Procurement 20/20: Supply Entrepreneurship in a Changing World

Praise for PROCUREMENT 2O/2O "At Johnson & Johnson, Procurement's mission is to be a driver of productivity gains and a conduit to innovative solutions that exist within our supplier network. What the authors of???Procurement 20/20???call 'supply entrepreneurship' is a concept that resonates well with us. We aspire to mastering all opportunities offered by the rapidly changing marketplace, and this book provides an excellent road map for the journey that lies ahead of us." —Hans Melotte Vice President and Chief Procurement Officer Johnson & Johnson "Increasing material productivity through the application of the newest methods and approaches has been a key factor in driving our profitability and competitive advantage in the past. Procurement 20/20 takes a bold look into the future and explores the changes that the procurement function needs to make. It is a must-read for the ambitious CPO." —Babara Kux Member of the Managing Board Siemens AG "Best Practice category management is no longer sufficient to stay ahead of the pack in procurement. The telecom industry is undergoing fundamental changes requiring totally new ways of working. This book explores very convincingly how CPOs and their organizations need to adapt to deal with the challenges of the future." —Vicente San Miguel Chief Procurement Officer Telefonica "In the academic community, procurement is one of the most underrepresented topics today. This book fills this gap with a unique combination of careful, in-depth analysis and insightful, practical recommendations. The result is a highly persuasive call to arms regarding what organizations need to do now to prepare for the future. A must-read for practitioners and academics alike." —Christian Terwiesch Andrew M. Heller Professor Wharton School, University of Pennsylvania

Preface ix Introduction: The Procurement Advantage xiii Part 1 From Good to Great Procurement 1 Chapter 1 The Drivers of Sustainable Procurement Performance 3 Chapter 2 The Megatrends That Impact Competitive Advantage 15 Part 2 Responding to the Megatrends of the Next Decade 29 Chapter 3 The Great Global Rebalancing: Building a Dynamic Sourcing Footprint 31 Chapter 4 The Productivity Imperative: Orchestrating the End–to–End Value Chain 49 Chapter 5 Big Data and the Global Grid: Procurement’s New Role in Data–Driven Decision Making 73 Chapter 6 Volatility as the New Normal: Translating Sourcing Risk into Competitive Advantage 91 Chapter 7 The New Economic Drivers: Capturing the Total Impact of Environmental, Social, and Regulatory Factors 117 Part 3 T he Road Map to Procurement 20/20 137 Chapter 8 Getting Ready for Real Change: Steps for Starting the Journey toward Procurement 20/20 139 Chapter 9 Your Agenda Now 157 About the Authors 159 Acknowledgments 161 Index 163

PETER SPILLER is a Principal in McKinsey's Frankfurt office and leader of the firm's EMEA purchasing and supply management practice, serving clients in the automotive, telecommunications, and high-tech sectors on operations transformations and strategy. NICOLAS REINECKE is a Tenured Expert Principal in McKinsey's Hamburg office. He is part of the EMEA operations leadership team, focusing on supply management and operations topics across industries and geographies. DREW UNGERMAN is a Director in McKinsey's Dallas office and leads the firm's Americas purchasing and supply management practice. He advises clients across the health care value chain on strategy and operations. HENRIQUE TEIXEIRA is a Principal in McKinsey's S???o Paulo office. He is the leader of the firm's Latin America purchasing and supply management practice and sourcing center.