The end of

procurement
as we know it
What’s Procurement’s
role after the Coronavirus
(COVID-19) pandemic crisis?
It’s a question on the minds
of Chief Procurement
Officers everywhere.

According to leading executives

Accenture interviewed,1 Procurement
organizations have played a critical
role throughout the crisis when difficult
decisions needed to be made. They’ve
contributed greatly to their company’s
effective and rapid recovery—heroicly
putting out fires, paying careful attention
to supply security, and anticipating how
to adapt to changes in end-customer and
internal customer purchasing needs.

But as the chaos from the early days of

the pandemic fades and companies have
to think about how they move forward,
it’s time for Procurement to engage in
some of its own self-reflection. What
will the business need and expect from
Procurement, and how is that different
from the role Procurement plays today?

Let’s start with the larger enterprise.

While COVID-19 undeniably has had a
massive disruptive impact on all businesses,
it hasn’t changed the fundamental fact
that the rules of competitiveness today
are very different thanks to digital and
continually evolving customer expectations.
It used to be enough for a business to flex its
competitive muscle on one or two of three
areas: growth, profitability, or sustainability,
resilience, and trust.

2
Executing with equal strength against
all three was difficult, expensive, and
unnecessary. But now, shareholders and
stakeholders expect winning companies
to be growth-led, nimble and agile with
their cost base, with a demonstrated
commitment to sustainability, resilience,
and trust. These are the new table stakes
for competing successfully, and leading
companies know it.
This new focus has profound implications
for the Procurement organization and
the person who leads it. It will require
Procurement to complement its traditional
focus on driving profitability with added
value across growth and sustainability and
trust. And that means business as usual
in Procurement will no longer be tenable—
at least for Procurement organizations
that don’t want to become a back-office
function providing commoditized services,
gradually relegated to tasks and activities
that haven’t been taken over by increasingly
intelligent technologies.
The leaders we spoke with roundly agree
that CPOs need to think boldly about
what Procurement can do to become
an irreplaceable driver of 360-degree
quantitative and non-quantitative value
for the business of the future. It’s time
for a new vision for Procurement: its
role across the broader enterprise,
stakeholders and communities, the new
kind of value it can generate, and what
Procurement needs to get there.
Based on our interviews, here’s how
that vision is shaping up in today’s
leading organizations.

Figure 1: The imperatives of competitive agility

Profitability

Create a zero-based mindset by

Growth and
customers
driving strategic cost reduction through
sourcing, demand management and
contract negotiations

y
og
Growth and
C
ol

ap
hn

customers
ab
tec

iliti

Serve as the ecosystem architecture,

Data and

es

working with partners to look for

growth opportunities, while keeping
the end customer at the heart of Intelligent
everything Procurement does Procurement
Path to new
growth and agility
Sustainability, Sustainability,
resilience and trust Profitability resilience
Own and drive the sustainability Pe o p l e and trust
agenda for the business, resulting
in attractiveness to customers

