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Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Procurement Case Studies – 10 Insightful Examples

Table of content

• Amazing vs Wholefoods
• Vaccinate Nationalism
• Golden Donut Chain
• East China Sea
• Apple vs Samsung
• RJR Nabisco Tabacco
• Microsoft vs Nokia
• International Longshore and Warehouse Union
• North Korea vs South Korea
• Largest Ponzi Scheme

Frequently asked questions

Key take-aways

Establishing trust is a foundational element in negotiation. Whether in international relations, business disputes, or organizational conflicts, parties must invest time in building trust.

Cultural differences can significantly impact the negotiation process. Understanding the cultural nuances of the parties involved is crucial. 

Even individuals with strong ethical values can inadvertently engage in deceptive practices when driven by the desire for high profits or personal gain. 

Negotiation occurs naturally when parties are dealing with one another to form an agreement. It is the first step in developing or creating an agreement that both parties will mutually benefit from. However, not all negotiations end up in a good way. Sometimes, a dispute is created when both parties are invested in the negotiation. 

For this article, we will check ten negotiation and procurement case studies that can give you insight into how to negotiate with the other party. We will explore how they tackled the situations in which parties are in dispute. 

After reading this article, you will have an insight into how to negotiate with someone through these negotiation examples . You will learn how to tackle disputes in a negotiation without harming the other party’s reputation. So without further ado, let us start delving into these ten insightful cases.  

Example 1 — Price negotiation between Amazon and Whole Foods

Actual case:

The case study is based on a real-life price negotiation between Amazon.com and Whole Foods Market. 

Whole Foods Market has been declining in performance in the market for the last two years. Due to this, the activist hedge fund that owns almost 9% of the common stock is pressuring the former. 

The activist hedge fund is eyeing the reform of the management style of the executive officers as it asserted that they are the ones responsible for the poor results achieved by the Whole Foods Market. In other words, the CEO of the Whole Foods Market is in trouble of losing his position

In light of the pressure that comes from the activist hedge fund, four different equity firms send separate inquiries to Whole Foods Market. One of the equity firms offered a share cash price of $36.00. This is in line with the historical share price of Whole Foods Market. Private investment in public equity (PIPE) is the shortcut for companies that are in need. 

However, pursuing this will put Whole Foods Market at numerous disadvantages. The result of the buy-out might make shareholders quickly sell their stocks. If a large number of stocks are sold at a lower price, the private equity firm may pressure the company. Additionally, it may claim ownership of the company. 

A few days ago, Amazon’s CEO reached out to Whole Foods Market. It was expected as many news outlets reported that Amazon is interested in acquiring the latter for opportunities in the retail sector. 

The reason why the Whole Foods Market is a good candidate for Amazon to acquire is its attractive value and strategic deal. Amazon expects that it can guarantee a substantial premium. The first signal of commitment by Amazon is the face-to-face meeting with the Whole Foods Market’s CEO. Moreover, Amazon just launched a new service called AmazonFresh that fits perfectly with what Whole Foods Market has developed which is the local-based fresh-goods delivery system. 

Before the prospect of acquiring Whole Foods Market, Amazon has another candidate which is Silvia’s Market. The strategy of this company is focused to become the best supermarket that a middle-class family can trust. However, looking at the collaborative opportunity of the two parties, you will start to have some doubts. This is because Silvia’s Market’s mission is too far away from the core value of Amazon which is Innovation. 

That is why the most attractive option is to choose Whole Foods Market rather than Sylvia’s Market because the synergies between Amazon and Whole Foods Market are the best option. 

One core aspect of Amazon is high-velocity decision-making. However, this strategy does not line up with Whole Foods Market. That is why Whole Foods Market suggested the decisional strategy of disagreeing and committing. 

Most negotiators face challenges within themselves thinking about what to offer, what is the reasonable agreement to accept, and the real interest in the negotiation. For this, you would need high-velocity decision-making because time is important in negotiations and the time you will need to decide is crucial.

Whole Foods Market needs to know that Amazon is not used to long bidding wars. It needs to be interested in Amazon’s proposal exclusively or else Amazon will find another company for opportunities in the retail sector. 

In the negotiation, Amazon has the upper hand as it has the capability to inflict damage on Whole Foods Market by not pursuing the negotiation. The threats looming the Whole Foods Market will cease if it collaborates with Amazon.

Additionally, Amazon demands secrecy. Any leakage will force Amazon to terminate the negotiation. In bidding situations, secrecy is important. Any leak of confidentiality will have disastrous outcomes regarding the agreements. A non-disclosure will allow Amazon to have steadiness, speed, and information symmetries in the negotiation.  

Final Deal:

The limits of the offering price for each party are laid out in the agreement which makes them able to compute their reservation price (RP).

When Amazon first bid, it evaluated the historical value per share of Whole Foods Market which is about $35.00 per share. At first glance, the $42.00 per share bidding price of Amazon seems too high. However, the calculations of Amazon were totally inclined with the prospect of growth of Whole Foods Market in the case of an acquisition. 

The Whole Foods Market’s attempt to counter-offering the bid with $45.00 per share was just to hold onto the financial resources of Amazon. Although we must take note that Whole Foods Market does not expect Amazon to be willing to bid at a higher price. Simultaneously, Amazon expects Whole Foods Market to accept its high offer. The expectations of both parties have coincided with one another which makes the negotiation reasonable and advantageous for both parties. 

Additionally, a profitable outcome depends on how negotiators deal and discuss during the negotiation process. Being an active listener and discussing issues is pivotal in the negotiation to be successful.  

Finally, after rigorous research and consideration between one another, Whole Foods Market approved the deal with Amazon which acquired the former for $42.00 per share which amounts to $13.7 billion including its debt. 

What can we learn from it?

We learn from this case study that both parties must make an effort to retrieve data from both sides to quantify and evaluate the outcome of every possible solution. 

Another is that a good negotiator can anchor the positioning battle around the other party’s reservation price . It is important to consider the other party’s perspective to take action in their situation rather than our own. 

This will help negotiators to obtain information and interest with the other party while also building trust and a fruitful negotiation process management. 

Lastly, we can learn from their negotiation that a final outcome can be reached once both parties meet on the same ground or terms. Both sides must be convinced that there is no use to retreat when the outcome will be good and that the negotiation is about to end.

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Example 2 – “Vaccine Nationalism”: A lose-lose negotiation strategy

The onslaught of the pandemic has made national governments across the world face the challenge of securing enough safe doses of COVID-19 vaccines when it becomes available.

A coordinated global plan is sought to promote fairness and efficiency. However, it may be a little too late, especially for least developed countries. 

This case study highlights the best and worst practices when pursuing limited resources through negotiation. 

In the early days of the COVID-19 pandemic, many drug manufacturers around the world focused on developing vaccines that can provide immunity to the virus without any harmful side effects. 

The governments of developed countries began negotiating with drug manufacturers to ensure that their citizens will get the vaccine first. The competition was on with developed countries while poorer countries were left on the sidelines. 

Many nations bought more than what they needed because they know that only a few vaccines will likely be safe and effective; Vaccine hoarding has now begun. 

As wealthy nations begin to outsmart each other through negotiation because of their limited resources, poor countries are left to wonder how they can protect their citizens. 

The World Health Organization (WHO) came up with a plan that aims to ensure that the vulnerable populations in the world will have access to the COVID-19 vaccine. 

On August 24, 2020, WHO announced that 172  nations that comprise over 70% of the world’s population had made commitments to participate in the COVID-19 Vaccines Global Access (COVAX) facility. 

COVAX is a global initiative to secure two billion doses of safe and effective COVID-19 vaccines from companies such as Pfizer, AstraZeneca, Moderna, etc. for the vulnerable population worldwide. 

At first glance, COVAX seems to be a charitable enterprise founded by wealthy nations. However, this is not the case. Wealthy nations see this opportunity as a win-win situation for them. 

Wealthy nations will be guaranteed access to the world’s largest portfolio of vaccines. Additionally, they will negotiate as part of the 172 nations which will bring the price of the vaccines down. 

A week after the announcement of COVAX, the previous Trump administration said that it would not be joining the global effort. The decision was inclined toward “America First”. 

Kendall Hoyt, a professor from Dartmouth’s Geisel School of medicine, said that backing out or not joining the global effort of COVAX is like passing an insurance policy. Because if none of the vaccine candidates that the United States has proved to be effective, then the nation will be left unprotected. 

Many nations that cannot afford to purchase the vaccines directly have made creative deals with other countries. For example, Pakistan has allowed China to conduct vaccine trials on its citizens in exchange for enough doses to vaccinate its citizens, especially its most vulnerable population.  

Each country has negotiated with drug manufacturers without thinking of other countries. This is normal, especially when you are procuring scarce resources. However, the problem with the vaccines can be handled better if countries have cooperated with each other instead of negotiating by themselves with drugmakers. 

In order to encourage coordination when allocating scarce resources, countries must plan ahead, show the benefits of cooperation, and take a broader view of the problem. 

When emotions are running high amidst a crisis, it is difficult to keep in check your behavior. If the perception of your country is that the others will hoard, your country will also hoard. The time to negotiate the outlines of an agreement is before the start of a crisis and not in the middle of it. 

Negotiators usually think that when they lose, the other one wins. However, this is far from the truth. Professor Max H. Bazerman from Harvard Business School explains that to move beyond this mindset, one must show what one can gain from cooperating with one another. 

Organizations always feel the special duty to protect and look out for those they represent. This is true but we should also take time to consider how our actions can affect other people. This includes the most vulnerable population in the world. 

Ingroup bias does not stop solutions that can benefit others. As a matter of fact, you can expand it by considering what those people outside of your organization can provide that will benefit you too. 

Ecologist Garrett Hardin shares the parable of a group of herdsmen who graze their cattle in the same pasture in his 1968 article.

In the parable, all herdsmen are motivated to increase the size of their respective herds to increase their profits. However, the increase in the number of cattle would mean that the pasture will be destroyed due to overgrazing. 

We can learn from his parable that the best solution to the dilemma of the herdsmen was to negotiate with one another to limit the size of their herds. 

With a finite resource at stake, those that are involved will usually have better long-term outcomes by negotiating to divide the resource equitably rather than trying to claim the biggest piece for themselves. 

If we just imagine that all the leading economies in the world agree to put all their budgets for vaccines in the COVAX or a similar global effort and not sign bilateral deals with pharmaceutical companies, then the efficiency of the coordination will help lower the cost and streamline the production and distribution. 

If countries just broaden their views in negotiating with other countries to strive for coordination, then many lives would have been spared by the pandemic.

Example 3 — Negotiation Case Study: Sincerity’s Power in Negotiation

Actual Case:

The golden donut chain, a Philippine-based company, has faced difficulty in negotiating with its labor union. The donut chain and the labor union have talks regarding their problem. 

When the donut chain’s management team arrived late with the said talks, the labor union stormed out in protest to show great dismay over their delay in the negotiation. 

In order to continue their talks with the labor union, the management team of the donut chain has sent a letter that includes an apology.

However, from the perspective of the labor union, the apology is insufficient to forgive the inconvenience that the donut chain has caused. The labor union refused to meet for talks and continue with their strikes. 

This case study has focused on how to convey your sincerity when apologizing in a negotiation. How can one deliver their sincerest apology that the other party will accept? 

The case with the golden donut chain and the labor union has ended in a bad way. Due to the lack of concession due to the insufficient apology from the donut chain, the labor Union has brought it into court. 

When both parties brought it to the courts, it took years before a party was compensated. In this case, the labor union has won the case against the donut chain. 

Professor Edward Tomlinson and Professor Roy Lewicki from Carroll and Ohio University have found out that people view apologies to be sincere when it includes internal attributions of harm. This simply means that people will see your apologies as sincere when you own up to your mistakes. 

The credibility of a person has a significant factor in making apologies sincere from the perspective of the other party. 

A study showed that unfulfilled promises, deception, and breaking the trust of the other party are some factors that a negotiator cannot work out in giving their sincerest apology. Moreover, giving assurance even if you cannot attain or fulfill it is counterproductive in a negotiation. 

Many negotiators advance their case by persuading the other party or listening to their side. But sometimes, the greatest thing you can do in a negotiation is to straightforwardly admit your mistake.

Many apologies have failed to achieve their aim—to be forgiven. The delivery of some people is usually the culprit why apologies are not accepted. 

The importance of an apology in a heated argument or negotiation cannot be overstated enough. When the other party thinks that your apology is not sincere enough to make amends, the heat in the negotiation will rise further—leaving both disliking each other. 

The power of apology in negotiation and dispute resolution is significant to fixing relations between parties. It is important to apologize and own up to your mistakes to make the other party feel that you are sincere. 

We must remember that if we cannot fulfill or attain our promise, we must not push it further to the other party. Doing so will only aggravate the emotions of the other party. Because we all know that no one wants to be left hanging—so do not promise during a negotiation that you cannot follow through. 

Example 4 — The East China Sea Dispute

Actual Case: 

In November 2013, China established an air defense zone over the disputed Islands on the East China Sea. This has been seen as an act of aggression in an escalating international dispute.

Japan and China are both claiming the islands. It is known as Senkaku in Japan and Diaoyu in China. According to CNN, the islands are believed to be rich in oil. Additionally, the islands are said to be an advantage for military defense strategically which is why the dispute on the islands is hard to resolve. 

China began patrolling the islands and its plane has come near the international airspace of Japan several times. When this happens, Japan launches its fighter jets in response to the tactics of China. Additionally, Vietnam and the Philippines had made claims to the islands as well. 

The conflict over scarce resources can be tricky and difficult to resolve. In the business field, negotiators that face this conflict are able to avoid the conflict by considering and thinking about every party’s contributions and claims with the resources. However, in our own business negotiation , how can you convince the other parties that concession is possible?

Japan has bought the disputed islands which have enraged China. Today, the tension has increased and no negotiation has been settled. In 2019, Japan built military bases to keep China from further developing its military capabilities in the region. 

All negotiators must keep in mind that the first thing they need to work out is building trust with the other party.

First, when you are negotiating with a new party or the negotiation with them in the past has not gone as planned, you cannot expect them to trust you right away. 

You must give them time to adjust. Additionally, you must let them tell their concerns, and past grievances, and apologize for any actions that have created mistrust from the other party. 

Second, when negotiators discuss agreements, they must devote a lot of time to asking questions to tackle all the issues circulating the agreement. 

By asking the other party questions regarding their positions in the negotiation, you will know their underlying interest. 

Also, you can share your information to show your own interest in the negotiation. This will allow you to unfold potential tradeoffs that are tolerable to both of you.

Lastly, negotiators must look for solutions that can make the other party whole. This means that you must let the other party know that they can benefit greatly from the negotiation. 

Demanding a unilateral concession with a corresponding benefit to the other party will make the negotiation fail. You cannot expect anyone to compromise without them gaining any benefit from the negotiation. 

What can we learn from it? 

From this case study, we can learn how to negotiate without making the outcome self-serving for any of the parties. 

We all know that during an international negotiation , even if negotiators believe that they sincerely want a fair outcome, their perspective of a fair outcome is likely to be self-serving. This kind of perspective will make the negotiator believe that they must have a greater share of the resource—making them biased on their own terms.

We can learn from here that trust is the foundation of every negotiation. Without trust, it will not be possible to produce a fruitful outcome of the negotiation. 

We must also consider the interest of the other party to make concessions that both of you will benefit from the negotiation. 

If you cannot make the other party realize that they can gain from your negotiation, the outcome of the negotiation will always fail. 

Example 5 — Negotiation in Business: Apple and Samsung’s Dispute Resolution Case Study

In April of 2011, Apple accused Samsung of copying the look and feel of its products when it launched its Galaxy line of phones. The situation has made Apple file a lawsuit against Samsung. 

