Key Procurement Takeaways From KPMG’s 2013 Global Manufacturing Outlook

We’ve already featured two articles that leverage findings from KPMG’s 2013 Global Manufacturing Outlook (see titles/links at the end of this post). Today, we feature three takeaways that truly jumped off the page as we read the results. In part, they surprised us because far too few companies are ready to seize the opportunity to take advantage of these trends and observations as a result of the immaturity of their procurement organizations when it comes to partnering with suppliers. But see what you think as we quote a few of the stand-out findings below (with our cynical commentary below):

 “Many companies are starting to see their suppliers as a source, not just of production and logistics, but also of ideas. Half of our survey respondents say that partnerships, rather than in-house efforts, will characterize the future of innovation. And investing in R&D and innovation remains a priority: 42 percent expect their company to invest greater than 4 percent of their revenue in innovation over the next 2 years.”

Spend Matters’ rhetorical questions: How many procurement organizations in all but the largest companies are set up to tap supplier innovation? How many folks in procurement today know how to engage suppliers in a continuous, collaborative two-way discussion?

“Nearly a third of all companies in our survey are planning mergers or acquisitions to capitalize on opportunities in new markets, and close to half of larger companies (those with revenue over US$5 billion) are doing so. 4 in 10 say they plan to exit unprofitable, non-core product lines and unprofitable, non-core business units over the next 2 years.”

Spend Matters’ rhetorical questions: Does procurement have a seat at the table in M&A or divestiture discussions today? If so, at what level and when, e.g., after deals are done, during the due-diligence process, or even before? Does procurement have an ability to develop rapid visibility into contract exposure (and potential exposure) and opportunities of potential targets—let alone potential lost savings from reduced volumes through divestitures?

“For companies of all sizes, genuinely closer working relationships between suppliers and other partners will be critical to maximizing their responsiveness to changes in the market. More effective and efficient collaboration enables firms to optimize inventory, logistics, and other operational costs.”

Spend Matters’ rhetorical question: Isn’t that what those operations and supply chain folks should be doing already?

The response (we know, we shouldn’t answer our own question, but we couldn’t resist): Well, perhaps if they are doing this effectively today, they should be doing more for procurement and supplier relationship management as well. This would mean a whole lot more APICS credential holders than CPSMs running the supply management show.

First Voice

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