3
Profitability
The “Zero-Based Officer” going beyond an
external spend focus toward full cost ownership
Profitability is critical to any company’s
survival and Procurement has historically
focused on it by tackling costs through a
price focus on external spend. But there’s
more to profitability than contracted
savings. To give the business what it truly
needs to be profitable, Procurement must
build on its legacy of focusing on third-
party spend. It needs to adopt leading
zero-based (ZBx) practices to continually
look for ways to sustainably eliminate
undesirable or unnecessary costs in
the P&L and unlock money that can be
reinvested in the business to fuel growth.
ZBx programs deliver rapid returns, typically
paying for themselves within the first year,
and often many times over. According to
Accenture research, results vary from 5 to
28 percent savings—a wide range because
every company can decide how aggressive
it wants to be (and can be) in determining
“should cost” targets. But regardless of
impact, speed is of the essence. Delaying
transformation by just a single week could
result in an average opportunity cost of
$5 million for global companies.
4
Effectively becoming the “Zero-Based
Officer” means seeking opportunities to
shape specifications and demand and
to change buying behaviors across the
organization, as well as creating a tight
partnership between the business and
finance to create a healthy tension that
keeps everyone accountable for meeting
target objectives. It also means moving
beyond focusing on external spend only
and assuming ownership of the total cost
across the value chain—and that requires
integrating with the business.
Take, for example, the financial services
industry, where payroll (rather than
third-party spend) represents a
majority—55 percent—of the cost
base. When these companies look
to reduce costs, they often consider
various avenues that impact customer
segmentation and channels. In many
cases, Procurement leads such efforts,
taking a value- or process-led approach
versus coming at it from a purely price
perspective. Procurement is in the driver’s
seat because it understands the value
levers for the categories involved and
which levers optimize cost, knows where
there are opportunities to drive down
consumption or change specifications,
and can help guide suppliers to take
advantage of synergies to lower costs.
What’s possible in 2030?
Profitability moves
to a true total cost of
ownership mindset
In 2030, Procurement has moved far
beyond its traditional focus on contracted
cost savings to assume ownership of all
costs, internal and external, of a business
unit or product group. Gone is the
old three-headed cost ownership—
Controller, Business, and Procurement.
Now, it’s a one-stop shop: Procurement
is solely responsible for the cost line
on the P&L. And with Procurement in
the driver’s seat, the business now no
longer focuses on optimizing individual
costs but, instead, adopts a total cost
of ownership mindset that drives higher
overall profitability. This is what we call
Integrated Spend Management.
5
In this role, Procurement reports
directly to the business unit lead and
provides vital direction and insights
to the budget process in two key
ways. One is determining what the
budget (or total cost baseline) should
be to achieve business ambitions.
As the neutral cost owner advising the
business, Procurement infuses make/
buy thinking to help steer the business
toward the right mix of insourcing and
outsourcing. The second is driving
continuous improvement initiatives
within the budgeting cycle. In particular,
Procurement works on continuously
improving the internal cost structure,
which is often not the core competence
of managers who formerly owned internal
costs. By helping the business make more
informed financial decisions, Procurement
enables the company to target and
eliminate unnecessary costs, which results
in more money to invest in people and
other growth-generating capabilities.
Growth
Gaining a top-line focus by embedding innovation
and customer-centricity in every decision
Procurement has to be about more than
the bottom line. Top-line growth matters
too, and Procurement must consider
how it could influence innovation and
customer experience.
With more and more companies
looking outside their own walls for
new ideas, Procurement is in an ideal
position to serve as the orchestrator of
the company’s ecosystem (suppliers,
startups, academics, other key external
relationships, and even customers) and
be a driving force of the enterprise’s
innovation agenda. Many of the executives
we interviewed see Procurement
becoming the chief “innovation scout,”
charged with identifying promising new
technologies, products, and capabilities
that help make the company more
customer-centric.
“Procurement needs to get ahead of the
opportunities, and help to get business
partners there too, because they are
not scanning the marketplace for what
is going on all the time—they are busy
running their operation,” noted one
CPO. “And you can’t do this totally in-
house and build everything from scratch.
The reality is you need to have a network
of suppliers, providers and partners that
all work together with you to help deliver
that. It is not just a category strategy
that stays on the shelf for 12 months
and you buy off of it.”
6
When it comes to customer centricity,
tomorrow’s leading Procurement
organizations will have a dedicated
focus on the company’s end customer.
Procurement must ensure that every
sourcing and strategic decision it makes
is rooted in the ultimate impact of that
decision on the customer experience,
the value delivered, and how it might
impact the company’s brand. In other
words, the voice of the customer must
become a guiding force across the
Procurement organization.
“I think a lot of Procurement organizations
are still removed from the customer and
still not working toward realizing who
the customer is, and partnering with the
rest of the organization to exceed and
meet customer expectations,” noted one
CPO. “When you ask Procurement people
who their customers are, you generally
get, ‘it’s sales,’ or ‘it’s operations,’ or ‘it’s
finance.’ It’s typically an internal customer,
which kind of gives you a glimpse of the
internal culture and the mentality of the
Procurement organization.”
What’s possible in 2030?