However, Samsung has countersued Apple stating that it has not paid royalties for using its wireless transmission technology. After this, the number of disputed patents has gone up to the sky. 

Since then, the two giant tech companies have repeatedly accused one another of copying the appearance and functions of their respective products. 

Both companies have shown willingness for mediation in an effort to avoid going to court. Due to this, they have cut the number of disputed patents by half. However, even if the CEOs of both companies had sat down at a table for mediation, Apple started striking Samsung again.

Apple has filed a motion to bar the sale of one of Samsung’s products on the grounds that the tablet is created to replicate its second-generation Ipad. 

Both companies have hoped to avoid legal battles. However, the mediation of both companies has ended in an impasse. Neither one wants to back down from their arguments. The lawsuit has been pursued and went to trial twice and Apple has ultimately won more than $409 million.  

We must take note that both parties need to negotiate or mediate a solution before escalating it to the courts. Additionally, both parties must be willing to work together to resolve the problem or deal with the situation. 

In many situations, mediation is viewed as the last step of adjudication rather than the first step in a collaborative effort to work on a solution. 

From the standpoint of preserving the image of the organization, mediation is preferable. Mediation that leads to voluntary agreements will always ensure compliance with whatever the parties have agreed upon

For this case study, we have seen that mediation as a dispute resolution technique is not possible when both parties are grudging participants. In order for mediation to succeed, both must be actively engaged in finding a solution. 

Additionally, Both companies have already invested too much time and resources with all the lawsuits that they have bombarded one another. Due to this, they will feel that it is too late to back down as they have invested too much in it. 

The talks for concession will fail and the aggressiveness from both parties will increase the longer they spend fighting rather than finding a solution.

We can learn that when a business dispute arises, both parties must be willing to negotiate in finding a solution before they take the matters to the courts. Taking it to the courts will end any negotiation for meeting halfway.

Example 6 — Overconfidence In Negotiation

RJR Nabisco, a tobacco company, is having a bad year with its stock performance. Ross Johnson, the CEO of RJR Nabisco, has thought that it is the best time to negotiate a buyout to increase the shareholder’s value of the stock. 

As a reference, a buyout is a transaction where another party has acquired control of the company. Going back, Ross John and his management group have entered into negotiation with the special committee of the board of directors. 

Since he is the CEO of RJR Nabisco, Ross John is confident that his buyout attempt would be a successful pitch for the board of directors. Unbeknownst to him, his overconfidence has led him to fall into making bad decisions and jumping to the wrong conclusions. 

His first mistake is assuming that due to his position and connection in the company, his buyout pitch will be approved easily. 

His second mistake is assuming that his investment bankers will just simply put the financing in place. Lastly, he expected the board of directors that they would give him the entire power to manage the buyout. 

Along with Shearson Hutton, his main financial partner, they offered an initial buyout price of $75 per share. 

Ross Johnson’s overconfidence in closing the buyout has led him to his impending downfall. He was not paying attention to numerous occurrences that were happening at that time. Instead, he had gone on in his self-interest. 

The board of directors has never discussed or met halfway with Ross Johnson regarding the buyout. Additionally, it never occurred to him that there were other companies who wanted to buy Nabisco. 

Following the series of events, his attitude has led the board of directors to award the buyout bid to an investment bank firm, Kohlberg, Kravis, and Roberts (KRR), for $109 million. 

In actuality, the bid of Kohlberg, Kravis, and Roberts (KRR) is lower than Johnson’s Bid. The board just wants to get off Ross Johnson from their shoulders even if it means that they would take a loss. Although it is lower, they appreciated the KRR’s negotiation flexibility.  

The solution here in this negotiation case study is to avoid overconfidence in negotiation. It is okay to have confidence, but overconfidence will make your judgment hazy.

There is a thin line between confidence and egotism. Unfortunately, in the case study, he becomes so full of himself that he does not consider the factors and the events that are transpiring at that time. 

Being confident is knowing that you have prepared for the negotiation. Additionally, you will know your limit and the do’s and don’ts when negotiating even if you know the other party all too well. 

To reduce your overconfidence, you must first collect information. When the stakes are high, you must put down the mirror to stop admiring yourself. Instead, you must know the information about the other players in the game. The collected information will allow you to use it to your advantage when negotiating. 

Second, you must consider the other party. One of the best ways to correct biases such as overconfidence is to think of reasons why your assumptions are wrong. This will allow you to keep your attitude and your assumptions in check. 

Third, you must ask other people in your organization about your assumptions. Good negotiators base their decisions on the data or information available and not on the information that will just make them feel good. 

Lastly, you must not be afraid to ask. Many people avoid negotiation because it is stressful. In the part of the case study, Ross did not ask questions to the board. Rather, he has carelessly gone on with the buyout. His attitude and assumption about the buyout have failed him ultimately.  

Negotiation courses usually suggest that business managers should possess a high level of confidence to succeed. 

This is correct as confidence will allow managers to face any challenges in the fast-paced environment that they are in. However, there is a thin line between being confident and overconfident. 

Overconfidence is a cognitive bias that lurks in the background. It is like a trap waiting for you to get caught as you innocently walk. 

Overconfidence can cause you to become indifferent to the available information. Additionally, it will always cause you to miscalculate things by making assumptions. 

We must always assess ourselves if we are already being overconfident because it will always lead us to make wrong decisions and baseless assumptions. 

Example 7 – The Microsoft-Nokia Deal

According to the New York Times, on September 3 of 2013, Microsoft announced a deal to acquire Nokia’s handset and services business for $7.3 billion. 

The agreement has marked a bold move to the side of Microsoft to upgrade its game in the handset competition. Additionally, it ends the struggle for Nokia to re-enter the phone market where it once ruled. 

The deal explores the dynamics behind the negotiation that has made Nokia join forces with Microsoft. Both sides had a strong urge to join forces. 

Through the years, the struggle of Nokia to re-enter the phone market has lost significant ground to smartphone manufacturers such as Samsung and Apple. It has failed to keep up with the latest innovation in the market which has severely impacted its profitability. 

Nokia’s underperforming handset business has made its focus on telecommunications equipment, mapping business, and patent portfolio. 

Steve Ballmer, the previous CEO of Microsoft, first approached Nokia’s CEO, Stephen Elop, for a possible acquisition during the Mobile World Congress industry conference in Barcelona. 

Their first meeting started the discreet negotiation between Nokia and Microsoft.

Microsoft’s acquisition of Nokia means that it has to know its cultural background before negotiating. 

According to a report from the Program on Negotiation at Harvard Law school, there are four simple rules to handle cultural differences in international negotiations. 

First, you must research your supplier’s culture. In the case of Microsoft, it must know the culture of Nokia to know what are the dos and don’ts in their negotiation. 

Second, you must show respect for cultural differences. Microsoft has to understand the value system of Nokia. 

Third, you must be aware of how others may perceive your culture. Microsoft needs to carefully analyze how its gestures in the negotiation may affect the deal. Being aware of their culture will allow you to be able to adjust your negotiation in order to close the deal. 

Lastly, you must always find ways to bridge the cultural gap. The cultural differences create division between Microsoft and Nokia. If Microsoft knows how to come to terms with Nokia, then the negotiation process will be much easier than being insensitive to each other’s perspectives. 

Acquiring another company is not an easy process. It entails overcoming its greatest challenge —  cultural barriers in negotiation. 

Merging different cultures can be confusing and a lengthy process. Merging two of the largest companies in the world is difficult as both will have embedded roots in their respective country. 

It makes sense to keep the identity of the organization and borrow from the best of both. It never hurts to create strategies that are based on the expected cultural norms of the acquired company as long as it is a part of the bargaining process which creates valuable, workable, and sustainable agreements. 

Example 8 — After the West Coast Ports Conflict, Damage Remained

In a crisis negotiation, parties may believe that they face an impossible choice between giving in to the other side’s demands or standing firm with their decision resulting in the worst-case scenario to happen.

This is the case with the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). The lack of agreement between the two parties quickly became a problem. 

The ILWU-PMA contract expired on July 01, 2014. Since the month of May, the parties have met to negotiate a new agreement regularly. During this period, the ILWU claims that it has consistently come to discuss the agreement in good faith despite the other party’s pressure tactics. 

The spokesperson from the PMA has said that both parties agreed that normal operations at West Coast ports would continue even if no agreements have been reached but the ILWU has backed out of the agreement.

However, after a few months, PMA has accused the ILWU of orchestrating slowdowns at the Pacific Northwest ports of Seattle. It alleges that the slowdown at the port has resulted in the reduction of terminal productivity by 40 to 60%. 

Following these events, the ILWU has issued a statement that according to experts, the cause of the congestion is the result of three factors that are deeply rooted in employer management. 

In the case of LIWU and PMA, both have already plunged themselves into crisis negotiations. Fortunately, both parties have already reached a deal in 2015 but still, we cannot change the fact that there are ways that can help the parties avoid the need for crisis negotiation. 

First, to avoid crisis negotiation, you must build trust in its early phase. You should not wait for an urgent deadline to come before you do something. Take advantage of launching negotiations early to establish trust. Furthermore, check on the other party periodically to ensure that you can mutually address any issue before it is too late to be fixed. 

Second, you must be aware of overconfidence. Crisis negotiation often arises because of the overconfidence of one party in the negotiation. To prevent this, you must think of possible scenarios and prepare for each of them accordingly. 

Third, you must avoid extreme demands. A demand increases the tendency to escalate commitment to tough positions. You must resist drawing a line in the sand. 

Lastly, you must seek an outside opinion. Third parties can give a dose of rationality in crisis negotiations. This allows you to have an objective critique of your plans that will result in meeting all the parties’ interests in the negotiation. 

We can learn from here the adage,” prevention is better than cure.” If the parties have discussed their interests early, the congestion will never happen. Partnered with the contentious history of both parties, the crisis negotiation is bound to happen. 

In addition, it is important to build trust in its early phase. This will build a foundation that will allow both parties to resolve any issues that will arise together. 

If there ever have been any heated arguments in the past, it is important to take note that the party who has delayed on their promise apologizes sincerely. 

Also, we must take note that in a negotiation, both parties must see that their interest will be met. There can never be any negotiation if the other one feels that it got the short end of the stick. 

Example 9 — International Negotiations: North and South Korea Talks Collapse

In June of 2013, North Korea and South Korea were supposed to meet in Seoul to negotiate how they can forge a rapprochement due to their decades of division. 

If this happened, it would be the highest government dialogue between the divided nation in years. 

After this, news came out that South Korea had appointed its vice unification minister as the chief delegate to the negotiation that will occur.

North Korea was offended by this move made by South Korea. It demanded that South Korea send its more senior officials. South Korea defends itself and has responded on the issue that the proposed delegate of North Korea is lower in status than what it has delegated. 

The night before the scheduled talks begin, North Korea accused the South that their response is an insult to them. South Korea is still open to dialogue but it will not back down with its delegation. 

When South Korea criticizes North Korea’s argument, it has risked the latter in embarrassment. According to a study by experts, direct threats to self-esteem can trigger anger, embarrassment, and competitive behavior toward the other party. 

We know that some people are slightly more sensitive than others. When slightly-sensitive people negotiate with others, they are twice as likely to declare an impasse even if the agreement will benefit both sides. 

Research has concluded that when slightly-sensitive people are personally invested with the issue that is being negotiated, they are more susceptible to feeling threatened and acting competitively.

In the case of South Korea, it has neglected the value of helping North Korea to save face or to protect its image. It is the mistake of South Korea that made the negotiation meet its dead end. 

Many experts have criticized the government of South Korea for ruining the chance to engage with the North. 

In this case study, we can learn that protecting the image of the other party in the negotiation is important to reach a fruitful discussion. 

Of course, no one wants to be put in a situation where you will be a laughingstock in the eyes of the public, more so when it comes to international negotiation.

Example 10 — Why Ethical People Become Unethical Negotiators

Bernie Madoff, the person who ran the largest Ponzi scheme in history that is worth about 64.8 Billion dollars, did not pull off the scam by himself. 

To give a brief review of his infamous scheme, we will go back on how he attracted investors by claiming to generate large returns through an investing strategy that is called split-strike conversion which is a legitimate trading strategy. 

However, he deposited the client funds into a single account which he used to pay existing clients who wanted to cash out. The 2008 financial crisis has made him unable to maintain his fraud . On December 10 of 2008, he confessed his fraudulent act to his son who has worked in his firm. 

Long story short—a lot of investors put their trust in him due to his facade as a respectable financier in the industry.  

According to professor Max H. Bazerman, good people that have strong ethical values can trick people without realizing that they are doing it. 

He draws on the psychological study of ethical decision-making and applies it to negotiation. He tells us that negotiators usually act unethically due to the desire of gaining high profits and greed. 

Negotiators may exaggerate things that are far from the real thing which falls into the category that Bazerman calls bounded ethicality. You may ask why it happens. Well, it happens once the negotiation progresses. In the heat of the negotiation, it is where ethical fading begins. 

Negotiators fail to see what they are doing as they are only focused on one thing—high profit. Many people interpret situations that will favor them.

According to Bazerman, deception occurs at the negotiation table, especially during the preparation, participation, and recalling of the negotiation phase . Participation in negotiation is the most susceptible phase where ethics fall. This is due to the fact that negotiators will only want to negotiate what makes sense for them. 

In recollecting or remembering the negotiation that transpired, the negotiator fails to see the other party’s perspective. 

We can promote ethics at the negotiation table by encouraging negotiators to slow down and consider important decisions. They should mask the gender and the picture of the applicant to lessen the bias in the process

Negotiators should also know that language matters. Using words like Ultimatum and winning can unintentionally set the negotiation for deception. 

What Can We Learn From It?

We can learn that negotiators that become aware of their susceptibility to deception, will be lessened at the negotiation table. 

Negotiators must be able to reflect and deliberate all the important decisions before dealing with someone at the negotiation table. 

Once you see that something is wrong but you failed to notice due to your focus on the high returns, that is when ethics fade. 

In conclusion, the provided case studies offer valuable insights into the complexities of negotiation across various scenarios. Negotiation is a skill that extends beyond business transactions, encompassing international relations, legal disputes, and even internal organizational dynamics.

These examples underscore the importance of preparation, cultural awareness, trust-building, and ethical considerations in successful negotiations.

How important is trust in negotiation?

Trust is fundamental in negotiation. It fosters open communication, collaboration, and a willingness to find common ground. Without trust, negotiations become challenging, and parties may struggle to reach mutually beneficial agreements.

How can cultural awareness impact negotiations?

Cultural awareness is crucial in negotiations. It influences communication styles, decision-making processes, and the perception of gestures and actions. Ignoring cultural differences can lead to misunderstandings and hinder the negotiation process.

Why is ethics essential in negotiations?

Ethics are vital in negotiations to maintain integrity and build sustainable relationships. Even well-intentioned individuals can engage in unethical practices, especially when driven by financial gains. Prioritizing ethical considerations ensures fair and honest negotiations.

About the author

"> "> My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.

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Case Study: Transform a Procurement Organization

Investco’s purchasing demands were growing faster than their procurement capabilities could handle—the process was at a breaking point.

Despite a time of economic instability with headlines depicting a grim global economy plagued with debt crises, financial volatility, and lower commodity prices, Investco has continued to sustain its competitive advantage in hedge fund management. Similar investment companies recorded portfolio losses, while Investco experienced unprecedented growth, expanding its client roster, maintaining and improving historical returns, and substantially increasing the number of its personnel during this period.

