Procurement Transformation for 2025: Master Change, Maximize Value.

Driving Success in 2025 and Beyond: The Key Agenda for CEOs, CFOs and CPOs in Europe's Automotive, Industrial, and Machinery Sectors

As we approach 2025, CEOs leading automotive, industrial, and machinery companies in Europe face an unprecedented convergence of opportunities and challenges.

The rapid pace of technological innovation, evolving regulatory frameworks, and shifting market dynamics demand decisive action. To thrive in this transformative era, here are the top priorities that must dominate the C-suite agenda to make procurement a real value and profit generating function.

"In many organizations I’ve worked with, I’ve observed significant potential for improvement in achieving best-in-class performance global procurement and delivering measurable results and innovations. Several companies I’ve encountered were operating at Level 2, with considerable progress needed to reach Level 5 and truly excel. How does your group measure up in this regard?

Get done an assesment without delay and the facts on the tabel to be able to improve your situation and generating increased short- and longterm profits"

In the following I have outlined what is required in global operating companies:

Transform your Procurement Function with Excellence and Strategic Capabilities

To establish a procurement function that achieves excellence across direct, indirect, and project procurement, while aligning with global, regional, and local objectives, a structured and scalable approach is essential. Below is a comprehensive framework for designing a procurement function capable of delivering value today and evolving to meet future challenges:

1. Define a Clear Vision and Objectives for Procurement Excellence

Start by establishing the overarching purpose of the procurement function, ensuring alignment with the organization's business goals.

• Vision: Build a procurement organization that drives value, fosters innovation, ensures sustainability, and enables competitive advantage.
• Key Objectives:Achieve cost optimization and value creation across direct and indirect spend.Enhance supplier collaboration for innovation and risk management.Embed sustainability and compliance in every procurement activity. Build global-to-local synergies to support business needs efficiently.

2. Design a Procurement Organizational Structure

Create a structure that balances strategic direction with operational execution while enabling procurement excellence at all levels:

a. Core Procurement Leadership

• Chief Procurement Officer (CPO): Drives the global strategy, reports to senior leadership, and ensures alignment with business objectives.
• Regional/Local Procurement Leaders: Execute global strategies while tailoring initiatives to local market conditions.

b. Key Procurement Functions

1. Procurement Excellence Team:
2. Category Management:
3. Sustainability and Risk Management:
4. Supplier Relationship Management (SRM):
5. Support Functions:

3. Implement Category Management Across All Spend Areas

Category management forms the backbone of strategic procurement. To succeed:

• Segment Categories:
• Category Strategies:
• Global, Regional, and Local Approaches:

4. Build a Procurement Center of Excellence (CoE)

The CoE acts as the central hub for driving innovation, process improvement, and alignment across regions and categories. Key roles include:

• Defining global standards, tools, and processes for procurement activities.
• Monitoring procurement performance through KPIs (e.g., cost savings, supplier performance, risk reduction).
• Driving digital transformation initiatives like e-procurement, spend analytics, and predictive sourcing.
• Leading training programs to build capabilities in category management, negotiation, and risk management.

5. Enable Digital Transformation in Procurement

Invest in technology to enhance efficiency, visibility, and decision-making:

• Spend Analytics Platforms: Use tools like Coupa or Jaggaer for comprehensive spend visibility and insights.
• e-Procurement and e-Sourcing: Automate sourcing, bidding, and supplier selection processes.
• Supplier Management Systems: Implement platforms to track performance, compliance, and innovation.
• AI and Predictive Analytics: Use AI for demand forecasting, supplier risk identification, and dynamic pricing strategies.

6. Foster Collaboration with Cross-Functional Teams

Aligning procurement with engineering, R&D, and operations ensures greater value creation:

• Value Engineering: Work closely with engineering teams to optimize product designs for cost and performance.
• Early Supplier Involvement: Engage suppliers during product development for innovative solutions.
• Integrated Planning: Collaborate with sales and operations teams through an S&OP process to align demand planning with supply chain capabilities.

7. Build Supplier Relationships for Innovation and Resilience

Suppliers are critical partners for future success. To strengthen these relationships:

• Strategic Supplier Segmentation: Focus on high-impact suppliers that align with long-term goals.
• Collaborative Innovation: Partner with key suppliers to co-develop technologies and new products.
• Risk-Sharing Agreements: Develop contracts that share risks and rewards, ensuring supplier commitment and resilience.

8. Develop Future-Ready Talent in Procurement

A skilled workforce is essential for a high-performing procurement organization:

• Training Programs: Invest in training for negotiation, digital tools, sustainability, and data analytics.
• Career Pathways: Offer clear growth opportunities to attract and retain top talent.
• Diversity and Inclusion: Build a diverse team to drive innovation and reflect market needs.

9. Create KPIs and Performance Management Systems

Track procurement’s contribution to the organization’s goals through meaningful KPIs:

• Cost savings and avoidance.
• Supplier innovation contribution.
• Carbon footprint reduction and ESG compliance.
• Supply chain resilience and risk mitigation.

10. Evolve Procurement Through Continuous Improvement

Procurement excellence is a journey, not a destination. Regularly assess and refine:

• Processes and policies based on market dynamics and internal feedback.
• Technologies to ensure procurement remains at the forefront of digital innovation.
• Strategies to align with evolving business goals and external challenges.

Conclusion

A procurement function structured around excellence, category management, and strategic support functions can drive significant value across direct, indirect, and project procurement. By fostering global alignment, leveraging technology, and empowering talent, companies can build a procurement organization ready to master future challenges and opportunities.

Are you ready to elevate your procurement function to the next level? Let’s connect and explore how this roadmap can help you achieve procurement excellence and improved results.

"Your company can not effort to not reach best in class performance and related results"

1. A first step would be to first make an AS-IS assesment and make sure your procurement function is well aligned with the organization's business goals and other functions.
2. Based on this outlined a prioritized roadmap and action plan how to deliver improved profits, innovations and real company business value short- and longetrm.
3. Hereafter move into execution to transform your procurement function to a high performing and profit generating business function and reach best in class.

You can not afford not to act here with high priority!

I am ready to support you and deliver measureable results based on my many years successful experience and capabilities in global procurement. Lets get in touch.

Read more here: www.iwersen-interim.com

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