Procurement Leaders Power Through COVID: Report

While many procurement companies struggled during the Coronavirus (COVID-19) pandemic, some leaders showed strength in their decision making yielded results.

Chaay Tee Stock adobe com

A new report from Kearney shares a light on what leaders in procurement did to stand out from the others, most importantly showing strategic command of their third-party spend and investing in the right technologies. The Power of Third-Party Economics showed that some even saw revenue growing double the amount of competitors. These leaders also invested in sustainability, product and service innovation and supplier diversity.

Per PR Newswire

  • Leaders (7% of the companies studied) generated nearly five times higher total shareholder return and 33 percent higher average margins compared with their peers, which were designated as "aspirants" (8%), "the pack" (50%), and "strugglers" (35%).
  •  Leaders' vastly superior results stem from what the study's authors call third-party economics―looking beyond immediate cost considerations toward creating long-term structural advantages across the company's supply chain.   
  • Other distinguishing characteristics of the leaders identified in the study include the following: 3x more likely to have long-term category strategies, 3x more likely to report strategic value from supplier diversity initiatives, 4x more likely to have formal supplier relationship management (SRM) programs with key strategic suppliers and 7x more likely to have cross-functional SRM governance. 

"C-suites that neglect the growing gap between their own company and leaders that are pursuing third-party economics will end up, in effect, subsidizing more advanced competitors that can draw from the same supply base on increasingly advantaged economic terms," says Yves Thill, a Kearney partner who led the study. "This could result in competitive disadvantage for companies that accept the status quo."