Although Investco retained a competitive advantage, the company was growing organically faster than internal processes could adapt to scale and new demands. This growth challenge was exacerbated by the current procurement practices which varied by business unit with limited enterprise-wide standards or policy. Lengthy cycle times and redundant activities were common across the procurement to pay cycle as a result of this rapid growth and nonstandardized approach. Adding to the challenge, the existing procurement tool, a custom-developed solution, was inflexible and inefficient. While the tool was fixed and rigid, individual business unit processes and approaches were not. Some business units used purchase orders, where others did not. Each business unit had a variety of process and review steps for purchasing goods and services. The legal review process for contracts was not differentiated or scalable based on type of purchase, and the review steps were not consistently applied. Spend authorization thresholds were low relative to the large number of purchases at a smaller dollar value and had not been adjusted to reflect growth. For example, a $50 software license renewal went through the same review stages (technology, legal, and sourcing) as a one-off $100,000 specific piece of IT equipment. Investco’s existing tool did not have workflow capabilities that would meet the new needs of the business, and concerns existed regarding scalability. The inflexible workflow issues combined with poorly designed process also led to late engagement of the required reviewers. For example, a purchase would frequently go through sourcing or contract review before technology review.

The impact of these inefficient processes was being felt as a constraint to leveraging third party goods and services to support firm growth. When the firm identified a need for a new procurement software tool to address these constraints, KPMG was chosen to assist Investco with the selection of the tool and the initial design of the new procurement solution.

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Intelligent procurement

• Call For Change
• When Tech Meets Human Ingenuity
• A Valuable Difference
• Meet The Team
• Related Capabilities

Call for change

As procurement functions realize the value their data and their relationships with third parties can add to an organization, they are trying to shift from their traditional offering of transactional compliance to being a business partner that can help their companies grow their bottom line.

Making this transition means standardizing, simplifying and automating the elements of traditional procurement to create a frictionless buying experience. This accomplishment will help move procurement functions toward enabling intelligent procurement.

As Accenture makes this shift itself, we recognized the need for a strong data and analytics foundation. Our Procurement Plus organization—so named with the word “Plus” added to reflect the shift in delivering value above and beyond what is expected of traditional procurement—is developing a data strategy and program to empower us to be more data driven in analysis, information tracking and decision making. We recognize this is a journey, and like all transformations today, the journey is best undertaken in an agile way.

When done right, a data and analytics strategy is a powerful tool that enables Procurement to be a valuable business partner delivering real change as our Procurement Plus did with Accenture’s closed-loop spend management (CLSM) approach . CLSM is a new, data-driven operating model for managing the source-to-pay life cycle that targets indirect and direct costs for meaningful and sustained transformation.

Procurement Plus by the numbers

procurement spend

invoices paid

ventures & acquisitions work projects

US spend with diverse suppliers

As of Accenture fiscal 2020 year end. *On top of standard procurement FTE it includes more than 500 FTE in Accounts Payable and our internal contractor managed service provider.

When tech meets human ingenuity

In our attempt to deliver a data strategy, we started small with the focus on delivering value. This approach allowed us to gain support for a larger investment to turn us into the intelligent procurement function that we aspire to be.

Digitizing processes to create access to data

Our agile journey to transform procurement began with Accenture’s move to  SAP Ariba Buying and Invoicing  and the deployment of the Guided Buying capability across Accenture to improve the buying experience. Our Procurement Plus and  global IT  organizations have continued to collaborate to enhance our capability. We are transforming content, digitizing procurement processes, building automations and intelligence on SAP Ariba, all on the journey to developing intelligent procurement.

Throughout this time, we’ve gained experience in addressing data and developing analytics solutions along with Accenture’s  Applied Intelligence  organization. Together, we have developed several advanced analytics solutions that help us address specific issues today.

Setting the foundation for advanced analytics

The advanced analytics solutions we have developed include:

Ariba procure-to-pay process improvement.  We are using  Celonis , a process mining and execution management solution, to identify and remove bottlenecks in the procure-to-pay process and improve the quality of execution. In so doing, we are optimizing standardization at scale. The data visualization capabilities of Celonis are helping us to develop deeper insights, allowing us to have fact-based conversations and highlighting similarities or differences of workflows, categories, or countries that are impacting global process turnaround time. We are leveraging the newer workbench and execution management capabilities to automate the execution of activities to confirm we can offer a higher level of operational service without increasing head count. This is a powerful enabler for change.

General ledger recommendations.  We are using  predictive analytics to identify and assign the financial data  on requisitions and non-purchase order invoices. This capability better prepares buyers who are less familiar with accounting to be more accurate with their purchases, improving their user experience and significantly streamlining downstream accounts payable accuracy, time and cost.

Predictive contractor fulfillment.  This tool uses predictive analytics that draw on historical information to help Accenture determine whether a contractor request can be filled. It also helps to assess the quality of the requirements and to view trends on cancellations by categories, clients and geographies. The tool allows our contractor onboarding teams to apply their time where it’s most valuable, delivering huge time savings in effort and higher satisfaction from suppliers in the quality of requests that they receive.

360-degree supplier relationships view.  By integrating data about Accenture’s family of suppliers with Dun & Bradstreet services, this tool helps us understand the full scale of the relationship and partnership Accenture has with our suppliers, which is the key to gaining better insights as we partner with them.

Metrics at users’ fingertips.  We have created and integrated targeted dashboards across the procure-to-pay and accounts payables areas to cascade to any user. The dashboards present performance against service level agreements (SLAs) and other business outcomes and key performance indicators (KPIs). They also derive data-driven, actionable insights and determine high-impact opportunities for process and key outcome improvements.

Creating a holistic, robust digital strategy

Developing these specific solutions has allowed our Procurement Plus team to reach a mature stage in advancing our data strategy and deliver valuable use cases that showcase the return on investment to leadership. This demonstration has enabled us to begin the next phase of execution on our data and analytics journey.

Data Strategy. Our approach now consists of two layers: the first is the normalized movement of data to enable a simplified user experience and the second is the positioning of data in a shared location so that it can be consolidated and consumed. With this central storage in place, procurement data can be analyzed effectively cross-process. This ability allows us to gain new insights and be able to answer future, unanticipated questions based upon new business disruptions.

This new data-centric environment also allows us to accelerate development of more advanced solutions supporting the connected buying experience for our people, comprehensive frictionless third-party risk management, and intelligent procurement.

Connected experience . To reduce friction for our people, we are developing a “connected experience” for buying that is underpinned by a fully digitized process enabled by data and analytics. We recognized the need to give Accenture people a more effective response to “how do I buy something?” and be navigated through the procurement process.

Our connected experience capability consists of several key components. We are developing a “front door” via ServiceNow to provide users with a single and connected entry for all their procurement needs. Sourcing will be automated and handled through a dashboard giving users updates and reminders from all procurement systems all in one place.

The workflow data architecture will then connect all sourcing activities with the correct buying channel. This architecture will essentially bring our sourcing activities from the front door together with the buying into one central data lake that is curated and integrated. This visibility will confirm, for example, what we bought from a supplier and whether we paid them according to the terms agreed upon during our sourcing and contracting process. These and many other insights will enable us to measure process effectiveness through the total life cycle of procurement.

Third-party risk management. The data journey and the connected experience will support third-party risk management. By capturing the data in a curated fashion, from the time we make a request to buy through our sourcing and contracting activities and the buying process, we can measure the relative risk of any given supplier compared to others, both from a compliance and performance perspective, according to the criteria we set forth on what defines risk. Bringing together more data elements enables us to establish a risk score and gain a full view of each supplier.

Leveraging data to drive intelligent procurement

With the data we now have, we’re able to answer questions that we could never answer before. For example, we can measure whether our respective spend category plans are being implemented as intended. Detailed insights regarding spend and performance will move Accenture toward engaging with suppliers that are the best fit for our categories.

The insights help us confirm that we are engaging with the right suppliers to contribute to Accenture’s innovation and sustainability agenda. The insights also help us to obtain better arrangements, pricing, and quality and help us be smarter with the suppliers we’re engaging with, ultimately driving margin, where possible.

A few example use cases include compliance to contract and payment terms, demand concentration according to category plans, and balance of trade. Yet another example is getting a better sense of the trajectory around contractor needs in relationship to demand trends and costs. All these user scenarios were developed by a structured input/output review of data traversing the procurement processes. The outcomes help to highlight current disconnects in the process and identify the data that will be needed to join the processes automatically and analyze their effectiveness.

A valuable difference

The future of procurement is in intelligence. By unleashing data and analytics as we progress on our program journey, we anticipate gaining new insights to get better at managing the total procurement life cycle while continually improving the customer experience.

Key outcomes from our journey with process analytics:

Celonis Continuously improves the customer experience and effectiveness of internal teams by reducing friction and improving turnaround time

Predictive contractor fulfillment Fulfills contractor requests much faster and more effectively than our previous process and with less manual effort

General Ledger Recommendation Delivers an improved procurement experience and greatly streamlines accounts payable accuracy, time and cost

Connected experience Planned to be more comprehensive and standardized than today in guiding Accenture people through the buying process

“Bringing the right data and steps together in the procurement process will give us enormously valuable insights into how we’re contracting and buying and with which suppliers.” — PATRICIA MILLER , Managing Director, Procurement Plus – Digital Transformation, Accenture

Annualized working capital benefits delivered by having greater visibility into our pending invoices, as of fiscal year 2021.

Reduction in invoice approval time.

Improvement in request-to-order time.

Meet the team

Patricia Miller

Jim Gradeless

Scott Perkins

Related capabilities, corporate services & sustainability.

These teams are enabling innovation, growth and business continuity for Accenture.

How Accenture does IT

Sourcing and procurement.

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• Inventory Management Software
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Case Study: NXP Semiconductors

Procurement Academy

OCTOBER 18, 2023

The challenge Following the appointment of NXP’s Chief Procurement Officer, Jeff Wincel , a new global strategy was implemented that included a pillar dedicated to ‘people and success’. As part of this important pillar, a professional development program was created to transform the procurement department.

Case Study: Ewellix

MARCH 2, 2023

After implementing several new procurement processes, Group Director Purchasing, Nicolas Robardet, identified a number of competencies which required development within the team. Competencies included risk management, supplier relationship management, contract management, negotiation, and strategy . Victor Jaecklin, COO, Ewellix.

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• Scaling Logistics for Success: A White Claw Story

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Global Supply Chain & Procurement Summit 2015

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Strategies to secure stakeholder buy-in for corporate training

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Resilience is the New Critical Supply Chain Strategy!

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Artificial Intelligence in Procurement: Case Studies from GEP

• AI-powered solutions can help businesses to automate tasks, improve efficiency, and gain new insights into their procurement strategies.
• AI is well positioned to help businesses to catch the pulse of their customers, understand their needs, resulting in better customer experience.
• With incremental leaps in technology, AI will continue to deepen its impact on procurement software solutions.

October 16, 2023 | Procurement Software

Artificial intelligence (AI) is rapidly transforming the procurement landscape. AI-powered procurement solutions can help businesses to improve their efficiency by automating tasks as well as help them gain deep insights into their operations.

As a leading provider of AI-powered procurement solutions, GEP's solutions are used by businesses of all sizes to improve their procurement performance. Here are a few artificial intelligence procurement case studies that discuss how AI-powered procurement solutions have helped businesses to achieve success.

Artificial Intelligence in Procurement Case Study #1

A global oil and gas company wanted to streamline, unify, and automate its procurement operations. Its existing system was fragmented, with a limited set of automation capabilities and multiple sources of data across systems and business units. Although the client had more than 20,000 B2B customers and its annual revenue was more than $14 billion, it had limited supplier interaction through systems and high sourcing cycle time. As a result, the client wanted to make the procurement system more consistent, efficient and automated.

GEP SMART™, the AI-driven procurement platform, made the client’s procurement a seamless, integrated function for the client, enabling a high level of automation. GEP’s solution also strengthened the client’s entire source-to-contract and procure-to-pay process, encouraged catalog-based buying, and eased the supplier onboarding process.

This case study is a must-read for procurement professionals looking to rid their operation of silos and transform it into a united, efficient function that drives value.

Read the case study here: Global Oil & Gas Company Transforms Procurement Operations With GEP SMART™

Artificial Intelligence in Procurement Case Study #2

A Global 500 heavy equipment manufacturer with more than 400 sites and multiple subsidiaries wanted to transform its entire sourcing processes. The client’s transformation objectives included streamlining procurement operations, improving spend visibility and forecast of material costs. The chose GEP as a partner to deploy the best-in-class source-to-pay (S2P) software in order to provide a boost to its spend, sourcing and category management functions. With the help of AI-powered GEP SOFTWARE™, the manufacturer was able to unify and replace its disparate legacy systems that were slowing down its global operations. GEP was able to streamline the workflow and capture all direct material sourcing process data in one unified system, making all demand visible in one place for the first time.

The software functions implemented by GEP included sourcing, spend, analytics and category strategy. The procurement software solution’s intuitive interface helped the client drive user adoption of sourcing/RFX and CLM tools — from under 20% to more than 80%. This helped the client gain much-needed visibility into spend, as well as real-time insights into suppliers, cost breakdowns and risk, enabling it to forecast material needs more accurately and improve sourcing efficiency, saving millions of dollars in costs.

Read the case study here: Global Heavy Equipment Manufacturer Saves $45M in Direct Material Sourcing With GEP SOFTWARE

Artificial Intelligence in Procurement Case Study #3

A leading global pharmaceutical company wanted to transform its research and early development (R&ED) infrastructure with a bespoke, data-driven and AI-enabled platform that would facilitate modern clinical trials.

The pharma giant needed new-age infrastructure that would enable it to keep up with rapidly changing requirements in clinical trials. The company partnered with GEP to achieve this goal. GEP adopted a multi-pronged approach to help the firm identify its needs and select a suitable cutting-edge platform that transformed the R&ED infrastructure.

This case study demonstrates how the strategic partnership enabled the company to speed up drug development, improve patient experience and enhance the operational efficiency of its clinical trials.

Read the case study here: How GEP Helped A Pharma Giant Transform R&ED Procurement Infrastructure and Reduce Drug Development Time

Advantages of Integrating Artificial Intelligence in Procurement

As AI continues to make incremental leaps, the impact on procurement will continue to deepen. Therefore, businesses that embrace AI will be well-positioned to succeed in the future. Some key benefits include:

Increased Competitiveness

By automating tasks, improving efficiency, and reducing costs, AI can help businesses to become more competitive in their markets.

Improved Customer Experience

Artificial intelligence with all its technological advancements is well positioned to help businesses to catch the pulse of their customers, understand their needs, resulting in better customer experience. From personalizing product recommendations to providing instant customer support to providing real-time resolutions, AI can provide quick and efficient support.

More Innovation

AI can help businesses to develop new products and services more quickly and efficiently. For example, enterprises can use AI to quickly analyze customer data and identify new product opportunities, and accordingly devise strategies and production methods.

AI is rapidly transforming the procurement landscape. AI-powered solutions can help businesses to automate tasks, improve efficiency, and gain new insights into their procurement strategies. Be it heavy engineering, oil and gas or the life sciences industry, artificial intelligence in procurement will have a deeper impact on sustainability practices of businesses – including reducing waste, improving energy efficiency, and identifying sustainable suppliers.

Tags: Artificial Intelligence in Procurement , AI in procurement

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A new era for procurement: Value creation across the supply chain

The world experienced significant turmoil between 2020 and 2023: supply chain disruptions, geopolitical tensions, technological advances, changing consumer needs, new sustainability commitments, and more. It’s increasingly clear that the resulting shifts in how people live, work, and play are not temporary but structural, beginning a new economic era characterized by volatility, regionalized supply chains, AI dominance, and talent scarcity. 1 “ On the cusp of a new era? ,” McKinsey Global Institute, October 20, 2022. To succeed in the new environment, organizations are currently embedding agility, technology, and innovation into every aspect of their value chains.

