(if possible) fundamentally
change supply and demand
power for select categories.
It chose to pilot the approach with
two categories. One category
involved purchased technology
that was changing rapidly. The
company needed a strategy to
slipstream the new technology
into its product development and
production processes while
continuing to manufacture and
service its legacy products that
used the old technology. The
other category involved a risk
with a sole-source supplier three
tiers upstream in the supply
chain. For this category, they
needed a strategy to mitigate risk
in the short term while creating
options in the longer term.
For each category, a cross-
functional team including
procurement, manufacturing,
marketing, R&D, and new product
development researched the
situation in depth and developed
scenarios. They then brain-
stormed options and analyzed the
most promising among them.
Finally, the strategies, short- and
longer-term actions, and contin-
gency plans were documented,
and implementation began.
Forthetechnology-based
category,thestrategywasto
integrateitsproductdevelopment
planswithsupplier“A,”judgedto
havethemostpromising
technology road map. For its
existing product line, the
company chose to continue dual
sourcing from supplier “A” and
supplier “B,” while adding
contract provisions that would
guarantee availability for legacy
products and warranty coverage
for the installed base.
For the risk-vulnerable category,
the strategy was to go directly to
the tier 3 supplier to evaluate its
risk readiness—including
financial health, management
stability, quality assurance,
production stability processes,
and potential for a natural
disaster. In the short term, it
concluded that it should direct
upstream suppliers to stockpile
inventory of the tier 3’s goods in
the event of a failure. Longer term,
two alternatives were under
consideration: work with tier 1 and
2 suppliers to find a substitute for
the tier 3’s products, or redesign
the tier 1 and 2 components to
avoid using the tier 3 at all.
While the company is just
beginning to execute these two
playbooks, the near-term actions
are already in place. As the future
unfolds and situations change,
the company will refine these
playbooks and develop new ones
for other important categories.
8. 6Procurement-Powered Business Performance
Besides tracking more conventional supply and demand conditions, procurement leaders
closely monitor and prepare to deal with disruptive technologies that could change demand for
their end products and services. They also actively scan for the emergence of new technologies
and nontraditional suppliers that can increase market competition. Additionally, they recognize
the importance of supply risk management: nearly all use techniques such as continuous risk
monitoring, scenario planning, value chain modeling, disaster planning, and secondary supply
sourcing, while barely half of typical companies do the same.
Creating competitive advantage through supplier capabilities
Procurement leaders are finding ways to harness the suppliers’ capabilities, work
collaboratively with them to benefit from excellence in their supply base, and thus achieve
competitive advantage. Leaders have generated significant value from their SRM efforts.
In fact, one-third of the value their organizations create comes from SRM, versus about
one-quarter for the typical company.
Achieving high SRM performance requires developing a common, cross-enterprise
understanding of what we call “TrueSRMSM
” in order to drive value throughout the supplier
life cycle (see sidebar: TrueSRMSM
). Leading procurement organizations have developed and
continually demonstrate their SRM understanding by using a consistent, repeatable, and
commonly understood SRM process and vocabulary that is embraced throughout the
company and the supplier community. Using SRM, leaders address a broad range of business
goals beyond the basics of supply continuity and lower unit costs, including innovation and
growth, asset optimization, and risk mitigation (see figure 4 on page 7).
Successful strategic SRM efforts also require selecting the right suppliers. The best candidates
show longer-term alignment with the company’s business strategy as well as the capabilities to
enhance the company’s growth. In identifying these suppliers, leaders develop hypotheses
about potential mutual value creation opportunities to discuss with suppliers, jointly agreeing
with them on implementation plans that include improvement recommendations.
