New global research from The Hackett Group has revealed that over the past year procurement operating costs increased for the first time in more than a decade.
Unprecedented uncertainty from inflation, supply disruption and other factors – such as environmental, social and governance initiatives – was responsible for driving up costs at both typical and Digital World Class procurement organisations, according to the group’s new report ‘Resilience: The Digital World Class Procurement Advantage’.
“Despite this, the performance advantage achieved by Digital World Class procurement organisations is more impressive than ever. They are better at navigating uncertainty, risk and complexity than peers because they are more disciplined at maintaining strategic focus and more adaptive to rapidly changing circumstances. In large part, they do this by harnessing actionable data more effectively, which enables them to deliver faster and better insight, and make better decisions” said Senior Research Director, Amy Hillcox.
The report found Digital World Class procurement organisations excel at cost optimisation compared to typical organisations. They now operate at 21% lower cost than their peers and have 32% fewer staff.
For example, they drive nearly two times more savings due to spend cost reduction, generate a 2.4 times higher ROI, are 86% more likely to be viewed as a valued partner, and see 76% lower process costs per order.
In addition, Digital World Class procurement organisations see improved resiliency, provide their companies with greater business value and demonstrate higher levels of business excellence across a wide array of key metrics.
As a result, they are better able to navigate uncertainty, risk and complexity because they have greater strategic focus and are more adaptive to changing circumstances.
Research concluded that Digital World Class procurement organisations now have a $6 million annual cost advantage over their peers (for a typical $10 billion enterprise).
Principal Chris Sawchuk added “To achieve their impressive performance improvements, Digital World Class organisations obviously focus procurement strategy on technology enablement. But to truly unlock the potential of technology, they also invest appropriately in the five other areas as well: data and advanced analytics; modern cloud architecture; evolving their operating model; more effective business partnering; and improved talent management.”
To learn more, download a free public version of the research here