Growth driven
by Procurement
becomes the norm
Over the past three years, the evolution
of large organizations from siloed entities
into co-evolutionary networked providers
has quickened dramatically. Something
that seemed wholly intangible at the start
of the decade has now manifested into
myriad platform-first organizations, ones
operating at breakneck speed and sitting
in the center of partner ecosystems that
contribute to their sustained growth.
Procurement itself is also barely
recognizable. The function is now the
glue that binds all external and internal
stakeholders together in a spiderweb
structure. These interconnected parts
are all facilitated by a third wave of
Procurement teams, ones tasked with
driving innovation and revenue growth.
Made up of data scientists, growth
hackers, and business analysts, these
teams use all the technology at their
disposal to collaboratively work with this
ecosystem, blurring the lines between
where one organization ends and the
next one begins. Knowledge, trust, and
transparency have all been underpinned
by blockchain and data, ensuring the
demise of the walls that had previously
existed around the transfer of knowledge.
In this new dawn of Procurement as
a growth driver, organizations work
strategically with their existing partners
and undiscovered suppliers, which now
have a line of sight into organizations’
5-, 10- and even 15-year objective horizons.
Procurement engages with partners to
contribute to these shared objectives as
early as possible to build a pipeline of
future-facing growth ideas. Procurement
sits in the C-Suite and controls the
growth agenda, aligning Procurement
teams with business objectives,
using technology to farm and harvest
innovation from supplier ecosystems
at scale, and driving top-line revenue
growth through incredible competitive
advantage. The cost- and efficiency-
focused procurement organization of
old is truly dead and buried.

7
Sustainability,
resilience and trust
Earning the license to operate and grow under
the stewardship of the CPO
Being customer-centric is also where
sustainability, resilience, and trust come
into play, of which Procurement is well-
positioned to become the chief steward.
With customers increasingly opting
to only do business with companies
that operate ethically and sustainably,
enterprises can ill afford missteps that
undermine customers’ and the public’s
trust. Accenture research1 has found that
54 percent of a sample of companies
we studied experienced a material drop
in trust that put a collective $180 billion
in revenue at risk. More specifically, we
found that a typical $30 billion retailer that
experiences a material drop in trust stands
to lose $4 billion in future revenue.
Leading Procurement organizations
will take the lead on the company’s
responsibility, sustainability and
resilience agenda, and help guarantee
the company’s license to operate and
grow. This includes fully vetting the
supplier base and ecosystem; basing
business, supplier, and sourcing decisions
on sustainability objectives, reputation,
and trust; carefully balancing the
tradeoffs between sustainability and cost
management; and continually looking
for ways to embrace circular economy
principles in sourcing to reduce or
eliminate waste and promote reuse.
8
Trust is also about resilience and true
business continuity. With the threats of
disruption higher than ever, it’s critical
for businesses to build world-class
operating chain resilience and implement
a risk management strategy that
embraces complexity, with capabilities
enabling prediction, anticipation, and
real-time execution and monitoring of
real business continuity plans.
“I think sustainability and resilience
is actually an opportunity that a lot of
Procurement organizations are seizing
because it’s something that doesn’t have
a formal owner in a lot of companies,”
one CPO noted. “I see the sustainability
piece, in particular, as an opportunity
for Procurement to actually shine
and show more relevancy within the
company. For example, at our company,
Procurement leads a big effort on shifting
the consumption of energy from fuel
sources to renewable sources. That was
something the company was talking
about from a PR perspective, but nobody
was doing it, so Procurement took it over
because we manage utilities spend.”
What’s possible in 2030?

