Hackett Research Alert: New Capabilities Model Helps Procurement Deliver New Levels of Business Value and Strategic Support
October 21 2008 - 4:30PM
Business Wire
What capabilities do procurement organizations need to develop in
order to extend their value proposition from simply assuring supply
to truly harnessing the power of supply markets and influencing
business strategy and tactics? A new Procurement Capabilities Model
from The Hackett Group, Inc. (NASDAQ: HCKT) details the specific
changes companies need to make as they mature. The model is
detailed in Hackett�s latest Book of NumbersTM volume �2020 Vision:
Delivering on the Evolving Value Proposition of Procurement.� The
Hackett Procurement Capability Model expands on proven Hackett best
practices that are correlated with world-class performance and
organizes these practices by capability rather than tying them
strictly to business processes. It also supports practical
solutions by helping companies identify weaknesses, predict future
staffing needs, prioritize investments in tools and technology, and
establish better strategic alignment among all parts of the
enterprise. Hackett�s 2008 Book of Numbers research also reports
that world-class organizations now spend 22% less than typical
companies on procurement operations (.64% of spend for world-class
companies versus .82% for typical), and operate with 37% fewer
staff (48.4 per billion US$ of spend for world-class companies
versus 76.4 for typical). They also generate 129% higher spend cost
savings, including reduction and avoidance while also delivering
great stakeholder satisfaction and support for initiatives in
sustainability, innovation, working capital improvement, and other
areas. At a typical Global 1,000 company (with annual revenue of
$22 billion and annual sourceable procurement spending of $8.9
billion) this represents more than $16 million in annual savings on
procurement operations, 249 fewer procurement staff, and over $263
million in additional annual spend cost savings. In addition,
Hackett announced that it has launched a new Procurement
Capabilities Performance Study that enables companies to assess on
a broader evolutionary scale both the value proposition of their
procurement service offerings and also the capabilities needed to
support them. Respondents will receive a customized report
discussing the study results, and an analysis of significant
shortfalls and insights from Hackett on how to close performance
gaps. More information on the performance study is available at:
https://member.thehackettgroup.com/survey/prcap2008. �As we
developed our Procurement Capabilities Model, we began by
considering how the typical procurement executive would respond
when their CEO knocks on their door, asking about procurement�s
current mission, what�s needed to support it, the vision for five
years out, and what resources are required to get there,� said
Hackett Procurement Practice Leader Chris Sawchuk. �The Model is
designed to help procurement leaders answer these questions,� said
Mr. Sawchuk. �It shows how to broaden and clarify procurement�s
vision and strategy, while articulating the operating model and
resources that need to be in place. For example, a procurement
organization focused on reducing purchased costs will have
different operating and resourcing models than those of an
organization focused on supporting rapid growth. Additionally, if
the operating model and resources are not moving in lockstep with
the strategy, short-term execution and long-term transformations
are doomed to fail. The correct approach and sequence for improving
these capabilities will be different for each organization.�
According to Hackett Senior Business Advisor Pierre Mitchell,
�We�ve created a framework in which procurement leaders can
consider a broad range of questions about how to evolve their
organization and what the upsides and also the obstacles are at
each stage of evolution. Hackett�s Procurement Capability Model
helps procurement leaders stimulate organizational improvement by
framing the problem, defining its scope and dimensions, and
enabling communication using common terms.� The new Procurement
Capability Model builds on Hackett�s Procurement Value Proposition
Model, which was launched in Q4 of 2007. It details capabilities
across 12 dimensions of procurement within three major categories.
For each dimension, specific capabilities at each of four maturity
levels (reactive, planned, aligned, and strategic) are offered. The
categories and dimensions are: Operating Model, including
organization and governance, strategy and alignment, performance
measurement, and continuous improvement; � Core Process Management,
including innovation and product support, customer/stakeholder
management, strategic sourcing, supplier management and
development, and purchase-to-pay; � Resource Management, including
business process sourcing, information technology management, and
talent management. Hackett�s new Book of Numbers research will be
one of several topics discussed at Hackett�s Procurement Advisory
Leadership Forum in Atlanta on October 30. The summit is an annual
event exclusively for members of Hackett�s Procurement Executive
Advisory Program, where they can exchange ideas on creative,
innovative and proven solutions for mastering the challenges of
doing business in current economic conditions, hear insights from
client member presentations, and gain insights into metrics and
trends from Hackett research studies. An excerpt from a Hackett
Research Insight providing more details on the findings described
here is available, with registration, at the following URL:
http://www.thehackettgroup.com/research/capabilitymodel/. About The
Hackett Group The Hackett Group, Inc. (NASDAQ: HCKT), a global
strategic advisory firm, is a leader in best practice advisory,
benchmarking, and transformation consulting services, including
shared services, offshoring and outsourcing advice. Utilizing best
practices and implementation insights from more than 4,000
benchmarking engagements, executives use Hackett's empirically
based approach to quickly define and prioritize initiatives to
enable world-class performance. Through its REL brand, Hackett
offers working capital solutions focused on delivering significant
cash flow improvements. Through its Hackett Technology Solutions
group, Hackett offers business application consulting services that
helps maximize returns on IT investments. Hackett has worked with
2,700 major corporations and government agencies, including 97% of
the Dow Jones Industrials, 73% of the Fortune 100, 73% of the DAX
30 and 45% of the FTSE 100. Founded in 1991, The Hackett Group was
acquired by Answerthink, which was renamed The Hackett Group in
2008. The Hackett Group has global offices in the United States,
Europe and India. More information on The Hackett Group is
available: by phone at (770) 225-7300; by e-mail at
info@thehackettgroup.com; or on the Web at www.thehackettgroup.com.
Book of Numbers is a trademark of The Hackett Group.
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