Before the holidays, I had a chance to catch up with Hackett Group's Chris Sawchuck on some of the latest research they've conducted. For those who don't know Chris, the man is every bit as knowledgeable as his colleague, Pierre "cram as much as you can on a slide" Mitchell. In other words, Chris really knows his stuff. And he talks a bit slower than his benchmarking wingman as well. But alas, I cannot vouch if his tastes in Cabernets and Pinots are as sophisticated as Pierre's.
On a more important note, the benchmark findings that Hackett is discovering these days are fascinating -- and invaluable for procurement organizations worldwide. Moreover, I trust Hackett's numbers. Indeed, Hackett's quality control is second to none. Unlike some other analyst and benchmarking providers that rely entirely on web-based survey tools, Hackett's benchmarking and consulting efforts are driven by one-on-one executive interaction as a jumping off point. This is not a general knock on other approaches -- after all, you get what you pay for. But when you're using benchmark data to justify major investments and headcount adjustments, I would argue that it's worth spending a few bucks to get it right.
So what are some of the more insightful observations that Chris shared on our call? First, procurement integration and business alignment is rising in importance in top performing procurement organizations. According to Chris, when you look at a world class procurement organization, they are "more focused on alignment", tying together the voice of the customer -- both end and internal -- through constant surveying and analysis. Obviously, for procurement to take a partnering approach is nothing new -- but it remains a key ingredient to achieving success, Chris observes.
A second major observation that Chris made which ties to the first is the importance of procurement in enterprise level budgeting and planning. According to their benchmarking findings, "when procurement is actively involved in budgeting and planning, there's a huge difference in overall procurement performance". The good news here is that the performance gap has narrowed slightly between 2005 and 2006 between world-class organizations (typically 10-12% of participants in Hackett's benchmarking) and the rest of the bunch when it comes to procurement involvement in budgeting and planning. But still, for average performing organizations, there's a long way to go in getting procurement involved in CFO-level planning efforts.
Another key observation that Chris made on our call is that across the board, the real differentiator in world-class organizations is how much they invest in technology and other non-labor investments relative to their peers. As he put it "world-class organizations swap out labor investments for technology ones." But one of the more subtle differentiators here Chris notes is not just the investment in technology world-class organizations make, but how they use it. The key is leveraging the investments that are made, not buying shelf-ware!
Now, don't think for a minute that world class organizations can't improve further. Chris observed that, across the board, even world class organizations are still challenged with visibility into spending data (especially global multi-nationals). Perhaps this explains, in part, why spend visibility has become such a hot topic on Spend Matters, Sourcing Innovation, and Supply Excellence, among other blogs of late.