Leaders deliver value beyond cost from SRM by integrating suppliers into the company’s
own processes. They use a range of methods to streamline supply chains with their strategic
suppliers, including collaborative capacity management, collaborative cost reduction,
integrated operations planning, and virtual inventory management. Additionally, procurement
TrueSRMSM
TrueSRMSM
is A.T. Kearney’s
approach for converting SRM
from a purely tactical realm
focused on process into a
strategic agenda to:
• Manage all supplier interactions
in relation to business
objectives
• Encourage desired behaviors
at suppliers
• Achieve internal alignment on
the above points
The key to meeting these
challenges is to rigorously
manage suppliers in a highly
differentiated way. This is based
on a rigorous corporate-wide and
top-down assessment of perfor-
mance and strategic potential,
which then leads to nine differen-
tiated interaction models for
dealing with suppliers. Exponents
of TrueSRMSM
focus their time,
effort, and resources on the
“critical cluster” of relationships
that have the true potential to
bring competitive advantage. 4
4
For more information, see the book Supplier Relationship Management: How to Maximize Vendor Value and Opportunity.
9. 7Procurement-Powered Business Performance
leaders integrate key suppliers into innovation and growth initiatives (see the sidebar:
Innovation through Collaboration on page 8). All AEP 2014 study leaders have an innovation
target for procurement, and nearly half have a major open-innovation effort underway to
integrate suppliers into their innovation stream.
Investing in the procurement team to deliver durable superior performance
To help ensure that their procurement organizations will continue to deliver and
sustain superior results, leaders are investing in their teams’ capabilities, technology,
and performance management.
Leaders invest to increase procurement team members’ capabilities, including subject
matter knowledge, analytical capabilities, leadership abilities, and teaming skills. They use a
planned training and development road map, invest to ensure the skill advancement takes
place, and routinely review the capabilities required to realize the procurement vision. With
continued globalization of supply and customer markets, leaders are actively addressing the
needs of a diverse and dispersed workforce. They employ strategies to attract the best talent
in every market and promote interactions and collaborations around the globe. Leaders are
relentless about shifting responsibility for transactional processes outside of procurement
(either via migration to an outsourced provider, shared service center, or automation) to free
up resources for high-value activities.
To enhance their teams’ capabilities, leaders are leveraging enabling technologies to strengthen
analytics and support broader and deeper knowledge management. Because spend visibility is
so critical to cost management, they are investing in systems that provide current spend data for
ongoing analysis. Almost all leaders capture and share procurement knowledge and invest in
intellectual capital development. They train their teams to use spend analytics, supply market
analysis, and other procurement information technology tools. Over half of our study leaders
have introduced new tools for optimization and other emerging techniques.
Figure 4
Leaders use SRM to address a broader range of business goals
SRM capability
(% of companies selecting “significant results” or “breakthrough results”)
Source: A.T. Kearney Assessment of Excellence in Procurement Study
77
Meet current
business or
supply
requirements
59
73
Reduce
supplier
unit cost
50
71
Mitigate
risks
28
57
Improve asset
or capital
structure
13
55
Drive
end-to-end
cost down
32
45
Pursue
innovation
development
14
44
Grow existing
markets
or enter
new ones
21
40
Develop or
leverage
differentiating
supplier
capabilities
14
“The basics” Advanced dimensions
Leaders
Typical companies
10. 8Procurement-Powered Business Performance
Leading procurement organizations make broader and more robust use of performance
management metrics than the average company. They do not simply measure quantitative
results; they also measure the effectiveness and efficiency of the underlying processes
that drive those results. The metrics and dashboards they use provide insights that help
drive continuous improvement. To reinforce teamwork, leaders also link compensation to
performance that reflects both group and individual performance. Leaders tie compensation
to the achievement of measureable benefits, with clear differentiation in rewards between
high and low performers. Leaders also benchmark compensation levels externally to stay
competitive in talent attraction and retention.
In terms of procurement operating models, leaders focus on strategic activities and develop
specialists in areas such as category management, SRM, analytics, and process design and
implementation. Procurement outsourcing is targeted toward more tactically and operationally
focused activities.
The Path Forward
Procurement organizations face a choice: maintain the status quo or reach higher by
unleashing the full potential of their supply base. Over the next few years, for the typical
company, maintaining the present course will almost certainly lead to a reduction in
procurement‘s impact on company performance and diminished stature for the function.
