#Bain#Procurement

Bain: Helping Build World-Class Procurement Organisations

Find out how Bain estimates that companies can reduce their purchasing cost base by an average of 8-12% plus an additional 2-3% savings annually

Oliver Freeman
|Sep 14|magazine8 min read

Procurement is a department that many organisations tend to let slip. They slack a little on the optimisation of processes because the majority are unaware of just how lucrative an excellent procurement department can truly be. Lucrative through savings and increased productivity, that is ─ which is why organisations falter, because executives and business leaders often only take the ‘inbound’ cash flow into account, and tend to maintain supply chain relationships for a prolonged period of time through a form of loyalty, or comfort. Bain is looking to change that relative ignorance, with a unique three-stage approach reduce procurement costs for global organisations, bolstering bottom lines and igniting further growth across the board.

It’s usually the case that companies have huge external spends─oftentimes; it’s actually the largest expense. Regardless of that fact, external spend remains one of the least scrutinised aspects of the budget. Odd, right? It turns out, when consultants get involved with organisations on a supply chain level, they tend to focus on improving procurement effectiveness and tactical improvements like price negotiations and changing the volume pooling. 

Bain has come up with an alternative method of consulting organisations in an attempt to turn their procurement departments into world-class leaders.

Spend X-Ray

Using unique visual imaging software, the ‘spend x-ray’ assists organisations in understanding what they’re buying; who is buying it, and where it’s being bought from. It’s all imaged as an automated spend cube which gives companies an excellent overview of their spending through data analytics, supported by Bain’s dedicated procurement centre of excellence. 

Buy Better + Spend Better

With a comprehensive plan to reduce spending, Bain’s collaborative system combines the proprietary spend, savings benchmarks, category expertise, spend drivers, and complex analytics to analyse data. This system takes a broader and more integrated look at each organisation’s unique circumstances and identifies the best saving opportunities available. Not only that, but the system also aims to go a step further than just price optimisation and supplier acquisition, by focusing on improving demand management and understanding the total cost of ownership across multiple projects, in realtime. 

Capabilities

Bain is looking to help organisations build the right capabilities, through the adoption of the right organisational structure and by employing a diverse, but correct set of talent across the company. They do this so that your organisation is sustainable in the future, long after their own engagement has ended. 

The very best firms out there have the best of the best, not just on a technological solution level, but also on a people level. They’ve got the right models and the right talent, demonstrating that with the right level of augmentation, the sky is the limit. By providing the best tools and empowering the right talent through ample training and resources, organisations find that, in the right environment, they can optimise their productivity and the results stick. 

In fact, by following these simple steps, Bain claims that there’s “a typical one-time cost reduction of 8-12% for their clients, with ongoing 2-3% annual increased productivity benefits.”

These are tangible results that, if your organisation is savvy, can be reinvested in other parts of your business to fuel further growth and successes. 

Source: https://www.bain.com/consulting-services/operations/procurement/

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