Today, world-class supply leaders use procurement as a strategic accelerator and to achieve cost savings, which can average 8 percent to 12 percent of total procurement costs, and as much as 40 percent for some categories. Also, procurement improvements can result in shorter cycle times, product innovation and increased revenue. Despite procurement's increasing importance, a recent Bain survey found a growing divide between what corporate leaders expect and what their supply management teams are able to deliver: 50 percent of supply management executives interviewed considered their procurement organizations ineffective and 65 percent admitted they don't measure procurement performance in creating shareholder value.
Bain has worked on more than 700 cases across all major industries and around the world, helping clients reduce their cost base, strengthen their supplier base, and create world-class procurement organizations. Our approach is based on three key principles that we've found characterize procurement leaders. They practice strategic supply management by understanding how procurement can accelerate their company's strategy, and then figure out the criteria for a winning supplier–low cost, speed or flexibility. They think cross-functionally, including human resources, finance and other departments in their teams. And, they view supply management as an agent of innovation, drawing R&D insights from customers, suppliers and even.
Bain has helped clients reduce purchasing costs by five percent to 40 percent while improving quality and supplier performance. Our approach starts with a focused diagnostic to identify the critical levers of value, and rank opportunities. We provide our clients with support with everything from supplier negotiations to making the process or organizational changes needed to sustain results.