procurement problem case study

10 Procurement Case Studies: Examples & Lessons Learned

Effective procurement practices are crucial across all industries. By examining procurement case studies, we gain valuable insights into the impact of procurement solutions and best practices that can drive success in any industry.

Explore a range of procurement case studies that showcase how organizations in various sectors— non-profit , technology, healthcare , and beyond—have leveraged innovative procurement strategies to overcome challenges and enhance overall efficiency:

Procurement case studies from different industries

By examining procurement case studies from different sectors, we can uncover how organizations have leveraged innovative solutions to address challenges, optimize operations, and achieve remarkable results.

1. Real-life example from energy & utilities sector

The leading utility company faced significant supply chain constraints that extended lead times for crucial transformers and electrical equipment to over two years, jeopardizing their expansion plans and project timelines. 1

A procurement software vendor partnered with the utility company to secure future production slots, negotiate favorable contract terms, and streamline internal processes. This collaboration resulted in a 5% cost reduction through competitive bidding, standardized pricing adjustments, and the creation of unique material codes for better forecasting and budgeting in future projects.

Lessons learned

The case highlights the importance of strategic supplier partnerships, direct negotiations to mitigate supply risk, and the value of streamlining internal processes to improve efficiency and cost savings in procurement.

2. Real-life example from oil & gas sector

A leading global oil and gas company faced inefficiencies, data silos, and governance issues in its procurement process due to reliance on 15 legacy custom solutions, which led to delays, a lack of visibility, and an overly complex approval system. 2

The procurement software vendor implemented its intelligent category management (ICM) system, consolidating the 15 legacy solutions into two centralized systems. This solution digitized contracts, increased eSourcing adoption by 20%, improved procurement ROI by 15%, and provided real-time insights to enhance category strategies, supplier relationships, and overall procurement efficiency. 3

The case demonstrates the benefits of consolidating and centralizing procurement systems, leveraging real-time data and insights for strategic decision-making, and using intelligent category management to improve efficiency, cost savings, and risk management in procurement.

3. Real-life example from the healthcare sector

For more information, check Healthcare Procurement Challenges & Effective Solutions .

Memorial Hospital of Sweetwater County faced frequent system failures and limited access to budget details during the purchasing process due to a problematic general ledger system, leading to workflow interruptions and high error frequency. 4

The procurement software provided a requisition solution that offered accurate budget reporting, visibility and transparency throughout the purchasing process, and seamless integration with the hospital’s materials management and ERP systems. This led to improved processing times, reduced errors, and enhanced efficiency.

The case underscores the importance of adopting tailored procurement solutions to overcome system inefficiencies, reduce errors, and streamline operations, leading to significant improvements in budgeting, transparency, and procurement professionals satisfaction. Technology can help procurement teams streamline their processes and improve communication with different suppliers.

4. Real-life example from the non-profit sector

For more information, check Nonprofit Procurement: Checklist & Challenges .

Central Park Conservancy faced a lack of control and chaotic ordering due to a paper-based requisition system that hindered tracking, approvals, and efficient order placement. 5

The procurement software vendor provided an integrated electronic procurement solution that included customized workflows, audit trails, and seamless integration with Blackbaud Financial Edge, enabling accurate tracking of expenditures, encumbrances, and accruals.

The implementation of procurement software significantly streamlined the procurement process, reinforced purchasing policies, and enhanced spend management, leading to improved efficiency, time savings, and better control over financial operations.

5. Real-life example from the financial sector

Hellenic Bank faced a lack of standardization, centralization, and digitalization in its procurement processes, leading to inefficiencies, high costs, and a need for improved compliance with regulatory requirements. 6

The bank implemented an AI-powered source-to-pay software to centralize procurement activities, streamline operations, and integrate key processes such as risk assessment, supplier management, and contract management. The deployment was phased, starting with the source-to-contract module and extending to procure-to-pay functionalities.

For more information, check 10 AI Procurement Use Cases & Case Studies .