As visible as these moves now are, their long-term success depends on a much less obvious action: changing what the organization buys, whether it’s raw materials that meet new environmental standards or analytics talent who can identify what consumers most value. Across performance dimensions ranging from cost and cash to carbon control and social impact, external spend plays a crucial role. Consequently, chief procurement officers (CPOs) who have successfully navigated uncertainty  in recent years have become indispensable partners to the executive suite.

As the CPO of a manufacturing company noted to us, “Never before has procurement been core to so many executive-committee-level priorities. We now have a real seat at the top table. And this is not a temporary situation—this is how we will operate going forward.” The CEO of a chemicals company echoed this sentiment: “These days, to perform well, companies need a different end-to-end view on the business. Procurement is absolutely critical.” The new economic era represents a unique opportunity for procurement to step up and redefine its scope, mandate, and playbook , providing a competitive edge to organizations that do so well.

Four megatrends are shaping the future ecosystem of procurement:

• An increasingly multipolar world that challenges the interconnectedness of global value chains. Procurement leaders are therefore shifting focus from cost improvement alone toward resiliency and assistance to businesses that are adapting to volatile market conditions.
• Advances in AI and machine learning that can quickly extract deep insights from previously unstructured data. Procurement can make a crucial contribution by enhancing spend transparency and capitalizing on movements in supply markets.
• Demographic shifts, including shrinking workforces and rising skill gaps, that intensify competition for digital talent . The task for procurement departments is to attract and nurture candidates with the analytical skills and data competence needed to unlock value from agile ways of working  and digital operating models.
• The transition to low-carbon energy, upending resource and energy systems. Procurement can take the lead in minimizing value chain emissions , securing high-demand green materials , and managing the capital expenditure required to achieve net zero.

The new currencies of procurement

Despite typically accounting for 50 to 80 percent of a company’s cost base, external spend often receives less attention than sales- or productivity-improvement efforts. Introducing new “currencies of procurement,” beyond traditional cost savings and price reductions, can help position procurement as a strategic function.

• Improving net margin by outperforming the market: In a more volatile era, value creation increasingly depends on offsetting market increases and swiftly capturing downward trends. Collaboration between procurement and sales, along with other functions, becomes vital for protecting and increasing margins while managing risk.
• Ensuring volume and enhancing growth: Procurement can surpass mere order fulfillment and instead provide a more durable competitive advantage, strategically securing critical and scarce materials while maintaining supply chain flexibility.
• Leading value-chain emissions reduction: Procurement can contribute critical support for net-zero objectives by securing green materials and decarbonizing the supply base through localization efforts and enhanced supplier co-innovation.

Companies that prioritize the reinvention of external spend management can excel in the new economic era. Investing in procurement performance enables organizations to derisk, decarbonize, and optimize their largest cost base. Embedding the new currencies for procurement into the broader strategic imperatives is crucial to steer holistic value creation.

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Toward ‘procurement 2030’.

In an era defined by volatility, procurement faces an imperative to remake itself with a new vision and new capabilities to help businesses weather coming storms. CPOs from a wide range of industries spoke with us in detail about how their roles are changing and where they see opportunities for the future. Their perceptions, combined with our analysis, coalesce into a vision for Procurement 2030 that comprises three critical challenges for the CPO: becoming an end-to-end value entrepreneur, expanding into new venues of value creation, and building the organization of the future that provides a strategic blueprint to guide procurement leaders (Exhibit 1). By embracing these challenges, CPOs can position themselves as strategic partners, incorporating innovation, resilience, and sustainability throughout the value chain.

Becoming an end-to-end value entrepreneur

Achieving procurement’s full potential for lasting impact means accelerating the function’s evolution from a traditional focus on savings to a much broader agenda emphasizing value creation and resilience. That has implications throughout the organization, from strategic development through to sales and marketing.

Redesign of upstream value chain. Procurement’s first opportunity is to go beyond cost management to use its deep understanding of the value chain and supply markets. By becoming an active strategic partner with the C-suite, procurement can help shape corporate strategy, identify M&A targets, scout early-stage innovations, and enhance cross-functional collaboration for long-term value creation. This allows procurement to actively shape and redesign the upstream value chain by optimizing supplier collaboration to extract maximum value from the supply base—tier one and beyond.

As the CPO of an industrial company told us, “The CPO is not only the chief procurement officer anymore, but the chief partnership officer as well—partnerships externally with suppliers and internally with other functions and business units—with procurement being a knowledge broker, creating value from the collaboration between inside and outside of the company.”

The CPO is not only the chief procurement officer anymore, but the chief partnership officer as well—partnerships externally with suppliers and internally with other functions and business units—with procurement being a knowledge broker, creating value from the collaboration between inside and outside of the company. The CPO of an industrial company

Downstream margin management. End-to-end margin management, not cost control, is where procurement can show the greatest impact. Joint governance and collaboration among sales, R&D, and procurement can then propel top-line strategies, with flexible, adaptable product mixes and dynamic pricing adjustment to maximize revenue and margins. This strategic, cross-functional co-ownership and collaboration ensures that sourcing decisions consider both top-line revenue generation and bottom-line profitability.

The CPO of a chemical company argues, “Not understanding how your price adjustment mechanisms work—decoupling them from procurement’s work rather than integrating them altogether—can be detrimental and even dangerous for margin. But to be truly part of the end-to-end strategy and not just represent the supply side, procurement will need to be increasingly holistic and entrepreneurial.”

Strategic resilience. Procurement is transitioning from assuming security of supply to optimizing the portfolio in order to mitigate the risk and impact of disruptions. That means developing a robust diversification strategy. Accelerating development of alternative suppliers, creating real-time data transparency, and incorporating procurement data into integrated business planning can identify and moderate the risk of shortages while limiting cost ramifications.

More companies say they are taking a new approach when weighing trade-offs. According to the CFO of an agrochemical company, “We are even prepared to accept higher cost in the short term to restructure the supply base and make it more resilient.”

Enabling socially responsible sourcing throughout the supply chain

Opening new venues of value creation.

Tomorrow’s looming pressures—macroeconomic, geopolitical, environmental—call for an expanded solution space, including judicious deployment of the latest innovations.

Volatility management. Thriving in the future will mean embracing volatility, so that procurement can become a truly predictive function that anticipates price increases, captures downward price movements, and creates value from uncertainty. By better leveraging technology—such as digital twins representing entire value chains —procurement gains real-time insights into cost drivers, enabling agile responses to market changes.

Senior procurement executives tell us that they are already feeling the pressure: “Volatility in the markets is at a level we have not seen before,” noted a pharma CPO. “Procurement’s ability to adapt to these changes and monetize that volatility will be absolutely crucial for success.”

Volatility in the markets is at a level we have not seen before,” noted a pharma CPO. “Procurement’s ability to adapt to these changes and monetize that volatility will be absolutely crucial for success. A senior procurement executive

Scope 3 upstream optimization. Carbon may soon achieve full cost equivalence in target setting and budgeting, with procurement playing a pivotal role in driving the sustainability transformation of the upstream value chain. By embedding CO 2 reduction into every sourcing decision , fostering expanded value chain transparency, and resetting the supply base through advanced demand-management and technical value-creation levers, procurement can align sustainability ambitions and cost-reduction targets. The CFO of a chemical company said to us, “Enterprise value is key, and the key success factor there is CO 2 ; it’s crucial for procurement to step up to drive Scope 3 reduction.”

High-value analytics. With high-value analytics powered by AI, procurement can harness available internal and external data to drive superior sourcing decisions. A multidimensional data pool, using AI for real-time spend analysis and insights embedded into collaborative platforms, can enhance decision making and strategic optimization. According to the 35 CPOs we surveyed, “procurement as the owner of the single-source-of-truth platform for external cost” was the highest priority for high-value analytics. At the same time, the vast majority said they lacked technology platforms that could perform thorough, integrated, real-time data processing and said, consequently, that less than 20 percent of their organizations’ available procurement data was currently used.

Building the procurement operating model of the future

Procurement’s expanded role implies a reinvention of its internal structures so that the function can respond more quickly, use technology more effectively, and support the business more strategically—developing the buyer of the future and a new talent model.

Agility through digitization. As procurement evolves, so too does its organizational structure. Together, recent breakthroughs in machine learning and generative AI are creating new opportunities (and urgency) to elevate performance and expand capabilities—with advanced digital tools enabling sophisticated, cross-functional processes. Strategic agility and digital capabilities combine into a model that comprises three central elements: strategic buying, fully autonomous operations, and agile pools (Exhibit 2).

First is the more widespread development of robust strategic buying teams to create winning sourcing strategies for strategic or complex spend areas. Building those teams may depend on the second change: deploying fully autonomous sourcing bots to drive procurement in standardized spend areas, thereby freeing up buyer time for more value-additive activities. But the CPO of a food business cautioned that while tail-end negotiation and optimization “should be fully automated, accurate and reliable data on your supplier base is crucial to achieving this.” Finally, by transitioning from a category-oriented team structure to agile ways of working, procurement organizations can become more responsive and effective in directing resources and competencies where they are most needed to meet business needs.

The buyer of the future. To thrive in the future, procurement needs a new breed of professionals who possess a diverse skill set. The buyer of the future combines the traditional procurement tool kit and category expertise with a new set of capabilities in advanced data analytics, sustainability, and strategic thinking. By nurturing talent with these competencies, procurement organizations can adapt to changing market dynamics and drive cross-functional innovation between the suppliers and the internal stakeholders.

The CPO of a technology company underscored this point: “Procurement professionals are going to need to be much more digitally fluent, so that they can learn from the data that is available to them. Just figuring out what are the right questions to ask the data is something that more and more supply chain professionals are becoming adept at, and that’s really going to help people be more surgical in making selections, measuring supplier performance, and building future plans.”

Procurement professionals are going to need to be much more digitally fluent, so that they can learn from the data that is available to them. Just figuring out what are the right questions to ask the data is something that more and more supply chain professionals are becoming adept at, and that’s really going to help people be more surgical in making selections, measuring supplier performance, and building future plans. The CPO of a technology company

Gain, retain, and develop talent. The ongoing digitization of roles across industries and functions is already intensifying competition for a limited talent pool. Procurement faces an additional dilemma, having been regarded too often as only a behind-the-scenes support function—focused on cost cutting and negotiating rather than driving innovation or growth. Making procurement more attractive to high-performing talent with ambitious career aspirations—especially compared with functions such as finance, marketing, or sales—is a challenge. To gain, retain, and develop talent, procurement organizations may consider enhancing their hiring strategy, strengthening their career progression opportunities and learning platforms, and uplifting the profile and reputation of the procurement function.

We are entering times defined by sudden upheavals. But this seismic shift also reveals previously untapped opportunities, which procurement can be instrumental in seizing. With an expansive vision for value and a reinvented infrastructure—backed by leadership support, talent, and technology—procurement can take the lead.

Mauro Erriquez is a senior partner in McKinsey’s Frankfurt office, Theano Liakopoulou is a partner in the Paris office, and Julian Schaefer is an associate partner in the Munich office, where Marc Sommerer is a partner.

The authors wish to thank Nicolas Barthel, Tim Beckhoff, Roman Belotserkovskiy, Oliver Blum, Charles Cocoual, Riccardo Drentin, Gustav Erlandsson, Hannu Helakorpi, Jenny Hu, Samir Khushalani, Christoph Kloos, Loraine Main, Mason Morgan, Srinivas Reddy Mallavarapu, Sebastian Rodriguez, and Peter Spiller for their contributions to this article.

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Creating a procurement business case – goods and services procurement guide

Find out how to create a procurement business case for goods and services procurement.

On this page

What is a procurement business case, why do i need a business case, when do i need a business case, how to create a business case, procurement business case structure, using this guide, tools and support.

A business case documents the information needed to decide whether to support a proposed procurement activity before significant resources are committed to its development. It assesses the costs and benefits of proceeding with a project.

A procurement business case assesses whether you need the procurement, the best way to conduct the procurement and how to achieve the best value-for-money outcomes.

A procurement business case:

• provides an audit trail of your decision making process;
• documents the scope of factors impacting the procurement; and
• provides a template against which a procurement outcome can be monitored.

Every procurement requires a business case, although the scope of the business case depends on the complexity of the procurement. For example:

• a simple, low risk, low value purchase may only need a description of the business need and price;
• a procurement activity with a clear business need, a well understood, competitive market and a standardised good or service may require a few paragraphs on a procurement approval template; and
• a highly complex procurement where the business need is less understood, with diverse levels of market capability and capacity, and varied options for goods and services, would need more in depth documentation to justify the need and to present a range of detailed delivery options.

A business case records the results of your assessments of the following interrelated elements of sourcing:

• market analysis;
• project scoping and demand analysis; and
• delivery planning analysis.

Understanding the supply market is an essential component. The business case should cover the ability and interest of the market to supply, the appropriate contract management structure and/or whether the actual procurement requirements could be restructured to better suit the characteristics of the market.

The level of detail required in each of the following components is scalable and will depend on the level of complexity and estimated contract value.

The business case will inform development of:

• market approach
• evaluation, negotiation and selection
• contract management.

The procurement business case structure lists a range of factors that may be relevant in preparing a case to justify going to market, allocating resources and committing funds.

This guide accompanies the goods and services supply policies . There are 5 supplies policies:

• Governance policy
• Complexity and capability assessment policy
• Market analysis and review policy
• Market approach policy
• Contract management and disclosure policy

This guide supports the market analysis and review policy .

Access a document version of this guide in the Toolkit and library .

For more information about procurement complexity and how to assess it, please contact the goods and services policy team.

Updated 5 July 2023

A Procurement Business Case Example

I hope that you have enjoyed the PurchTips article “ Defending A Procurement Business Case .”

PurchTips is always in a very concise format, so I didn’t have much room to include examples. But I will do so here.

I’m just going to pull numbers out of the air here, so don’t take the numbers themselves literally. Focus on the methods.

Let’s say that you are going to propose to the president of your company the idea of investing in an eSourcing system with optimization capabilities at a cost of $100,000. You expect the system to enable your department to conduct 50 sourcing projects a year instead of 40. In addition, you expect the optimization capabilities to enable your department to identify twice the amount of annual savings you had in the past (20% of sourced spend vs. 10% of sourced spend). The average spend per project is $200,000.

This means that, without the system, you would be sourcing $8 million worth of spend per year (40 x $200,000) and achieving savings of $800,000 per year ($8 million x 10%). With the system, you would be sourcing $10 million worth of spend per year (50 x $200,000) and achieving savings of $2 million per year ($10 million x 20%).

The net financial benefit of implementing your business plan, therefore, is $1.2 million: $2 million in savings with the new system less the $800,000 you’d save without it. Now, let’s walk through the four things from the article that you need to know to defend your business case…

1. Your alternatives with a fraction of the funding. So, if your management only authorized you to spend $70,000 instead of the $100,000, what would you accomplish? You couldn’t buy the system you wanted to buy. So does that mean it would be a bigger waste to spend that $70,000 on a less-optimal solution? You better know the answer!

Let’s say that with $70,000 you would be able to afford an eSourcing system without optimization capabilities. How would that impact your savings? Well, maybe your average savings would only be 15% instead of 20%. Then, your annual savings would be $1.5 million ($10 million x 15%). You’d be sacrificing $500,000 in cost savings to avoid spending $30,000. Does that seem worth it? Unless you defend your procurement business case with this type of analysis, your management may not know.

2. The timeframe in which benefits will accrue. The easy way out is just to say that you’ll save $1.2 million more over 12 months so you will save $100,000 per month and the system will “pay for itself” in 30 days.

Be careful. There is likely some lag time between agreeing to buy the system and when it will start showing tangible benefits. Be realistic.

