Monday Metric: Procurement Excellence ‘On The Go’

This week’s analysis focuses on the issue of increasing the effectiveness of the procurement function.

Creating and unlocking value in an organization starts with knowing precisely where things stand, and where the opportunities for improvement lie. To help, SAP’s Performance Benchmarking group publishes a short analysis each Monday, highlighting hot industry topics and high-impact strategies.

KEY QUESTION: Can mobility lead to procurement excellence?

Monday Metric: Procurement Excellence ‘On The Go’ image MM 130408 Procurement 1024x433Monday Metric: Procurement Excellence ‘On The Go’

KEY TAKEAWAY:

Procurement executives consistently call out for faster and more convenient approval processes, and mobile devices and technology are increasingly offering solutions. Approving an invoice or purchase request from an employee, for instance, now can be done quickly using mobile devices. This helps reduce delays, makes the process paperless, and provides an opportunity to negotiate early pay discounts, among other benefits. In addition, mobility in procurement can help in building stronger relationships with suppliers, helping them better manage working capital.

The bottom-line impact can be significant. For example, recent analysis by SAP’s Performance Benchmarking group found that in the Consumer Products industry, the average cost of goods sold (COGS) as a percentage of revenue drops dramatically when comparing companies that place a low importance on mobility in procurement practices with those that consider it high in importance – 52.5% for the former vs. 29.8% for the latter.

In another example, in the Auto industry the same key indicator (COGS/revenue) drops from 45% for companies that rank procurement mobility “low importance” down to 32% for companies that consider it high in importance. The bottom line? For companies ‘on the move’ today, mobility in procurement offers a clear improvement in performance efficiency.

To know more about how SAP can help you mobilize specific procurement processes for your specific industry through technology and best practices, please write to us at valuemanagement@sap.com. To benchmark your own performance against the database, visit https://valuemanagement.sap.com .

Note to readers: SAP’s Performance Benchmarking program is a strategic service sponsored by its Value Engineering organization. Originally launched in 2004 together with ASUG as a forum to exchange metrics and best practices, the program today has grown into a global effort and one of the largest such programs in the industry—with more than 12,000 participants from more than 4,000 companies and studies available in 12 languages.

Participants receive—free of charge—customized and confidential benchmarking comparisons against industry peers as well as aggregate analyses. To participate in the SAP benchmarking program, visit https://valuemanagement.sap.com.

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