Sustainability and
resilience become
the “New” savings
The board of a large industrial components a manufacturer’s traceability practices
manufacturer has delivered a new edict on across its supply chain a major factor
sustainability—but not to generate good in their purchase decision. Third, the
PR or remain compliant with government company has found that its largest
regulations. That’s so 2020. Instead, this customers have jointly agreed that all
global manufacturer, in the midst of its transactions with suppliers will have full
own turnaround driven by the rise of carbon offsets in place by 2024—or risk
electric-powered vehicles, now cares significant penalties for non-compliance.
more about the impact of sustainability
on its stock price than all other initiatives. In the draft of the 10-K filing introductory
In fact, the company considers creating letter making its way around the board
quantifiable impact around sustainability for comment, the CEO puts it bluntly:
its top strategic priority for creating “Without making sustainability and
shareholder value this year—for three resilience our number one strategy in
compelling reasons. 2023 to meet shareholder and customer
requirements, this company will not exist
First, there’s the investment factor. in 2025. I have instructed our Procurement
The company determined that if it didn’t and supply chain teams to prioritize these
build on its existing sustainability efforts, initiatives over cost reduction and cost
it would likely lose up to 60 percent of management programs until our goals
current investors that have raised the are achieved.”
sustainability and resilience performance
threshold to be considered for investment
or holdings in 2024. Second, proliferating
electronic vehicles, which now represent
47 percent of the firm’s business, has
become critical to strategy. These vehicle
producers are requiring the same minimum
sustainability thresholds from their
suppliers to meet the expectations of
their younger car buyers, who consider

9
To thrive tomorrow,
CPOs must reinvent
themselves today
Procurement’s new vision and value
proposition is a significant departure from
what Procurement historically has done and
it won’t be easy to deliver on—especially for
organizations operating with a more traditional
model and still struggling to evolve from a
transactional to a strategic function.

But, according to the CPOs in our research, Procurement really has

no choice. It has to adapt and evolve if it wants to remain relevant
and valuable to today’s rapidly changing enterprise.

For CPOs, the change may seem intimidating and make no mistake
it’s a huge undertaking, but it’s certainly not insurmountable. Based
on our research and input from leading CPOs, we’ve developed a
structure that can help CPOs think through and shape the next steps
in Procurement’s evolution and the key elements that will define the
organization’s journey.

Four steps to future-proofing procurement

Fine-tune Rewrite Reinvigorate Adopt new

1 the core 2 the book of 3 the talent 4 measures
engine Procurement base of value