Maybe it will take you 30 days to implement the system and train users before it can be used in a real sourcing project. Maybe the first sourcing project will take 90 days to conduct and conclude. And, spreading that $200,000 in spending over a year from that point forward (as well as spreading that $20,000 in additional savings over a year), you may only really achieve $1,667 per month from that first sourcing initiative. If you only did that one sourcing initiative in the 12 months following your purchase of the system (and you subtracted the 120 days of implementation and sourcing), the benefit of the system in the first year would be a mere $13,333 ($1,667 additional savings per month x 8 months).

So, go to this level of detail to identify what projects you will be utilizing your investment on, any lag time associated with those projects, and when the real money will drop to the bottom line.

3. The importance of timing. Here, you answer the question: “What happens if we put this off?” Fortunately, it is quantifiable. Let’s say that, as per point #2 above, you determine that there will be a 4 month lag time before contracts are signed that results in additional savings from using the system. That gives you 8 months – or 2/3 of a year – to accrue benefits. Two-thirds of your additional annual savings of $1.2 million is $800,000. You can say that putting off investment will cost your organization $800,000 in higher prices this year alone.

Pretty powerful stuff when put this way, eh?

4. Multiple options for success. In this case, you might compare the eSourcing with optimization vs. the eSourcing without optimization alternatives that I discussed in point #1 above. Or you may show what the costs and benefits would be if you hired a consultancy to do your 10 extra projects vs. buying the system that would improve your department’s productivity. Or you may show two or three options of any variety. When presenting a procurement business case for approval, the worst thing you can do is to relegate the decision to a “go” or “no go” decision.

All too often, the “no go” decision looks more attractive to executives. Give them a “choice of yeses” as they say in marketing speak.

It’s not enough to put together a business case. You must anticipate what your audience (i.e., senior management) will be thinking. I hope that these tips help you get your investments in improvement procurement approved.

Recommended Reading

• Sourcing and Supply Management in the “New Normal”
• Executing a Global Sourcing Strategy
• Sourcing Problems in a Slow Economy
• Make Sourcing Your Competitive Advantage
• The 4 Missing Strategic Sourcing Goals
• Self-Motivation For Procurement Professionals
• Hiring Friends & Acquaintances: There’s More Risk Than You Think!
• Role of the Procurement Function
• Pallet Sourcing 101: A Quick Win for Cost Reduction
• 50 Quick Procurement Tips
• Supplier Failure

NLPA Learning :  Looking for authoritative procurement templates, tools, webinars, and more? Stop trying to create resources from scratch and start taking advantage of having exactly what you need right at your fingertips in  NLPA Learning .

Related Post

Procurement Strategy: Optimizing Your Path to Success

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Case study: How Lonza promotes responsible procurement

Founded in Switzerland in 1897, Lonza is one of the world’s leading and most trusted suppliers to the pharma, biotech and specialty ingredients markets. By engaging with its stakeholders, Lonza has been able to identify gaps, future trends and requirements regarding sustainable sourcing and supplier risk assessment.

This case study is based on the 2020 Sustainability Report  by Lonza, prepared in accordance with the GRI Standards, that can be found at this link . Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.

Lonza’s procurement teams focus on procurement excellence     Tweet This! , developing and implementing category strategies, managing the selection of suppliers and negotiation of terms, and reducing exposure to supply risks. In order to promote responsible procurement Lonza took action to:

• promote responsible practices
• establish a comprehensive and integrated supplier risk-management process
• promote due diligence

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Please subscribe to the SustainCase Newsletter to keep up to date with the latest sustainability news and gain access to over 2000 case studies. These case studies demonstrate how companies are dealing responsibly with their most important impacts, building trust with their stakeholders (Identify > Measure > Manage > Change).

With this case study you will see:

• Which are the most important impacts (material issues) Lonza has identified;
• How Lonza proceeded with stakeholder engagement , and
• What actions were taken by Lonza to promote responsible procurement

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What are the material issues the company has identified?

In its 2020 Sustainability Report Lonza identified a range of material issues, such as economic performance, customer satisfaction, environmental compliance, anti-corruption, occupational health and safety. Among these, promoting responsible procurement stands out as a key material issue for Lonza.

Stakeholder engagement in accordance with the GRI Standards

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups Lonza engages with:

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics Lonza engaged with its stakeholders through a materiality survey, to capture their input on topics to be reported upon, actively managed or simply monitored. They included employees, customers, the scientific community, financial analysts, future talent, media and Lonza’s management and Board.

What actions were taken by Lonza to promote responsible procurement?

In its 2020 Sustainability Report Lonza reports that it took the following actions for promoting responsible procurement:

• Promoting responsible practices
• Lonza is a member of the Pharmaceutical Supply Chain Initiative (PSCI). PSCI is an association of pharmaceutical, biotech and medical device industries. Its aim is to establish and promote responsible practices to improve ethics, labour, health, safety and environmentally sustainable outcomes, as well as to improve supplier capability for the members’ supply chains. This active membership enhances the firm’s capabilities and processes in sustainable supply chain management. As a PSCI member, Lonza performs audits of key suppliers and is in turn audited with a similar scope by its customers.
• Establishing a comprehensive and integrated supplier risk-management process
• Key supplier risk assessment and management by global procurement experts;
• Integrating risk assessments into business processes to enable and support business continuity;
• Using criteria and a risk register for scalable assessments of materials and suppliers;
• Monitoring and ranking supply risks, including risk mitigation and implementation;
• Embedding in the risk assessment process the supplier’s on-time/in-full delivery and quality performance ratings.  
• Promoting due diligence
• As part of its commitment to sustainable development, Lonza’s Supplier Code of Conduct sets high standards for suppliers and provides a framework to evaluate their practices. Lonza carefully selects and evaluates suppliers for security of supply and specifications of materials and services and also audits some of its critical suppliers to assure and improve performance and relationships, in line with the Pharmaceutical Supply Chain Initiative (PSCI) principles. Lonza operates an automated anti-bribery and anti-corruption due diligence process, monitoring for high-risk suppliers. This is run by the Ethics & Compliance Group and integrated into the procurement and supplier management process through Lonza’s enterprise resource planning (ERP) system (SAP). Third parties in qualification are blocked in SAP until the due diligence process is completed. The process includes real-time corruption, trade sanctions, and adverse media screening for all third-party suppliers with increased due diligence for higher-risk third parties. For the latter, the process includes mandatory completion of a due diligence questionnaire and a custom made anti-bribery and anti-corruption training, as well as competition law. Third parties with higher risk profiles are then further reviewed and assessed by members of the Ethics & Compliance Group. Lonza’s suppliers are continuously monitored and, where relevant, full due diligence is completed on a two-year automated cycle.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 308-1 New suppliers that were screened using environmental criteria

2)  Disclosure 414-1 New suppliers that were screened using social criteria

Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.

Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:

• Sustainable Development Goal (SDG) 5 : Gender Equality
• Targets: 5.2
• Sustainable Development Goal (SDG) 8 : Decent Work and Economic Growth
• Targets: 8.8
• Sustainable Development Goal (SDG) 16 : Peace, Justice and Strong Institutions
• Targets: 16.1

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Research by well-recognised institutions is clearly proving that  responsible companies can look to the future with optimism .

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• August 21, 2023
• By: EmpoweringCPO Insights Team

Procurement as a Profit Center: Advantages & Case Study

Introduction.

In the intricate tapestry of business, the term “profit center” has often been reserved for those divisions recognized for directly generating revenue, such as sales or services. These profit centers have long stood as the pillars of a company’s financial success, with other divisions like procurement, logistics, and administration often relegated to the background, termed as ‘cost centers’. These cost centers, while essential, were viewed primarily as areas of expenditure rather than sources of profit.

However, the winds of change have been sweeping across the corporate landscape. A burgeoning trend is redefining how we perceive these traditional cost centers. Procurement, once seen as just a function to manage expenses, is now emerging as a potential profit center. This transformative shift underscores the idea that with the right strategies, even procurement can contribute significantly to a company’s bottom line.

Enter EmpoweringCPO, a vanguard in the realm of procurement services. We at EmpoweringCPO have always believed in the untapped potential of procurement. As pioneers in this space, we’ve embraced and championed this shift, empowering businesses to look at procurement not as a mere operational necessity, but as a strategic function capable of driving profitability. Through our tailored services and offerings, we’re reshaping the narrative, proving that procurement, when approached innovatively, can indeed become a cornerstone of a company’s financial success.

Join us as we delve deeper into this transformative journey, exploring the myriad benefits and real-world case studies that spotlight procurement’s evolution from a cost center to a profit dynamo.

The Paradigm Shift: Why Procurement is More Than Just a Cost Center

For decades, procurement has been nestled comfortably within the organizational framework, seen predominantly as the mechanism for sourcing materials, managing suppliers, and ensuring a steady flow of goods and services. Its conventional role was clear-cut: negotiate contracts, manage supplier relationships, and ensure timely delivery—all the while keeping a tight rein on costs. The primary measure of its success was how much money it could save. While these tasks are undeniably crucial, categorizing procurement merely as a function to control expenditure is an oversimplification of its vast potential.

As businesses evolve in an increasingly interconnected world, the dynamics of procurement are undergoing a radical transformation. Today’s market demands agility, innovation, and strategic partnerships, and this is where the traditional view of procurement falls short. Simply put, if procurement continues to be seen only through the lens of cost-saving, businesses risk missing out on its broader strategic potential.

But why is this shift in perception so crucial?

Firstly, procurement is the gateway to the external market. It has its finger on the pulse of global trends, supplier innovations, and market dynamics. By leveraging this knowledge, businesses can gain a competitive edge, tapping into innovations and partnerships that can drive growth.

Secondly, in today’s era of sustainability and corporate responsibility, procurement plays a pivotal role. It’s not just about getting the best price anymore; it’s about sourcing responsibly, ensuring suppliers align with a company’s values, and contributing to broader societal goals.

Lastly, and perhaps most compellingly, is the potential for revenue generation. When steered strategically, procurement can open up avenues for new business opportunities, and collaborations, and even create new revenue streams—turning it from a cost center to a profit center.

EmpoweringCPO has always recognized this multifaceted role of procurement. We understand that in the modern business landscape, procurement is not just a function—it’s a strategy. And it’s high time businesses started looking beyond their traditional confines, harnessing their true potential to drive growth, innovation, and profitability.

Xerox: Leading the Way in Procurement Transformation

Xerox, a titan in the corporate world, has long been synonymous with innovation. However, even for a company known for its groundbreaking advancements, the decision to metamorphose its procurement division from a conventional cost center to a dynamic profit center stands out as a landmark move in its illustrious history.

At its core, Xerox’s procurement function was like many others—focused on streamlining processes, managing supplier relationships, and, of course, reducing costs. But as the global business ecosystem evolved, so did Xerox’s vision. Recognizing the latent potential within its procurement division, Xerox embarked on a transformative journey to redefine its role and scope.

This transformation wasn’t just a superficial change in nomenclature. Instead, it was a deep-rooted strategic shift. By leveraging its procurement function’s market insights, global reach, and supplier relationships, Xerox began identifying avenues not just for cost savings but for revenue generation. The division was no longer just negotiating contracts; it was actively seeking partnerships, collaborations, and innovative solutions that added tangible value to the company’s bottom line.

The ripple effects of this transformation on Xerox’s overall business strategy were profound. For one, it propelled the company into new markets and ventures. The procurement division, with its fresh profit-centered approach, began offering services to external customers. This not only augmented their revenue streams but also bolstered their position as thought leaders in the domain.

Moreover, this shift had a cascading effect on the company’s internal ethos. Divisions across Xerox, witnessing the success of the procurement team, were inspired to adopt a more entrepreneurial mindset. The culture shifted from one of mere cost-saving to one of innovation, value addition, and strategic growth.

In essence, Xerox’s pivot served as a beacon for businesses worldwide. It showcased that with vision, strategy, and determination, even traditional cost centers could be reimagined as powerful profit generators. Xerox’s journey serves as a testament to the boundless possibilities that await when businesses dare to view procurement beyond its conventional role.

Key Advantages of Viewing Procurement as a Profit Center

The transformation of procurement from a cost-centric function to a profit-driven powerhouse is more than just a strategic pivot—it’s a revolution that promises a plethora of benefits for businesses willing to embark on this journey. Let’s delve into these advantages:

Employee Entrepreneurship and Innovation:

When a company recognizes and promotes procurement as a profit center, it sends a powerful message to its team: Innovation is not just welcomed, it’s expected. This mindset empowers procurement professionals to think beyond the traditional confines, inspiring them to develop groundbreaking solutions, explore new markets, and foster entrepreneurial ventures. The result? A department teeming with creativity and forward-thinking initiatives.

Goal Setting and Cost Savings:

By positioning procurement as a profit driver, businesses naturally establish more defined, ambitious goals. With clear targets in sight, the procurement team adopts a proactive stance, seeking not just to manage costs but to reduce them intelligently. This emphasis on efficiency often leads to streamlined processes, better vendor negotiations, and overall cost savings.

Enhanced Competition and Performance:

When procurement steps into the arena as a profit center, it’s no longer just competing internally—it’s pitted against the external market. This external benchmarking compels procurement teams to elevate their performance, ensuring they match or even outpace the offerings of external competitors, thereby driving excellence.

Visibility and Accountability:

Transforming procurement brings it into the spotlight. With increased visibility comes greater accountability. Every decision, every negotiation, and every partnership is scrutinized, fostering a culture where performance is paramount. This heightened sense of responsibility invariably leads to better outcomes and value-driven results.

Formalized Communication and Professionalism:

The shift towards a profit-driven model necessitates clear, formalized communication channels. These structured interactions ensure that the procurement team is always aligned with the broader organizational goals, fostering a sense of unity and professionalism that ripples across the enterprise.

Talent Identification and Recognition:

As procurement’s stature rises within the organization, it becomes a magnet for top talent. The newfound emphasis on profit generation means that standout performers are quickly identified and recognized, making procurement a hotbed for talent development and career progression.

Empowered Decision-Making and Innovation:

With the spotlight firmly on profitability, decision-making becomes more decentralized. This empowerment, especially at the grassroots level, acts as a catalyst for innovative thinking. Employees, knowing they have the autonomy and trust of the organization, are more likely to propose and implement pioneering solutions.

Enhanced Morale and Reputation:

Lastly, the evolution of procurement into a profit center does wonders for morale. Employees take pride in knowing their contributions have a direct impact on the company’s financial health. Externally, as the successes of the procurement team become known, the organization’s reputation is bolstered, positioning it as a leader in innovation and strategic thinking.

In sum, the advantages of transitioning procurement into a profit center are manifold. It’s a transformative journey that promises not just enhanced profitability but a complete organizational metamorphosis—driving growth, innovation, and sustainable success.

EmpoweringCPO: Pioneering Procurement Services

In today’s fast-paced business landscape, where the lines between cost centers and profit centers blur, EmpoweringCPO stands as a beacon for transformative procurement services. Our ethos is simple yet powerful: We believe procurement is more than just a function; it’s a strategic powerhouse capable of driving profitability and organizational growth.

EmpoweringCPO’s Offerings:

At the heart of EmpoweringCPO’s services lies a suite of offerings tailored to harness the full potential of procurement. Our expertise spans the entire procurement spectrum, from supplier relationship management to strategic sourcing, contract management to spend analysis. But what truly sets us apart is our unwavering focus on turning procurement into a profit center. By leveraging market insights, technological advancements, and strategic partnerships, we empower businesses to view procurement not just as an operational necessity, but as a catalyst for growth.

