Indirect Procurement: 2017 Market Report

Survey Highlights v Supplier engagement is a major challenge and focus for improvement. v Managing data is key – whether it comes from suppliers via catalogs, from master vendor data, or the spend data used in analytics. v The top three categories of indirect spend are all services or services related. With few of these suppliers sending electronic catalogs and so many orders created in free text, procurement is inefficient. v Cost reduction is the single most common KPI measured. However, with companies paying too much across few suppliers; little transparency in identifying expensive suppliers; lots of manual work; and insufficient use of supply chain financing – companies are not taking advantage of opportunities to reduce cost. v Spend analysis is a challenge: with most spend on services (itself problematic) along with lots of free text ordering, it is difficult to draw reliable conclusions. v Less than 10% of respondents tracks ROI in Procurement, implying a lack of control and cost overrun. v Most organizations are actively working towards improvements in their systems and processes, and recognize information as the starting point. Supplier catalogs and spend data are key. Almost a third are looking at the full P2P process for improvements. In the following pages we dive deeper into current supplier engagement practices identified in the survey, catalog management, procurement practices, and future improvement plans. About survey respondents: This report is based on the responses of procurement professionals based in Nordic and DACH region - members of the Shared Services and Outsourcing Network, the world’s largest forum for shared services and outsourcing practitioners. The survey was conducted by SSON on behalf of OpusCapita. Current Supplier Engagement Practices Current supplier engagement practices are characterized by manual activity: nearly ¾ of the survey’s respondents claim to be maintaining supplier information manually, and many profess to this information not being up-to-date. Even where supplier self-service options exist, the majority of respondents still believe the information is out of date. More crucially, perhaps, the vast majority of respondents described their RFQ/RFP process as poor or just adequate. The overall lack of transparency or insight also makes it difficult for respondents to rate their suppliers’ performance. A knockon effect is that early payment or supply-chain financing opportunities are not being taken advantage of. Roughly 5 out of 10 respondents do not leverage early discounted or early payment opportunities at present, although nearly a quarter of these appear to be actively considering some options. How would you describe your current process to on-board a new supplier? How would you describe your current ability to rate supplier performance? Poor Poor 31% 15% Adequate Adequate 36% 43% Good Good 29% 34% Excellent Excellent 4% 9% 0% 10% 20% 30% 40% 50% How is supplier information kept up to date? 10% 20% 30% 40% 50% How would you describe your current ability to create a sourcing event (RFQ/ RFP) with your existing suppliers? Manually and it’s often out of date 23% Manually and it’s typically up to date 54% Suppliers have self-service options to maintain their data but it’s often out of date. 17% Suppliers have self-service options to maintain their data and it’s typically up to date. 0% 6% Poor 17% Adequate 38% Good 34% Excellent 11%
Please complete the form to gain access to this content