10
 Fine-tune the
1 core engine
Building credibility, buy-in and enthusiasm
among the business for Procurement’s
new agenda is only possible if the
organization continues to focus on and
flawlessly execute the “brilliant basics”—
the core engine of Procurement that
drives profitability. It must be clear that
Procurement will still be responsible for
ensuring seamless source-to-pay, ensuring
compliance, managing suppliers, and
ultimately managing spend. Yet in many
companies today, these are areas in which
Procurement continues to struggle.
“The Procurement user experience is
very important, but the reality is that the
user experience will not get better until
the systems are integrated,” one CPO
observed. “Why is it when I do a purchase
order, I have to do a requisition, approve
that, then I have to approve the contract
when that goes through? I have to touch
it three to four times, and on different
systems. It’s almost ridiculous.”
Procurement needs to once and for all
complete its source-to-pay transformation
by building robust capabilities that bring
together simplified and harmonized
processes, the highest-quality data and
content, the right organization model
(typically in a front-, middle- and back
-office structure), and state-of-the-art,
user-friendly digital technologies.
In fact, a wide range of new, specialized
digital apps are infusing innovative
capabilities into the overall stack of
Procurement technology enablers.
By exploring and using these best-of-
breed solutions, CPOs can more easily,
quickly, and cost effectively build, adopt,
and maintain the capabilities they need.
11
Being equipped with the right technology
landscape requires having defined a clear
digital Procurement strategy and having
confirmed, via proof of concepts, that the
functionalities meet business needs. It also
requires a strong business and value drive
to avoid delivering “technology projects,”
as well as the capacity to change how
people behave and work.
One example of the impact these emerging
apps can have is how new providers have
dramatically improved procure-to-pay
enablement. Their cloud-based, flexible,
and user-friendly solutions, combined
with the right content and buying channel
enablement, offer an enterprise version of
shopping on Amazon, in a compliant way.
Rewrite the book
2 of Procurement
While fine-tuning the core engine,
CPOs also need to develop their vision
for the next level of Procurement—the
organization’s objectives, role, and
priorities—and what’s needed to get there.
This vision must be communicated across
the business, with the support of CPOs’
peers in the C-suite. From our research,
it’s obvious that the new role of the CPO
and Procurement varies across industries
and even within them. Corporate
strategies will determine what aspect
(growth, profitability, or sustainability)
will be the focus.
A key part of that vision is the fundamentally
new Procurement structure and operating
model that will enable the function to more
effectively align the value it delivers with the
business’s strategies. In most companies,
with the new mandate of Procurement and
a seamless source-to-pay experience, the
majority of current Procurement capabilities
will become back-office activities.
The face to the business will no longer
be a set of category  managers; instead,
Procurement will be represented by
senior entrepreneurs who are seamlessly
integrated into the business.
Reinvigorate
3 the talent base
New Procurement roles and
responsibilities necessarily mean new
skills are required. In fact, 95 percent of
the CPOs we spoke with said developing
new roles and skills is critical for
Procurement’s future success. The days
of a “typical” Procurement professional,
with a category or process focus and
standard career path, are gone. Instead,
diversity will be required. Successful
teams will still need key Procurement
skills, but will also be expected to exhibit
a high degree of business acumen, as
well as entrepreneurial, collaboration,
and analytical skills. Furthermore, they’ll
need story-telling and communications
proficiency; the ability to scout and
foster relationships with partners; and an
understanding of how to interpret insights
and leverage digital technologies to solve
business problems.
Yet, according to Accenture research,
nearly half of CPOs believe lack of
appropriate skills will be a key barrier
to transformation, and just 10 percent of
Procurement organizations are building
the right workforce to bring them into the
future.2 Making matters worse, such skills
are scarce; companies that don’t move
fast to bring them aboard will likely find
themselves out of luck.
To get needed skills, as well as infuse
innovative and fresh thinking into the
organization, CPOs will need to tap a
variety of non-traditional channels and
12
sources—both internal (such as sales
or engineering functions) and external
(including technical universities and
startups). Importantly, a compelling
Procurement value proposition will be
key in helping to attract and retain the
diverse, highly skilled (and in-demand)
professionals Procurement will need to
achieve its new vision. A big contributor
to such an experience is a different type
of career path for new Procurement
professionals that’s consistent with their
aspirations and supported by appropriate
training and development programs.
“We actually don’t actively recruit people
with traditional Procurement backgrounds
anymore,” noted one CPO. “We don’t need
any more Procurement specialists, more
people with Procurement backgrounds at
different companies with their own sets
of Procurement processes and mindsets.
Instead, we have people with backgrounds
in marketing, sales, and finance—
talented people who have the potential
to learn and to develop themselves.
We can teach them the Procurement
technical knowledge—I prefer to start
with generalists and a clean sheet when
it comes to Procurement skills.”
Adopt new
4 measures of value
With its broader focus on profitability,
growth, and sustainability, resilience,
and trust, Procurement can no longer
rely solely on the cost, compliance, and
operational metrics it has long used to
steer its organization and demonstrate
its value. While financial measures and
savings will continue to be a priority,
new metrics, all aligned to Procurement’s
new vision and value proposition,
are needed as well.
For example, the Procurement
organization needs to be able to
quantify the top-line impact and brand
equity enhancement of ecosystem- or
supplier-led innovations. It should be
able to track the amount of renewable
energy the company uses compared with
fossil fuel-based energy, or how much
the company has reduced the amount
of plastics in its packaging. And, in terms
of overall financials, it must be able to
calculate how the organization’s efforts
have affected the enterprise’s total
costs (both external and internal) and
cash flow, or the amount of “bad costs”
that Procurement-driven ZBx initiatives
have freed up to invest in growth.
“I think there’s opportunity to
include things that are traditionally
not a Procurement metric, like EBITDA,
for example, or even revenue,” said
one CPO. “Because if the Procurement
organization is not accountable to
actually go find value by partnering with
external entities, they’re not going to be
looking, for example, for opportunities
for partnerships on creating additional
revenue. Overall customer satisfaction,
all the way to the end customer, is
another one. It can make Procurement
accountable, for example, for the cost that
poor quality creates for the business when
a customer returns a product.”
“One of the next KPIs we need to look at,
and are starting to contemplate, is local
versus importing,” another CPO stated.
“We see increasing pressure to buy local
instead of imported products for financial
or sustainability reasons.”
13
Outside-in metrics that provide
ecosystem partners’ perspectives will
also be key to assessing Procurement’s
ability to drive value beyond cost and
efficiency. These include such measures
as 360-degree supplier/Procurement
valuations to provide helpful insights
on how Procurement can better
collaborate and improve relationships
with the supply base.
And to keep pace with the speed of
business, Procurement will need to
embrace new tools that enable the
organization to track these and other
key metrics, and gauge its performance,
in real time—and to use these metrics to
actually impact key Procurement decisions
involving such things as sourcing,
supplier performance management,
and negotiations.
According to one CPO, “While financial
measures and savings will continue to
be a priority, new metrics, all aligned
to Procurement’s new vision and value
proposition, are needed as well.”
While financial measures
and savings will continue
to be a priority, new
metrics, all aligned to
Procurement’s new vision
and value proposition,
are needed as well.
A big chance for
the new procurement
According to Accenture research, 78 percent
of CPOs believe their industry is facing
disruption, and those winds of change are
reshaping virtually every element of business.