Resonance with Benefits:

Every service we offer at EmpoweringCPO resonates with the transformative benefits of viewing procurement as a profit center:

• Our strategic sourcing solutions drive innovation by connecting businesses with cutting-edge suppliers.
• Our spend analysis services emphasize cost savings through intelligent data-driven insights.
• Our supplier management solutions ensure enhanced competition and performance, pushing suppliers to deliver their absolute best.
• Our contract management services emphasize visibility and accountability, ensuring every deal maximizes value.
• Our training and consultancy services foster professionalism and formalized communication, aligning procurement strategies with broader organizational goals.
• Through it all, our focus on talent development ensures that the procurement function becomes a hub for talent identification and recognition.

In essence, EmpoweringCPO isn’t just a service provider; we’re your strategic partner in reimagining procurement. We’ve been at the forefront of this paradigm shift, and our success stories stand as a testament to the transformative power of viewing procurement as a profit center. Join us, and let’s co-create a future where procurement is not just a cost-saving function but a cornerstone of your organization’s success.

Broader Industry Impacts: IBM and Reliance Retail

As the narrative around procurement evolves, industry giants aren’t just observers; they’re active participants in shaping this transformation. Two such behemoths, IBM and Reliance Retail, have embarked on their procurement journeys, showcasing the vast potential of this function when pivoted towards profitability. Their stories serve as a testament to the transformative power of procurement, transcending sectors and scales.

IBM: Innovating Procurement for a Digital Era

IBM, a global tech powerhouse, has always been at the forefront of innovation. However, their approach to procurement stands out, even in their storied history of trailblazing. Recognizing the strategic potential of this function, IBM initiated a transformation, integrating advanced technologies like AI, blockchain, and data analytics into their procurement processes.

This wasn’t merely a tech upgrade. It was a complete reimagining of procurement’s role within the organization. By leveraging these technologies, IBM’s procurement team could derive insights, predict market trends, and identify opportunities that were previously invisible. The results? Enhanced supplier negotiations, smarter contracts, and a shift from reactive processes to proactive strategies.

The financial implications were undeniable. With a more intelligent, data-driven approach, IBM’s procurement function became a significant contributor to the company’s revenue streams. By tapping into new supplier innovations, optimizing costs, and driving strategic partnerships, IBM showcased that with the right vision, procurement could indeed be a game-changer.

Reliance Retail: Harnessing Procurement for Market Dominance

Reliance Retail, a division of the colossal Reliance Industries Limited, operates in a different sphere than IBM. As one of the largest retail chains in India, their challenges and opportunities are unique. Yet, their approach to procurement resonates with the broader theme of transformation.

For Reliance Retail, procurement wasn’t just about sourcing goods; it was about creating a competitive advantage. By leveraging their vast procurement network, they established strategic partnerships, enabling exclusive product launches and collaborations. Their procurement team wasn’t just negotiating prices; they were co-creating value.

This strategic stance had a ripple effect on their revenue. Exclusive products and partnerships drove footfall, elevating sales. Moreover, by streamlining their supply chain through smart procurement strategies, they reduced overheads, further boosting profitability.

In essence, Reliance Retail’s approach to procurement became a cornerstone of its market strategy, propelling it to even greater heights in the competitive retail landscape.

Both IBM and Reliance Retail, though operating in distinct sectors, underscore a universal truth: the transformative power of procurement is real and tangible. Their journeys, while unique, converge on a singular point—that with vision, strategy, and execution, procurement can be a significant driver of revenue and growth. These industry leaders serve as inspiring examples for businesses everywhere, showcasing the potential that lies within a well-orchestrated procurement function.

The EmpoweringCPO Difference

In a world where businesses are increasingly recognizing the latent potential of procurement, there emerges a need for a guide, a partner who not only understands this evolving landscape but also possesses the expertise to navigate it. That’s where EmpoweringCPO steps in, bridging the gap between traditional procurement practices and the transformative possibilities of the future.

A Deep Dive into EmpoweringCPO’s Services:

At EmpoweringCPO, our services are more than just operational aids; they are strategic tools designed to catapult your procurement function into a new era. Our offerings span:

• Strategic Sourcing : We help businesses connect with innovative suppliers, fostering partnerships that drive value beyond mere cost savings.
• Spend Analysis : Through cutting-edge tools and analytics, we decode your spending patterns, unveiling opportunities for smarter investments and efficiency.
• Supplier Management : Our holistic approach ensures that your supplier relationships are not just transactional but strategic, aligning with your broader business goals.
• Contract Management: We ensure that every contract you ink maximizes value, balancing cost savings with strategic benefits.

Transforming Procurement with EmpoweringCPO:

Partnering with EmpoweringCPO is not just about availing services; it’s about embarking on a journey of transformation. Here’s how we make the difference:

• Strategic Vision: We view procurement through the lens of strategy. Every decision, every partnership, and every negotiation is geared toward driving profitability and value.
• Innovative Approach: In a rapidly evolving market, staying stagnant is not an option. We constantly innovate, ensuring that your procurement function is always a step ahead.
• Customized Solutions: We understand that every business is unique. Our solutions are tailored to resonate with your specific needs and goals.
• Expertise & Experience: Our team boasts a rich tapestry of experience, ensuring that you benefit from best practices and insights from across industries.

Your Next Step Towards Procurement Excellence:

The transformative journey of procurement awaits, and the path to excellence is just a click away. We invite you to explore the EmpoweringCPO difference, delve deeper into our offerings, and envision a future where your procurement function is not just an operational necessity but a strategic powerhouse.

Explore the EmpoweringCPO Difference Now!

Join the ranks of businesses that are not just adapting to the future but shaping it. With EmpoweringCPO by your side, the potential of procurement is boundless.

In the ever-evolving tapestry of the business world, few transformations have been as profound and promising as the reimagining of procurement. Once perceived as a backstage function, focused solely on cost containment and operational efficiency, procurement is now stepping into the limelight, revealing its potential as a pivotal profit driver.

The stories of industry giants, from Xerox to IBM, from Reliance Retail to countless others, serve as compelling testaments to this shift. They underscore a simple yet profound truth: when approached strategically, with vision and innovation, procurement can transcend its traditional boundaries, becoming a cornerstone of an organization’s financial and strategic success.

However, realizing this potential isn’t about mere acknowledgment; it demands action, expertise, and a partner who understands the intricacies of this transformation. That’s where EmpoweringCPO shines. As pioneers in this realm, we’re not just observers of this shift; we’re active facilitators, guiding businesses through the labyrinth of possibilities that modern procurement presents.

The future of procurement is not on the horizon; it’s here, now. And it’s a future teeming with promise, with opportunities, and with the potential to reshape the very foundations of business success. EmpoweringCPO stands ready, not just to navigate this future but to co-create it with you, ensuring that your procurement function is not just ready for the challenges of tomorrow but is actively shaping them.

In the words of Peter Drucker, “The best way to predict the future is to create it.” Together, let’s create a future where procurement is not just a function but a catalyst for unparalleled growth and success.

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8 Procurement analytics use cases to meet the moment

The procurement function has evolved significantly over time. Modernity -- in the form of global supply chain expansion and advancements in technology -- has hastened the maturation of the procurement officer’s role from tactical to strategic.

With the expansion of global supply networks, procurement’s initial focus on tactical, day-to-day purchasing operations has broadened to include enterprise-scale strategy on topics ranging from risk mitigation to sustainable sourcing.

As stated by KPMG , “CEOs are looking to the procurement function to take on a broader and deeper set of strategic responsibilities than ever before.”

Procurement leaders are sought after to make decisions affecting many critical business processes.  Poor supplier performance or lengthy source-to-settle cycle times, for example, can have downstream impacts on revenue generation, profit margins, warehouse storage costs, and workforce hiring.

Deloitte’s Global 2021 Chief Procurement Officer Survey similarly acknowledges the increased expectations within the procurement role and suggests that “…building capabilities focused on agility is the CPOs’ best bet to meet and exceed them.”

Data analysis provides procurement professionals with the agility needed to meet these increased expectations. Using procurement analytics, executives can surface critical patterns from the vast data sets generated from purchasing transactions, delivery inspections, invoice processing, and more. This empowers procurement teams to isolate profitability drivers and eliminate bias when making purchasing decisions.

The use cases below detail specific examples of how organizations can implement procurement analytics solutions to drive efficiency, cost savings, and risk management decisions.

Accelerate procurement efficiency with analytics

“Driving organizational efficiency” was ranked by CPOs as the #1 business priority in Deloitte’s 2021 Global CPO Survey , surpassing “Cost Reduction” by a slim margin for the first time since the survey’s inception.

While cost reduction will assuredly remain a top benchmark by which procurement officers are assessed, there is a growing consensus building around additional areas of value influenced by the procurement department. According to Deloitte: “It’s no longer just about more products and services at a lower cost, but about a broader range of improvements (e.g., speed to market and innovation enablement) and in many cases ROI.”

Improve procure-to-pay cycle time

Inspecting aspects of the procure-to-pay cycle provides a better understanding of the procurement team’s performance. Benchmarks linked to revenue generation, such as speed of time to market, are influenced by the pace at which critical parts are secured. Source-to-settle cycle times impact the ability to meet demand at its peak or snag market share before competitors. For these reasons, procurement cycle time efficiency affects internal operations and alters the momentum of innovation.

Data comprising the procure-to-pay cycle comes from multiple different departments and is often siloed. Analytics allows procurement teams to connect workstreams and data across the entire enterprise to form an accurate representation of cycle times. The ability to break down a cycle time by its parts enables organizations to surface -- and triage -- operational bottlenecks that threaten to thwart productivity. Granular visibility into these processes would not be possible without analytics.

A detailed analysis goes beyond transactional reporting, allowing me to determine which teams or individual employees are prolonging the approval process. Quick access to this level of detail enables our organization to rectify the situation before we experience the rush of seasonal demand.

Analyze supplier performance to minimize disruption

Analytics makes it easier for procurement professionals to support peers’ revenue and profitability goals across the organization by providing process visibility.

Detailed analyses into delivery status and Advanced Ship Notice (ASN) by item type, project code, and other metrics allow companies to maximize productivity while proactively managing customer relationships. Teams can see which goods were ordered and their arrival date at a specific location. When analyzed against current warehouse inventory, organizations gain a complete understanding of their operations, and alert customers or downstream partners of possible delays in advance.

For instance, the manufacturing team’s productivity is hampered by the inability to see whether a critical part needed for production is located within a nearby warehouse, or whether it has been ordered at all. Inventory uncertainty creates idle time/downtime.

Within transactional reporting systems, supply and demand drivers are often kept in separate data repositories. Many employees can only view the inventory on-hand for their facility, rather than an aggregate view of inventory across the business. However, suppose the manufacturing team can see that an essential production part has been ordered, and will arrive at a nearby facility by Wednesday at 2 PM. In that case, they can begin a partial build on Monday. The team will then be well-positioned to continue work when the part is delivered later in the week. Analytics enables companies to bypass workflow interruptions while efficiently using time and resources.

Reduce bottlenecks within invoice and purchase order processing

The age-old adage “time is money” is one that operations and finance professionals alike are familiar with.

In general, the complexity of the process increases operational costs. Combining procurement and financial data for analysis is a crucial first step an organization can take towards streamlining excess logistical complexities across the procure-to-pay cycle.

Let’s imagine that I have direct access to a graph that depicts purchase order (PO) dollar amounts by supplier alongside the number of invoices received from each supplier.

 When the number of invoices issued by one supplier far surpasses the monetary amount on a contract, it's a good assumption that the supplier is invoicing my organization for each line item on the PO, rather than producing one blanket invoice. This creates additional work for the Accounting department and increases the risk of accidental late or missed payments for small amounts.

Armed with this knowledge, a category manager can create an improvement plan for this  supplier that includes invoice consolidation. Reducing the number of invoices processed streamlines accounting practices, and in turn, saves money in the form of labor hours.

Proactively manage procurement contract expirations

Procurement teams can more deftly navigate contract expirations with the aid of analytics. Tracking all agreements and contract expirations across global operations is a painstaking task that many companies face. Complexity is magnified when attempting to monitor multiple agreements with the same vendor across different categories and geographies. Different contract creation dates and varied category manager responsibilities for each contract add to the complication. It is not uncommon for procurement analysts to spend precious days painfully tracking these expirations by manually copying thousands of lines of contract information into spreadsheets… it’s no wonder accidental contract expiration occurs.

When contract expirations inadvertently slip through the cracks, it can prove a sore inconvenience to recreate the entire contract. This cumbersome process increases logistical processing time, and the renegotiation process always poses the threat of increased pricing terms. 

Analytics is a powerful antidote to these complexities. Receiving timely alerts 30, 60, or 90 days before contract expiration eases the mental burden of spreadsheet tracking for procurement officers. With an in-depth procurement analytics solution , users can visualize contract expiration by multiple dimensions, such as product type, country, supplier location, direct vs. indirect spend, and more. High-level analysis also allows procurement executives to track the overall contract execution roadmap from a workload and staffing level; how busy will my procurement officers be with the number of contract renegotiations coming up?

Deliver cost savings with procurement analytics

Despite increased demand for organizational efficiency, Chief Procurement Officers (CPOs) are most commonly held accountable to cost reduction metrics. The expectation remains that an increasing number of CEOs and CFOs will either begin to -- or continue to -- require CPOs to “deliver cost savings that are visible to the bottom line (with more robust tracking to prove it).”

For the procurement organization, the path to increased margins can be attained by various means, whether by negotiating more favorable pricing rates with suppliers or reducing contract leakage. The key to understanding where to reduce expenditures lies principally within an entity’s spend analysis solution ; it becomes nearly impossible to identify cost reduction opportunities without a comprehensive view of spend across the business.

Enhance strategic sourcing negotiations with spend analysis

Buyers and category managers are measured on savings negotiated and realized year-over-year (YoY). Yet without the right tools to measure and track progress, it can be an onerous task to track the company’s price negotiations over time for each supplier and every product managed.

For category managers entering renegotiations with past suppliers, the ability to easily see historical pricing trends for a particular product across all business units-- in addition to pricing received from competitors -- can serve as a benchmark for cost reduction.

Visualizing discounts received for a specific set of goods over time also allows the procurement organization to optimize negotiations. The procurement analytics dashboard below illustrates spend analysis information alongside “savings potential” by product and supplier.

With the right analytics tools, procurement teams can arm themselves with salient data points to improve their position during contract negotiations and can reduce off-contract spend on a granular level. 

Realize greater savings with Invoice Price Variance (IPV) Analysis

It is equally important to track negotiated pricing against invoice amounts to determine the organization’s realized savings. 

Negotiated discounts are meaningless if data from finance and procurement departments have not been synchronized to ensure that the rate negotiated matches the price paid. Getting these metrics is often time-intensive and complex due to the data integration and manipulation needed to combine outputs from different sources.

It is imperative to invest in procurement analytics software that makes this critical matching process easy. By speedily surfacing Invoice Price Variance (IPV) trends, companies can uncover instances of inadvertent overpayment. Perhaps one supplier, in particular, is guilty of making this error consistently -- once discovered, this becomes an easy fix with a phone call to their accounting department.

Reduce rogue spend with contract utilization and contract leakage analysis

Analysis of contract utilization and contract leakage by category, business unit, and item allows buyers to assess how well they’ve procured products and services that closely match business needs. Category managers can negotiate more favorable rates for items on an agreement, but this proves ineffective if employees ultimately purchase that item off-contract, or don’t use these products at all.

Let’s imagine that my top 10 items procured account for 90% of my utilization, and the rest of my items – 140 of them – are seldom being purchased. However, my off-contract spend for a similar category is very high. This is a clear signal to investigate this discrepancy further -- should I fold the off-contract items into my agreement for the next negotiation cycle? By looking at agreement utilization by item and supplier, buyers can more accurately predict the amount and type of goods needed, thereby reducing wasteful spending.

