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Procurement 20/20
Supply Entrepreneurship in a Changing World

By 2020, procurements role will have become even more important for sustaining constant supply, best
cost, reduced volatility, faster and improved innovation, and clean corporate-brand image. (p. 179)

Procurement 20/20 is a team effort by four members of McKinseys
Global Purchasing and Supply Management Practice: Peter Spiller,
Nicolas Reinecke, Drew Ungerman, and Henrique Teixeira. If you were at
the Institute for Supply Managements conference in Las Vegas this May,
you might have even picked up a copy for free. (Thanks to Cottrill
Researchs Jeanette Jones for grabbing my copy!)

This book is an opportunity to get insight into the experience and
research of the McKinsey team, most specifically, their seven year Global
Purchasing Excellence (GPE) survey. This data provides the numbers to
back up many of the things practitioners have known instinctively for years: the pressure for each
employee to perform has gone up, as has external spend as a percent of total cost.
External spend as a fraction of total cost has increased by an average of 40 percent since 1970.
(p. 9)
External spend has also grown from roughly 60 percent of a companys total expenditure in 1970
to 85% in 2010. (p. 9)
Companies on the S&P 500 realize approximately $900K in revenues per employee, a 22x
increase since 1970. (p. 9)
Leaders [as designated by McKinseys GPE survey] invest 29 strategic full-time equivalent (FTE)
employees per US $1 billion in spending. (p. 19)

All of the leading procurement philosophies are reflected, including corporate virtualization, the need to
outsource tactical sourcing in order to foster excellence, and the expectation that more training will be
needed as attitude and work ethic are prioritized over experience in the hiring process. The authors also
address the idea that procurement transformation a phrase that has yet to be definitively captured and
defined is active preparation for the opportunities and challenges of the future.

In my opinion, the best thing about this book is McKinseys willingness to use their years of extensive
research to back up some tough love declarations. These statements necessarily separate the leaders
from the laggards. Procurement teams must have enough of the right talent, but they must also have the
opportunity and drive to leverage it. Although there is no denying the importance of structure and
systems, neither (nor the combination of both) is a substitute for superb talent. If, as Ralph Waldo
Emerson told us in the 19
th
century, A foolish consistency is the hobgoblin of little minds, an
overemphasis on process and technology is the refuge of a sub-par procurement team. Sometimes the
truth just hurts.

The unfortunate reality of this well written and documented book is that the professionals most likely to
read it are already singing in the choir. It will be an uphill battle to get your CEO or CFO to read it, no
matter how much they (and their procurement team) would benefit as a result. The best use of the facts,
benchmarks, and ideas contained within is to substantiate procurements requests for support, influence,
and organizational change. Add that to the fact that the $25 price tag is a pittance compared to what a
McKinsey consulting engagement costs, and the decision to buy this book becomes a no brainer.

-- Kelly Barner, Buyers Meeting Point

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About Buyers Meeting Point
Buyers Meeting Point is an online knowledge and professional development resource for procurement
and supply management professionals. Our mission is to support overburdened professionals by making
information accessible by centralizing access to resources on our site, by digesting content and
evaluating sources looking for the highest quality information, and by making sure all our coverage is
done clearly and simply with no presupposition of pre-existing knowledge or experience. There is a world
of information available to you and our site and resources provide an avenue for you to gain market
knowledge and expertise from others and to apply them where appropriate for your business. Watch our
news articles and blog postings for information on webinars, solutions, research reports, publications and
whitepapers being discussed by your colleagues. Make sure you get a well-rounded perspective on
procurement by reading our Flip Side content featuring "The Sales Guy". We are convinced you will find
something among our resources to assist you with your current challenges. For more information, please
visit www.buyersmeetingpoint.com or email management@buyersmeetingpoint.com