Procurement opportunity assessments provide the ideal introduction to and launch pad for a range of procurement process improvement activities. They are aimed at the CEO, CFO, or CPO who is looking to make a step-change in procurement performance.
Often, recognizing where this step-change is to be found can be challenging. A procurement opportunity assessment by Efficio will give you answers to these fundamental questions:
- What are we spending our money on?
- How sophisticated are we in each spending category?
- What is the potential for further cost reduction or value creation?
- How would we realize this potential?
- How well equipped is the Procurement team, and the tools and systems it uses, to act on this? Where does it need reinforcing?
Our procurement audits are delivered rapidly and with minimal disruption to existing operations. The process is conducted within four to six weeks, and requires relatively little senior management time.
What we give you
At the end of the process, you will be left with:
- An accurate, granular ‘spend cube’
- A bottom-up, category-by-category analysis of where you stand today, with estimates of available savings
- A benchmark of your organization against our Procurement Effectiveness Model. We rank your current performance alongside that of comparable and competitor organizations
- An Implementation Plan – a comprehensive but pragmatic roadmap for executing change and for achieving target savings and value
How the process works
Efficio typically deploys a team of three consultants, calling on other experts as required. They will collect, clean and classify spend data, and conduct brief, focused interviews with Procurement staff and other stakeholders to gain an understanding of current practices and requirements in each category.
We create the spend cube using our eFlow Spend Analytics technology, which makes it easy to interrogate spend data by category, business unit and supplier. We can do this as a one-off exercise, or you can retain the software that enables you to refresh the spend cube on a periodic basis.
Efficio has been conducting procurement audits for more than 15 years across Industrial, Commercial, Retail and Service sectors and for Private Equity (PE) investment portfolios. For many of our PE clients, a Procurement Opportunity Assessment is included in the 100-day plan, often as a ‘front runner’ that delivers tangible EBIT uplift before other value creation initiatives bear fruit.
Procurement Opportunity Assessments can be a real eye-opener. For clients with complex multi-tiered supply chains as in Construction or Infrastructure, this can be the first time they gain transparency across a supply chain dominated by a small number of strategic partners who sub-contract significant amounts of work.
We generally expect our procurement audits to address 50-70% of external spend and suggest savings potential of 5-15% by category. Opportunity Assessment provides deep insight in quick time, informs future procurement development, and introduces the potential for further partnership with Efficio.