As pictured in the visualization above, agreement utilization analysis can help identify opportunities to realign agreements and contracts with purchase needs. Insights into agreement utilization trends can be used to increase spend under management. In the example above, the graph of “agreement amount” versus “agreement utilization” reveals that internal demand for silicon control sleeves from supplier Advanced Network Devices is far greater than demand for the same item from other suppliers. Procurement can use this information to shift future agreement amounts with each supplier to better align with company purchase preferences, thereby reducing rogue spend. 

Mitigate Procurement Risk

Full visibility into a company’s entire value chain can be elusive, yet transparency into supplier risk and performance is paramount when it comes to identifying unhealthy sourcing dependencies or mitigating unforeseen disruption. With the help of analytics, procurement professionals gain the tools to navigate the ever-looming threat of volatility.

“...most businesses do not have a good idea of what is going on lower down in their supply chains, where sub-tiers may play small but critical roles. That is also where most disruptions originate, but two-thirds of companies say they can’t confirm the business-continuity arrangements with their non-tier-one suppliers.” – McKinsey [link]

Reduce sourcing risks with increased insight into supplier performance

Lack of organization-wide knowledge of supplier performance trends permits low-performing suppliers and vendors to negatively impact downstream deliverables.

Analyzing spend data with supplier performance metrics enables organizations to understand the many tiers of their supply base and helps companies assess the potential for disruption stemming from each vendor.

“The ability to detect, measure, and manage risk remains a challenge...Our research found that very few CPOs (18%) were formally tracking the risks that existed in their direct (tier 1) supplier base, and only 15% had visibility beyond that.” -- Deloitte Global 2021 Chief Procurement Officer Survey

Knowledge of supplier performance by on-time delivery, accepted, rejected, shipped, short-closed, and return rates enables the optimization of purchasing and facilitates strategic supplier management.

For example, the visualization below demonstrates the benefit of viewing multiple supplier performance metrics together to get a comprehensive picture that is otherwise difficult to get through multiple separate reports. 

 Using analytics, a procurement team can determine the optimal supplier for critical project completion. By comparing suppliers according to delivery performance, quality, and spend amount, procurement officers can more fully understand where inherent risk lies. When faced with a tight timeline, the volume of rejected shipments by one vendor may outweigh the benefit of their lower-priced offering.  To avoid the risk of stock-outs, supplier diversification may be necessary.

Why procurement analytics from Oracle?

Whether pre-built via Fusion ERP Analytics or DIY using Oracle Analytics Cloud , Oracle provides comprehensive procurement analytics offerings. Within the procurement space, the automation of routine tasks has become table stakes, while a comprehensive understanding of spend and supplier risk provides companies with multiple paths to greater profitability.

At Oracle, we believe that technology solutions must rise to meet the new demands of the procurement role. Our cloud procurement and advanced analytics solutions have been built to facilitate strategic decision-making for procurement teams as they navigate complex supply chain challenges. To learn more about the benefits of procurement analytics, check out our latest product tour . 

Visit Oracle.com/analytics, and follow us on Twitter@OracleAnalytics and LinkedIn .

Roxanne Bradley

Product marketing manager.

The procurement function has evolved significantly over time. Modernity -- in the form of global supply chain expansion and advancements in technology -- has hastened the maturation of the procurement officer’s role from tactical to strategic.

With the expansion of global supply networks, procurement’s initial focus on tactical, day-to-day purchasing operations has broadened to include enterprise-scale strategy on topics ranging from risk mitigation to sustainable sourcing.

As stated by KPMG , “CEOs are looking to the procurement function to take on a broader and deeper set of strategic responsibilities than ever before.”

Procurement leaders are sought after to make decisions affecting many critical business processes.  Poor supplier performance or lengthy source-to-settle cycle times, for example, can have downstream impacts on revenue generation, profit margins, warehouse storage costs, and workforce hiring.

Deloitte’s Global 2021 Chief Procurement Officer Survey similarly acknowledges the increased expectations within the procurement role and suggests that “…building capabilities focused on agility is the CPOs’ best bet to meet and exceed them.”

“Driving organizational efficiency” was ranked by CPOs as the #1 business priority in Deloitte’s 2021 Global CPO Survey , surpassing “Cost Reduction” by a slim margin for the first time since the survey’s inception.

While cost reduction will assuredly remain a top benchmark by which procurement officers are assessed, there is a growing consensus building around additional areas of value influenced by the procurement department. According to Deloitte: “It’s no longer just about more products and services at a lower cost, but about a broader range of improvements (e.g., speed to market and innovation enablement) and in many cases ROI.”

Inspecting aspects of the procure-to-pay cycle provides a better understanding of the procurement team’s performance. Benchmarks linked to revenue generation, such as speed of time to market, are influenced by the pace at which critical parts are secured. Source-to-settle cycle times impact the ability to meet demand at its peak or snag market share before competitors. For these reasons, procurement cycle time efficiency affects internal operations and alters the momentum of innovation.

Analytics makes it easier for procurement professionals to support peers’ revenue and profitability goals across the organization by providing process visibility.

For instance, the manufacturing team’s productivity is hampered by the inability to see whether a critical part needed for production is located within a nearby warehouse, or whether it has been ordered at all. Inventory uncertainty creates idle time/downtime.

The age-old adage “time is money” is one that operations and finance professionals alike are familiar with.

Let’s imagine that I have direct access to a graph that depicts purchase order (PO) dollar amounts by supplier alongside the number of invoices received from each supplier.

 When the number of invoices issued by one supplier far surpasses the monetary amount on a contract, it's a good assumption that the supplier is invoicing my organization for each line item on the PO, rather than producing one blanket invoice. This creates additional work for the Accounting department and increases the risk of accidental late or missed payments for small amounts.

Armed with this knowledge, a category manager can create an improvement plan for this  supplier that includes invoice consolidation. Reducing the number of invoices processed streamlines accounting practices, and in turn, saves money in the form of labor hours.

Procurement teams can more deftly navigate contract expirations with the aid of analytics. Tracking all agreements and contract expirations across global operations is a painstaking task that many companies face. Complexity is magnified when attempting to monitor multiple agreements with the same vendor across different categories and geographies. Different contract creation dates and varied category manager responsibilities for each contract add to the complication. It is not uncommon for procurement analysts to spend precious days painfully tracking these expirations by manually copying thousands of lines of contract information into spreadsheets… it’s no wonder accidental contract expiration occurs.

When contract expirations inadvertently slip through the cracks, it can prove a sore inconvenience to recreate the entire contract. This cumbersome process increases logistical processing time, and the renegotiation process always poses the threat of increased pricing terms. 

Despite increased demand for organizational efficiency, Chief Procurement Officers (CPOs) are most commonly held accountable to cost reduction metrics. The expectation remains that an increasing number of CEOs and CFOs will either begin to -- or continue to -- require CPOs to “deliver cost savings that are visible to the bottom line (with more robust tracking to prove it).”

For the procurement organization, the path to increased margins can be attained by various means, whether by negotiating more favorable pricing rates with suppliers or reducing contract leakage. The key to understanding where to reduce expenditures lies principally within an entity’s spend analysis solution ; it becomes nearly impossible to identify cost reduction opportunities without a comprehensive view of spend across the business.

Buyers and category managers are measured on savings negotiated and realized year-over-year (YoY). Yet without the right tools to measure and track progress, it can be an onerous task to track the company’s price negotiations over time for each supplier and every product managed.

Visualizing discounts received for a specific set of goods over time also allows the procurement organization to optimize negotiations. The procurement analytics dashboard below illustrates spend analysis information alongside “savings potential” by product and supplier.

With the right analytics tools, procurement teams can arm themselves with salient data points to improve their position during contract negotiations and can reduce off-contract spend on a granular level. 

It is equally important to track negotiated pricing against invoice amounts to determine the organization’s realized savings. 

Analysis of contract utilization and contract leakage by category, business unit, and item allows buyers to assess how well they’ve procured products and services that closely match business needs. Category managers can negotiate more favorable rates for items on an agreement, but this proves ineffective if employees ultimately purchase that item off-contract, or don’t use these products at all.

Let’s imagine that my top 10 items procured account for 90% of my utilization, and the rest of my items – 140 of them – are seldom being purchased. However, my off-contract spend for a similar category is very high. This is a clear signal to investigate this discrepancy further -- should I fold the off-contract items into my agreement for the next negotiation cycle? By looking at agreement utilization by item and supplier, buyers can more accurately predict the amount and type of goods needed, thereby reducing wasteful spending.

As pictured in the visualization above, agreement utilization analysis can help identify opportunities to realign agreements and contracts with purchase needs. Insights into agreement utilization trends can be used to increase spend under management. In the example above, the graph of “agreement amount” versus “agreement utilization” reveals that internal demand for silicon control sleeves from supplier Advanced Network Devices is far greater than demand for the same item from other suppliers. Procurement can use this information to shift future agreement amounts with each supplier to better align with company purchase preferences, thereby reducing rogue spend. 

Full visibility into a company’s entire value chain can be elusive, yet transparency into supplier risk and performance is paramount when it comes to identifying unhealthy sourcing dependencies or mitigating unforeseen disruption. With the help of analytics, procurement professionals gain the tools to navigate the ever-looming threat of volatility.

“...most businesses do not have a good idea of what is going on lower down in their supply chains, where sub-tiers may play small but critical roles. That is also where most disruptions originate, but two-thirds of companies say they can’t confirm the business-continuity arrangements with their non-tier-one suppliers.” – McKinsey [link]

“The ability to detect, measure, and manage risk remains a challenge...Our research found that very few CPOs (18%) were formally tracking the risks that existed in their direct (tier 1) supplier base, and only 15% had visibility beyond that.” -- Deloitte Global 2021 Chief Procurement Officer Survey

For example, the visualization below demonstrates the benefit of viewing multiple supplier performance metrics together to get a comprehensive picture that is otherwise difficult to get through multiple separate reports. 

 Using analytics, a procurement team can determine the optimal supplier for critical project completion. By comparing suppliers according to delivery performance, quality, and spend amount, procurement officers can more fully understand where inherent risk lies. When faced with a tight timeline, the volume of rejected shipments by one vendor may outweigh the benefit of their lower-priced offering.  To avoid the risk of stock-outs, supplier diversification may be necessary.

At Oracle, we believe that technology solutions must rise to meet the new demands of the procurement role. Our cloud procurement and advanced analytics solutions have been built to facilitate strategic decision-making for procurement teams as they navigate complex supply chain challenges. To learn more about the benefits of procurement analytics, check out our latest product tour . 

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Take a look at our latest procurement consulting case studies.

Procurement plays an important role in any business, without a proper procurement process, the entire functionality of business operations will become vulnerable. To ensure the organization’s internal procurement management team functions efficiently, companies hire procurement consulting firms like KEPLER to support organizations in Category Management, purchasing strategies, international sourcing, SRM / SRRM, the creation of digital & data-driven negotiation task forces, Costing, and the redesign of models operational purchasing.

In order to tell you more about KEPLER, it is a boutique business management consulting firm with strong roots in providing consulting expertise on four major verticals which are Innovation, Procurement, Supply Chain and Operations. KEPLER is a Global Procurement Consulting Firm that has its offices in the United States(U.S), France, China, and India. With all the expertise and years of experience working with organizations on different procurement topics, we have created a knowledge bank of procurement case studies that will enrich you with deep knowledge and procurement insights .

We have curated and listed the best procurement practices, methodologies, analyses on issues and solutions that we have provided to real-life businesses into a single point content platform called “Procurement Consulting Case Studies”, this section of our website will help those who are in doing research in university, Procurement professionals and decision-makers.

Our executive Procurement Consulting Case Study section covers topics that we worked on in recent times across multiple industries like Cosmetics, Healthcare, Distribution, Capital Goods, Automotive, FMCG and many others.

Our Procurement Consulting Case Study allows you to dive into each topic and detailed information can be downloadable as PDF.

Find out all our Procurement Business Cases

Conducting a Procurement Optimization Program for an Automotive Subcontractor

Our client, an automotive subcontractor, wants to set up a deep procurement optimization program.  

KEPLER offers a procurement diagnosis based on the data obtained from workshops with management and operational staff, external sourcing, and expert interventions.  

Establishing a New Negotiation and Supplier Relationship Strategy Based on AI Cost Estimation Models

Our client, an automotive supplier, wants to make immediate and significant savings.

KEPLER proposes implementing a negotiation program with its suppliers based on cost estimation models supported by AI.

Boosting Supplier Innovation for an Air Conditioning Equipment Manufacturer

Our client, a manufacturer of heating and air conditioning equipment, wants to boost supplier innovation.

KEPLER offers to build a global framework and pilot projects on several selected innovation topics.

Optimizing the Procurement Department of an Aerospace Supplier Committed to a Recovery Plan

Our client, a key supplier of the civil aerospace sector, has initiated a recovery plan involving a strong contribution from procurement teams.

KEPLER  Aerospace Consulting  team offers the implementation of a negotiation task force and an extended procurement diagnosis.

Developing Significant Gains on Supplies for an Electrical Equipment Distributor

Our client, electrical equipment distributor, wants to increase and secure gains on supplies.

Following a diagnosis, KEPLER offers an accompanying measures program for purchasers, in order to prepare negotiations, carry out coordinated actions on identified suppliers and sustainably strengthen internal collaboration.

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Meet our procurement consulting leaders.

Mathieu graduated from ESC IDRAC Paris and the Bachelor of Arts of Polytechnics Business School of Northumbria (UK) before joining GE CITS, Rexel and Cegelec in procurement functions. His career path in consulting includes appointments at different firms : BravoSolution, Lowendal, Masaï and RGP firms where he specializes in cost optimization, redesign to cost and organizational transformation programs. He mainly operated within the manufacturing, pharmaceuticals and luxury goods sectors.

Pierre graduated from École Centrale de Lyon as an engineer, before joining the procurement teams of Renault-Nissan group. His career moved towards operational consulting in 2001. He is a specialist of the Automotive, Pharmaceutical, Distribution and Private Equity sectors.

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Read this article, which highlights a novel strategy for procurement. Focus on sections 1, 2, and 5 and the opening paragraphs for sections 3 and 4. The model in the paper presents a new strategy to reduce procurement costs and enhance overall procurement flexibility.

An Indian Company is manufacturing/assembling product A and B as per the bill of material shown in Figure 2. The company is 40 km away from the railway station and well connected with other cities by road. Considering fluctuation of market demand of product A and B, company is seeking effective procurement strategy for their ATO production system. The company has assembling unit in Punjab and retailers in different parts of India. Base product is manufactured as per the forecast and stored at the central warehouse shown in Figure 1. After receiving the customer order, the base product is brought to retailer shops in 15 to 20 days. Auxiliary parts/components/sub-assemblies are manufactured or assembled at the retailer site. It is assumed that material handling cost is 10% of procurement cost from each supplier. The aggregate demand for raw material to produce base product in the planning horizon is 4,900 tones. Senior members of different departments such as Finance, Marketing, Design and Manufacturing are asked to form a team of decision makers to select the right supplier for the company. Initially, a supply base is formed based on their industrial certifications such as ISO, TUV etc, material test data and ability to supply within the lead time. Based on the above information supplier's data sheet, is prepared, and shown in Table 2. Distance and mode of transfer mentioned in Table 2 is used further to calculate cost of emission for inbound transport. Linguistic terms, shown in Table 3, are used to prepare supplier's reliability measurement data sheet, shown in Table 4. Arithmetic mean of each IFN, shown in Table 4, is used to calculate reliability of each supplier, shown in Figure 5.

Table 3 Linguistic terms.

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The art of persuasion: how to write a winning case study proposal for procurement.

