Procurement

What we do

World-class companies use procurement as a source of competitive advantage but many organizations still under-manage this treasure chest because they lack a predefined, systematic playbook for reducing costs and identifying and implementing necessary improvements.

By taking a more comprehensive approach to what they buy and how they buy it, companies can reduce cost and free up cash. Full potential savings programs can average 8 to 12 percent of total procurement costs and as much as 40 percent for some categories. Typically, these are sustainable cost savings that can be followed by a further two to three percent cost reduction annually. Furthermore, strategic procurement efforts often result in shorter cycle times and supplier-led product innovations.

Despite the increasing recognition of procurement's importance, a recent Bain survey found a growing gap between what corporate leaders expect and what their supply management teams are able to deliver:

  • Fifty percent of supply management executives interviewed considered their procurement organizations ineffective;
  • Sixty-five percent admitted they don't measure procurement's performance in creating economic value and are unable to link procurement savings directly to their P&L.

Bain's procurement consultants have worked on hundreds of engagements globally across all major industries, helping clients create world-class procurement organizations that can reduce their cost base, strengthen their supplier base and make the results stick.

Our Approach

Our procurement experts work with companies through the diagnostics and implementation phases of the procurement program:

  • Diagnostic: Together with our clients, we begin by defining each organization's starting point and identifying the right enablers that will help the organization achieve full potential savings. To realize these savings, we develop a tailored action plan for each spend category. Some companies may find that the key enablers are the development of an optimal global procurement footprint and international sourcing capabilities, while the most effective tools for others may be KPI dashboards, IT support systems or incentive structures.
  • Implementation: Next, we apply our proprietary tools, together with our "Triple A approach" to Assure, Amplify and Accelerate the savings. Bain ensures the successful implementation of all purchasing initiatives and mitigates risk with change management support through our Results Delivery approach.

Our procurement diagnostic is based on three key elements:

  1. Spend transparency: Creating a clear, complete picture of company-wide purchasing spend is a critical first step, whether it is managed directly by procurement or by other functions such as IT or HR. This "spend cube" includes a pragmatic overview of material group, supplier and structure by business unit.
  2. Full potential assessment: Together with the category managers and stakeholders our procurement consultants assess cost reduction potential by performing a bottom-up review of purchasing levers for all major categories of direct and indirect purchasing spend using Bain's Purchasing Lever Analysis. The identified levers are translated into initiatives including estimated savings impact, milestones, activities and owners and are prioritized based on impact and ease of implementation.
  3. Results sustainability: To ensure sustainability of results, we assess the gaps between the current performance of the purchasing organization and its full potential, including mandate and structure, processes, tools and capabilities. This builds the foundation for targeted improvement.
PowerCo - Procurement opportunity
Client results
We share our clients' ambitions. We work to understand their reality and deliver true results—focusing on strategic decisions and practical actions. And we align our incentives with our clients' objectives, so they know we're in it together.
Insights
We develop insights that work for our clients. Our approach and recommendations are highly customized and lead to practical actions. Below is a selection of our experts' perspectives on important issues. Visit Bain Insights to read more.
Our team

We work as an integrated part of your team, from frontline to C-suite, to deliver true results and make the changes stick.

Our leadership team

  • Klaus
  • Klaus Neuhaus

    Partner, Global Product Leader for Procurement

    Dusseldorf

    View profile
  • Wulf
  • Wulf Weller

    Partner, EMEA Product Leader for Procurement

    Munich

    View profile
  • Sam
  • Sam Thakarar

    Partner, Americas Product Leader for Procurement

    Boston

    View profile
  • Ray
  • Ray Tsang

    Partner, APAC Product Leader for Procurement

    Shanghai

    View profile

In addition to the leaders listed above, we have an extensive and diverse team of experts ready to serve the needs of clients worldwide. Please contact us to submit a business inquiry.