At the same time, they’re also opening up compelling new

opportunities for the Procurement organization to create greater
value as a ‘powerhouse’ for the enterprise. But the changes required
for Procurement to generate that value are unprecedented in scope
and scale and, for many organizations, the transformation needed
won’t come easily.

Successfully reinventing Procurement to expand its role to

cover new strategic grounds will require the right organization
structure and tight alignment with the corporate strategy.
It will require substantially new skills that are increasingly in
short supply. And above all, it will require a strong, visionary
CPO as a business leader, committed to driving the effort
and doing what it takes to make it happen.

“If you look at organizations today, every one is guaranteed to

have a CFO, CEO, CTO, and HR chief on the board, but not every
organization has a CPO on it,” one CPO observed. “Changing
that will require, among other things, creating a credible,
Procurement ‘brand,’ similar to the well-known brands functions
such as finance, marketing, and HR have. That’s Procurement
leadership’s responsibility—to demonstrate the value Procurement
delivers beyond just bringing in parts or services at the right cost.
We’re almost there, but I think the question is, how do we get that on
a global scale across all organizations? That’s when you start to see
Procurement being an area that people really want to work in.”

14
Authors
Line Bagger-Hansen Steve Craen François Bourbigot
Managing Director Managing Director Managing Director

Alexis Perez Benjamin Oswin Varish Singh

Offering Development Senior Manager Senior Manager
Senior Principal

Contributors
Daniel Vollath Robert Fuhrmann Sven Ruytinx
Managing Director Managing Director Managing Director

Markus Hoppe Alessandro Caviggia Thomas Papa

Principal Director Managing Director Managing Director

Kai Nowosel
Chief Procurement Officer

15
References About Accenture
Accenture Procurement Mastery Research
1 Accenture is a global professional services company
with leading capabilities in digital, cloud and security.
2
https://www.accenture.com/us-en/insights/ Combining unmatched experience and specialized skills
strategy/trust-in-business across more than 40 industries, we offer Strategy and
Consulting, Interactive, Technology and Operations
services—all powered by the world’s largest network of
Follow us Advanced Technology and Intelligent Operations centers.
Our 506,000 people deliver on the promise of technology
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