Procurement is a critical aspect of any business, and writing a winning case study proposal can make all the difference. But what exactly is a case study proposal ? Why are they important? And how do you write one that persuades procurement professionals to choose your company over others? In this blog post, we will explore the art of persuasion and provide tips on how to craft an effective case study proposal that stands out among the competition. So buckle up and get ready to learn some valuable insights into the world of procurement and case study proposals!

What is a case study proposal?

A case study proposal is a document that outlines the success of a project or service provided by your company. It serves as an example for potential clients to see how you have helped other companies achieve their goals. A well-written case study proposal can be persuasive and help demonstrate your expertise in your field.

The purpose of a case study proposal is to showcase real-life examples of how you have solved problems and provided value to other businesses. It provides evidence that you are capable of delivering results, which is crucial when it comes to convincing procurement professionals to choose your company over others.

In order to create an effective case study proposal, it’s important to understand the specific needs and pain points of the client you are targeting. Your proposal should highlight how your services address those particular challenges while providing measurable results.

To put it simply, a successful case study proposal tells the story of how your solutions have made a positive impact on other companies’ bottom lines .

Why are case studies important?

A case study is a detailed analysis of an individual, group, or event. It is used to understand complex problems and find solutions. Case studies are important because they help people learn from real-life situations and apply that knowledge to similar scenarios.

Case studies provide valuable insights into the decision-making process. They highlight best practices, as well as mistakes to avoid. This can be particularly useful for procurement professionals who need to make informed decisions based on data-driven analysis .

By examining a range of case studies within their industry, procurement professionals can gain a comprehensive understanding of the challenges faced by others in their field and learn how those challenges were addressed.

Another benefit of case studies is that they allow procurement professionals to communicate their successes with stakeholders in an engaging way. By presenting concrete examples of successful projects or initiatives undertaken by the procurement team, stakeholders will have more confidence in the team’s abilities.

In short, case studies are essential tools for anyone involved in procurement . They offer valuable insights into best practices and lessons learned while providing opportunities for communication and collaboration between different departments within an organization.

How to write a winning case study proposal

When it comes to writing a winning case study proposal for procurement, there are several key elements that you need to include . First and foremost, you need to clearly define the problem or challenge that your proposed case study will address. This should be done in a concise and compelling manner, highlighting the specific pain points that your target audience is experiencing.

Next, you should outline your proposed solution or approach. What unique insights or strategies do you bring to the table? How will your proposed solution help overcome the challenges outlined in the previous section?

It’s also important to provide some background information on yourself or your organization. Why are you uniquely qualified to tackle this problem? What experience and expertise do you bring to bear?

Don’t forget about metrics! Your case study proposal should include clear goals and objectives for what success looks like – both for yourself as well as for potential clients who may be interested in working with you.

By following these guidelines, you’ll be well on your way towards crafting a winning case study proposal that effectively communicates why clients should choose YOU over other competitors in procurement !

Tips for writing a successful case study proposal

Writing a successful case study proposal for procurement requires careful consideration of various factors. Here are some tips to help you create a compelling and persuasive proposal:

Firstly, understand your audience and tailor your proposal accordingly. This means taking into account their needs, priorities, and objectives.

Secondly, focus on the problem that your case study will address. Clearly articulate the challenge faced by the organization , how it impacts their operations or bottom line, and why it’s important to solve this issue.

Thirdly, use data to support your claims. Include research findings or statistics that demonstrate the impact of similar solutions in other organizations .

Fourthly, be concise and specific about what you’re proposing. Provide clear details about how you plan to address the problem at hand and what outcomes can be expected.

Fifthly, highlight any unique features or benefits that set your solution apart from others in the market.

Proofread carefully for errors and ensure that all formatting is consistent throughout the document. A well-structured proposal will help make a good first impression with potential buyers.

How to format a case study proposal

Formatting your case study proposal is just as important as the content you include in it. A well-formatted proposal can make all the difference when it comes to catching the attention of procurement professionals . Here are some tips on how to format a winning case study proposal:

First, choose a professional and easy-to-read font such as Times New Roman or Arial. This will help ensure that your proposal looks polished and is easy to read.

Next, use headings and subheadings throughout your proposal to break up long paragraphs into smaller sections. This will make it easier for readers to follow along and find key information.

Make sure to include plenty of white space throughout your document by using appropriate margins, line spacing, and paragraph spacing. This will also improve readability.

Keep in mind that visuals can be very effective in helping convey complex information quickly so try incorporating charts, graphs or images wherever possible.

Ensure that you proofread your document thoroughly before submitting it! It’s always best practice to have someone else review it with fresh eyes after you’re done as well.

Examples of successful case study proposals

Looking for inspiration on how to write a successful case study proposal for procurement? Look no further than these examples of winning proposals .

In one example, the proposal outlined a specific problem faced by the client and then detailed how their product or service provided a unique solution that saved them time and money. The proposal also included testimonials from other satisfied clients and data supporting the effectiveness of their approach . This combination of storytelling, social proof , and hard evidence made the proposal convincing.

Another successful proposal focused on demonstrating expertise in the industry by showcasing previous work with similar clients. They emphasized their ability to understand complex problems and provide tailored solutions based on individual needs. The use of visuals like graphs and charts helped make their argument more compelling.

A third example highlighted partnerships with relevant organizations as well as endorsements from respected industry leaders. They demonstrated an understanding of market trends through research findings, which they used to support their proposed solution.

These examples illustrate that an effective case study proposal uses a range of techniques such as storytelling, social proof, data analysis, visual aids, expert endorsements and research-driven insights to persuade potential clients or buyers effectively.

To sum it up, writing a winning case study proposal for procurement requires a strategic approach. By understanding the needs of your potential client and crafting a compelling story that showcases your company’s expertise, you can increase your chances of securing new business .

Remember to keep your proposal concise yet comprehensive, using real-world examples to demonstrate how you have successfully solved similar problems in the past. Use visuals and graphics where possible to showcase data and results.

Always be prepared to make adjustments and revisions based on feedback from the procurement team . With persistence and attention to detail, you can craft a winning case study proposal that sets you apart from the competition and helps secure new business opportunities.

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Avelo Airlines continues to soar with PayPal’s strategic solutions

PayPal Editorial Staff

April 8, 2024

On April 28, 2021, Avelo Airlines took flight for the first time — ushering in a new era of convenient, affordable, and reliable air travel. 1 Their mission statement is to “inspire travel” and they accomplish this by reducing as much friction as possible for their customers. Avelo never charges a cancellation or change fee. Ever.

They serve over 48 destinations across the United States with an average ticket price of $100. Flying out of smaller, more convenient airports, saves their customers time and money so that they can fly easily and more often.

We spoke to Avelo’s Head of Finance and CFO Hunter Keay, and Chief Digital Officer, Sumit Goyal, to discuss their experience with PayPal Braintree, Pay Later, and Fraud Protection Advanced.

Success metrics

• 3% increase in approval rates. 3
• 22% higher AOV with Pay Later. 4
• 15.5% reduction in chargebacks. 5

The opportunity – Avelo wanted to simplify and streamline the checkout process to reduce friction for their customers.

Creating a seamless travel experience is paramount for Avelo Airlines. However, they encountered challenges with their prior processor and felt that they were not being heard. As a result, Avelo decided to explore other processing solutions, via a request for proposal (RFP). Their goal was to align with an innovative company that shared their vision for putting the customer first and minimizing friction. Avelo also wanted to offer their customers flexible payment options to help them easily budget their travel. And, to ensure that they were approving as many customers as possible, they wanted an adaptive machine-learning solution, to help protect them against evolving fraud. Innovation, reliability, scalability, and responsiveness were key factors in their decision-making process. Ultimately, Avelo Airlines chose PayPal.

Said Keay regarding the RFP process, “We spoke to a lot of really, good emerging fintech companies who provided compelling economics and value propositions. But PayPal was really the only one from a top to bottom perspective, from IT, economics, overall support, and collaboration. PayPal differentiated itself from the start.”

The solution – Avelo integrated PayPal Braintree’s platform to elevate their offerings and decrease turbulence.

With the integration of PayPal Braintree as their processor, Avelo has access to PayPal checkout, Venmo , Pay Later , Fraud Protection Advanced (FPA) , and much more. “The PayPal Braintree integration was our single biggest IT success story that we’ve ever had at this company,” said Keay. “Not just through the speed of integration but through the partnership and collaboration.”

And there are so many components to this collaboration. Avelo customers are adopting PayPal Checkout at rates that have exceeded Avelo’s key performance indicators (KPI’s). Keay explained that “We have better data when the customer books through PayPal and a greater ability to track the demographics, and to better know our customers.”

Knowing that their customers were interested in flexible ways to pay for their flights, Avelo integrated dynamic messaging for PayPal’s Pay Later solutions. Customers can choose between Pay in 4, a short-term, interest-free offer for purchases between $30-$1,500, or, Pay Monthly, a longer-term, interest-bearing offer for purchases between $199-$10,000. 2 By messaging the Pay Later solutions early in the checkout process, customers are aware of these options.

“Quite frankly Pay Later is delivering above and beyond our expectations,” said Keay. “We use dynamic messaging for Pay Later because it drives higher conversion, and it’s a beautifully simplistic product.”

FPA is like a traffic controller, providing Avelo with critical insights and control relating to the customers on their site. With PayPal’s advanced machine learning and analytics, FPA helps Avelo manage fraud and ensure that as many credit worthy customers as possible are being approved.

“The ability to adjust the filters in Fraud Protection Advanced has been exciting for us. The PayPal team confirmed that our fraud filters are optimized and that is evident in our conversion rates,” said Keay.

Collectively, these PayPal products provide Avelo with an integrated payments solution that delivers scalability, security, flexibility, and innovation, ensuring their customers a seamless checkout.

The impact – PayPal helps deliver higher approval and conversion rates, and rich data intelligence to help manage fraud.

The strong collaboration between Avelo and PayPal has been developed with exceptional care and attentiveness, yielding impressive results. Avelo has seen a 3% increase in overall approval rates since integrating PayPal Braintree. 3 According to Keay, “That increase is huge. And that means we are increasing the number of customers who are able to successfully checkout.”

PayPal Pay Later messaging assures customers that Avelo offers the most trusted brand in payments at checkout even if they choose to pay in full. “With Pay Later, we actually experienced a 22% increase in the average order value,” noted Keay. 4

“Fraud Protection Advanced (FPA) is working brilliantly as well,” said Keay. FPA helps streamline the checkout experience for trusted travelers by creating frictionless customer journeys that help increase conversion rates, reduce good customer declines, and increase customer lifetime value. FPA has helped Avelo to reduce their overall chargeback rate by 15.5%. 5

As Avelo Airlines continues to strive to make travel easier for their customers, PayPal’s solutions align with that goal. The strong collaboration and communication have proven instrumental in streamlining the customer checkout experience. PayPal’s strategic offerings help Avelo fuel growth to deliver convenient, nonstop flights so their customers can fly more, for less.

Avelo Case Study (PDF)

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Creating a Corporate Social Responsibility Program with Real Impact

• Emilio Marti,
• David Risi,
• Eva Schlindwein,
• Andromachi Athanasopoulou

Lessons from multinational companies that adapted their CSR practices based on local feedback and knowledge.

Exploring the critical role of experimentation in Corporate Social Responsibility (CSR), research on four multinational companies reveals a stark difference in CSR effectiveness. Successful companies integrate an experimental approach, constantly adapting their CSR practices based on local feedback and knowledge. This strategy fosters genuine community engagement and responsive initiatives, as seen in a mining company’s impactful HIV/AIDS program. Conversely, companies that rely on standardized, inflexible CSR methods often fail to achieve their goals, demonstrated by a failed partnership due to local corruption in another mining company. The study recommends encouraging broad employee participation in CSR and fostering a culture that values CSR’s long-term business benefits. It also suggests that sustainable investors and ESG rating agencies should focus on assessing companies’ experimental approaches to CSR, going beyond current practices to examine the involvement of diverse employees in both developing and adapting CSR initiatives. Overall, embracing a dynamic, data-driven approach to CSR is essential for meaningful social and environmental impact.

By now, almost all large companies are engaged in corporate social responsibility (CSR): they have CSR policies, employ CSR staff, engage in activities that aim to have a positive impact on the environment and society, and write CSR reports. However, the evolution of CSR has brought forth new challenges. A stark contrast to two decades ago, when the primary concern was the sheer neglect of CSR, the current issue lies in the ineffective execution of these practices. Why do some companies implement CSR in ways that create a positive impact on the environment and society, while others fail to do so? Our research reveals that experimentation is critical for impactful CSR, which has implications for both companies that implement CSR and companies that externally monitor these CSR activities, such as sustainable investors and ESG rating agencies.

• EM Emilio Marti is an associate professor at the Rotterdam School of Management, Erasmus University. His research focuses on corporate sustainability with a specific focus on sustainable investing.
• DR David Risi is a professor at the Bern University of Applied Sciences and a habilitated lecturer at the University of St. Gallen. His research focuses on how companies organize CSR and sustainability.
• ES Eva Schlindwein is a professor at the Bern University of Applied Sciences and a postdoctoral fellow at the University of Oxford. Her research focuses on how organizations navigate tensions between business and society.
• AA Andromachi Athanasopoulou is an associate professor at Queen Mary University of London and an associate fellow at the University of Oxford. Her research focuses on how individuals manage their leadership careers and make ethically charged decisions.

Partner Center

Contractor Publishes Case Study Detailing Brighton, CO Veterans Memorial Project

Veltri Steel (+1-719-250-0499) has published a case study detailing the steps it took to complete the Adams County Veterans Memorial at Riverdale Regional Park in Brighton, CO.

Greenwood Village, United States - April 6, 2024 —

The steel fabrication company, based in Greenwood Village and serving a large area in Central Colorado, completed the memorial project in May 2023 and has published their official report on the durability and general reception to the installation.

For more information, visit https://www.veltristeel.com/

The project, a 1/14th scale replica of the USS Colorado, is located at Riverdale Regional Park in Brighton and stands as a tribute to the area’s service members. The construction consists of 175 tons of steel, assembled on site and partially submerged in the park’s water features, appearing just as the full-scale boat would when in harbor.

This installation tested the limits of the company’s project management skills and saw them using the full range of their capabilities in the assembly of curved, structural, architectural, and ornamental steel components. The inclusion of stainless and galvanized components as well as the challenges inherent in waterproofing a project of this scale added an extra layer of difficulty.

Despite the complexity of the project, the team was able to utilize advanced fabrication and welding techniques to precision forge and assemble each component of the project. In all, the project required the sourcing of material from 4 states and a large-scale collaboration between contractors and designers in the interest of creating a monument that will stand for generations to come.

Speaking on the project and its challenges, a spokesperson stated, “This was a very complex structural and ornamental steel construction including slip-critical connections, between curved steel & H-beams, channel beams, and stainless steel. It is an actual sculpture, and it had to be watertight, too.”

While this most recent project is primarily ornamental in nature, Veltri Steel offers a full range of commercial construction services throughout the Boulder area as well. It is capable of fabricating structural and architectural steel assemblages and providing general contracting and project management services.

Veltri Steel adheres to a strict “customer first” philosophy, a management strategy that places an emphasis on safety, flexibility, and environmental sustainability. It is open to collaborating with developers and project managers throughout the central Colorado area.

Interested parties can visit https://www.veltristeel.com/ or call +1-719-250-0499 to speak to a representative.

Contact Info: Name: Ilya Gouts Email: Send Email Organization: Veltri Steel, LLC. Address: PO Box 5393 , Greenwood Village, CO 80155, United States Website: https://www.veltristeel.com

Source: NewsNetwork

Release ID: 89126480

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