United Kingdom

Details

  • Service: Advisory, Management Consulting
  • Type: Video
  • Date: 17/02/2012
  • Length: 2.32 Minutes

The Power of Procurement - The impact of the economic crisis 

The Impact of the Economic Crisis:

John Tros, Partner, KPMG in Netherlands: I think that the economic situation has affected the situation of procurement in a negative manner. You used to see procurement much more business orientated, much more focussed on getting value for the company and getting value for the end customer. However, nowadays it’s much more focussed on price and cost reduction which means that supplier is just squeezed to the bone and in the end that will harm the supply chain.

 

Ray Slayford, Partner, KPMG in Australia: I think post the global financial crisis and the recent challenge that organisations are facing, procurement has a significant role to play in cost reduction. Now, that’s always part of normal procurement functions’ sort of remit and operation in life. I think, the change though is procurement operating at a more strategic cost optimisation level versus a traditional cost reduction level.

 

Richard Nixon, Partner, KPMG in the UK: I think the economic situation has produced some interesting challenges for procurement. One, there’s a real war for talent at the moment. So, companies are battling it out with each other to get the best procurement people who can negotiate the best deals with their suppliers and get the best value out of them. I think also, there’s been a certain complacency that’s developed and an assumption that as long as procurement is saving more than it cost to the business then that’s fine. What our survey’s found is that if you’re saving three times your cost in terms of the annual benefits the procurement delivers you’re not enough in the game. Leading edge is about 13 to 1, and that’s where companies should be striving to get to.

KPMG has conducted one of the biggest global surveys into procurement functional excellence. The second video in a short series looking at the key themes arising from this survey discusses how the economic crisis of recent years has affected the role played by procurement.
 

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