Innovation through Collaboration
With only two manufacturers
of long-distance aircraft,
long-haul airlines have a very
limitedchoiceofsuppliers.While
volume purchases provide an
opportunity for savings, other
sources of value beyond cost are
available by collaborating with
suppliers on design.
In the late 1980s, one aircraft
manufacturer started to develop
a new ultrahigh-capacity airliner
that would break the dominance
of its competitor in that segment.
Developing new technologies and
designing aircraft is a long-term
process with significant financial
risk. A leading global airline
recognized the opportunity to
build a strong relationship with
this aircraft manufacturer and
influence the design. Both sides
had high win-win expectations.
The airline wanted first-mover
advantage as the launch
customer, but it had a primary
interest in influencing the
development process, specifi-
cally the passenger cabin design.
Its premium class cabin was
designed around luxurious suites
targeted at passengers who do
not want to compromise on
sleeping, seating, or working
while in air. Each “suite” has a
full-size mattress, sliding doors,
and pull-down windows. This
innovation propelled the airline to
the top as the trendsetter for
luxury air travel.
The airline had great success as
the launch customer for the new
jumbo jet. It significantly
expanded its brand value,
customer base, and new services.
In less than 18 months, the
one-millionth passenger flew
with the airline on the new
aircraft. A big marketing effort,
followed by extensive media
coverage, turned the airline into
the best-known international
airline carrier. Especially
successful was a charity auction
on eBay, in which passengers
bought seats paying between
$600 and $100,000 for the first
scheduled flight of the aircraft.
The manufacturer’s early-stage
cooperation turned into a big
success for them as well, as it not
only heard the voice of the
customer through the entire
product development process but
also profited from free media
coverage. And even more
importantly, the buying
commitment from one of the
largest and most admired airlines
positively influenced buying
decisions from other airlines.
11. 9Procurement-Powered Business Performance
The second path suggests procurement soars as it becomes an even greater strategic
business contributor with a strong internal brand and advanced capabilities, staffed by
procurement athletes who are widely recognized as a valued asset throughout the company.
What will happen to the procurement organizations that opt to maintain their present heading?
Inaction will do more than simply erode some of the gains recently achieved; it could bring
about deeper repercussions. Already, the typical finance organization views the procurement-
reported results with a raised eyebrow, according to a recent A.T. Kearney survey that found
less than one-third of finance executives widely accept these reports. Credibility will be lost
by those organizations that do not reach higher. Failure to act could also lead to a lower profile
for procurement organizations, which will bring about changes in reporting relationships and
potentially lead to outsourcing of strategic procurement activities. Most damagingly, inaction
could negatively impact procurement’s financial contribution to the bottom line, ultimately
hindering the overall business’s performance. Without the procurement engine to deliver a
stream of ongoing benefits, fewer funds will be available to support important growth initiatives
such as innovation and market expansion or to directly boost earnings per share.
Companies that adopt the procurement practices that separate the best from the rest will have
a much brighter future. Procurement leaders provide insights into how to apply world-class
procurement practices to achieve team, category, and supplier excellence, while demonstrating
the economic benefits of doing so. Continued growth will lead to a strong procurement brand as
executives throughout the company come to acknowledge procurement as a strong, consistent
value generator, leading to increased stature, influence, and reach. Key suppliers will recognize
that the company can be trusted to partner for longer-term joint advantage. Procurement will be
known for attracting, developing, and retaining premier talent. A portion of the increased return
on the procurement investment achieved by leading organizations can be reinvested in enhanced
skills, tools, and capabilities. As procurement excellence helps to generate benefits and have
greater business impact, companies will be more inclined to free up more funds for innovation,
growth, and improved shareholder value.
The time is now for procurement to reassert its position as a critical value driver.
Authors
John Blascovich, partner, New York
john.blascovich@atkearney.com
Stephen Easton, partner, London
stephen.easton@atkearney.com
AlejandroFerrer,director, San Francisco
alejandro.ferrer@atkearney.com
The authors would like to thank Sonali Agarwal and Bill Markham for their valuable contributions.