Nokia: Reducing Procurement Staff and Increasing Savings Targets

For some, it might seem counter intuitive that it's possible to reduce procurement headcount and drive additional savings. But really, it's not. Hackett data continually suggests that top performing procurement organizations do more with fewer resources by making aggressive investments in the right combination of talent, technology and process. In fact, world class procurement organizations spend roughly 2x the amount on technology but can process every billion dollars of indirect spend with roughly half the number of resources (at significantly reduced costs that go beyond just labor savings). Perhaps then, it's no surprise that Nokia is doubling its savings target and cutting 50 procurement team members according to CPO Agenda. In the above-linked article, Geraint John notes that "staff levels have been reduced from 460 to 410". Nokia's VP of procurement is doing this at the behest of his CFO, who wants him to "do more with less".

To capture the savings, Nokia is targeting a range of initiatives including new spend categories (e.g., legal, consulting, global hotel spend) and is also focused on implementing existing projects. In addition, Nokia is attempting to move "indirect sourcing away from a traditional category focus to a knowledge focus, which [means] more interaction with other functions and more of a consultant role for procurement staff". Hmmm... making procurement a services provider to the business? I've heard that phrase more than once before. Methinks Hackett has taken a few trips to Helsinki recently. And if they have, it's a good thing for Nokia's shareholders.

Jason Busch

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