Consolidation going ‘hand in hand’ with shared services

11 March 2011
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11 March 2011 | Angeline Albert

More centralisation and the expanding role of shared services are affecting buyers with mature indirect procurement operations, research from the Everest Group found.

It follows a study of senior procurement professionals in seven global organisations who put forward their vision for the next three to five years. It assessed organisational structure, the role of shared services, location strategy, performance and risk management, among other things.

It found differences in laws and cultural considerations posed challenges for buyers trying to operate in a regional organisational structure. The study also found that the majority of the seven organisations were centralising indirect spend and planned to assess opportunities to consolidate core spend.

The report said that, for most businesses, consolidation went hand-in-hand with shared services, with six of the seven organisations adopting this approach at the same time as centralising spend or shortly after.

Purchasers revealed that a focus on cost-reduction was encouraging them to set up shared services and this approach was also happily resulting in globally standardised procurement processes. One said: “Moving to a shared services model helped ensure near 100 per cent technology adoption across all locations.”

The report found most shared services focus on providing purchase-to-pay (P2P) services. Buyers quizzed for the research said they wanted shared services to play a more active role in the future in transactional activities, supplier and demand management.

Buyers are also considering how to use technology to automate admin work to reduce costs.

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