The journey towards procurement maturity follows a curve through three broad stages, which  we label Foundation, Established, and Leading. Organizations are often at different maturity stages for direct and indirect spend procurement, with direct spending typically ahead of indirect. When projects under-deliver, it is often because the solution chosen was not appropriate for the relevant maturity stage or the implementation was not aligned with the level of maturity.

Foundation level challenges for indirect spend are largely focused around missed opportunities for cost savings. Direct spending is typically more mature and better managed. However, processes are inefficient and there is little innovation, suppressing profits and bringing unnecessary risk. Some Foundation level challenges include:

  • Lack of control over indirect spend
  • Lack of indirect spend data
  • Fragmental direct spend data
  • Functional capability
  • Procurement working independently from other functions

If you are at the Established level for either direct or indirect spending (or both), you are moving up through the maturity curve. Your business has implemented organization-wide processes, and you have good data visibility. But you are still missing opportunities to deliver savings and efficiencies and build competitive advantage. You are unable to exploit data fully to inform decision making or to manage suppliers strategically for long-term business benefit. Some Established level challenges include:

  • Investment in technology is inconsistent
  • Lack of accurate, in-depth insights
  • Limited cross functional coordination
  • Little innovation
  • Inefficient organizational structure

If you are at the Leader level for either direct or indirect spending, you have come a long way. However, if you stop now, the competitive advantage you have built up will quickly erode as what once was a cutting-edge approach becomes the norm. Some typical Leader level challenges include:

  • Connecting business functions and integrating suppliers
  • Driving adoption and continuous improvement
  • Moving from being a cost center to a revenue generator
  • Optimizing risk control

To find out what maturity level you are and how to advance to the next stage, read the report to see what your recommendations are click here.