The implementation of the procurement tool led to a significant transformation in procurement operations at Hellenic Bank, resulting in standardized processes, enhanced visibility, reduced cycle times, stronger supplier partnerships, and strategic insights. The bank also anticipates further benefits, including cost reductions and improved compliance, as they fully integrate their procurement activities on a single platform.

6. Real-life example from the construction sector

High Speed 2 Ltd. faced the greatest challenge of achieving supply chain transparency and resiliency for the UK’s largest infrastructure project. This involved managing a large number of suppliers and contractors in a complex market, with costs and risks exacerbated by external factors like hyperinflation and labor shortages. 7

HS2 implemented the supply chain management initiative, a focused approach using data-driven collaboration with suppliers to ensure transparency and mitigate risks. The effort involved mapping and assessing critical contracts and suppliers across multiple tiers, leveraging dashboards and innovative methods to deliver valuable insights into the supply chain.

The case study shows that commitment to collaboration and proactive risk management can achieve significant advancements in supply chain transparency, maintaining quality, and ensuring better deals for organizations. HS2’s successful development of supply chain management allowed them to focus on immediate needs, securing value for taxpayers by understanding and managing risks in real-time.

7. Real-life example from the chemical sector

Bioscience company Royal DSM N.V. (DSM)’s indirect procurement processes were fragmented, leading to inefficiencies and excessive time spent on operational tasks, detracting from value-creating activities. The purchase-to-pay process was also suboptimal, with potential payment delays introducing risk. 8

DSM implemented a procurement software solution to digitalize and automate procurement transactions. This included a comprehensive source-to-pay process supported by a robust governance structure and global rollout, starting with a pilot in Brazil to navigate complex tax regulations.

Starting the transformation in a region with complex tax systems, like Brazil, allowed DSM to learn valuable lessons that simplified the global rollout. Effective change management and extensive training, including local language support, were crucial for the successful adoption and deployment of the new procurement processes.

8. Real-life example from the transportation sector

Transport for London (TfL) faced a severe skills shortage and lack of diversity in the transport industry, with a workforce predominantly composed of older white males, while a significant portion of young Londoners were unemployed or out of education. 9

TfL established the Supplier Skills Team and implemented Strategic Labour Needs and Training (SLNT) requirements in contracts. This approach required suppliers to deliver specific skills and employment outputs, with a focus on apprenticeships and job starts for disadvantaged groups. TfL also partnered with charities and employability groups to support these efforts.

Successful outcomes were driven by strong internal buy-in, clear communication of goals with suppliers, effective partnerships with the right organizations, and recognition of achievements. TfL’s approach has led to thousands of apprenticeships, job placements, and the employment of disadvantaged individuals, setting a standard now being adopted by other public sector bodies.

9. Real-life example from the technology sector

Jumio faced challenges in managing its procurement and accounts payable processes , particularly with manual purchase order (PO) matching, which caused bottlenecks and inefficiencies, especially as the company scaled globally across multiple subsidiaries. 10

Jumio implemented an integrated procure-to-pay finance automation solution, which automated PO and invoice processing, self-service supplier onboarding, and improved month-end reconciliation.

Automation of procurement and accounts payable processes significantly reduced workload, improved efficiency by eliminating manual tasks, accelerated financial reconciliation, and ensured seamless integration with their ERP system.

10. Real-life example from the education sector

Pearson, a global leader in education, struggled with disjointed procurement systems that lacked comprehensive spend visibility and compliance enforcement, hindering strategic decision-making. 11

Pearson implemented a business spend management platform to unify their procurement processes, improve risk management, enhance compliance, and achieve better deals, with a focus on user-friendly adoption.

The integration of the procurement software platform significantly increased spend compliance from 22% to 85%, reduced operational inefficiencies, and resulted in high user satisfaction, demonstrating the value of streamlined procurement processes.

Summary of lessons learned from the procurement case studies

• Procurement software integration significantly increased spend compliance and reduced operational inefficiencies.
• Automation improved efficiency, reduced manual tasks, and streamlined financial processes.
• Effective change management and training were crucial for successful adoption.
• Commitment to collaboration and proactive risk management enhanced supply chain transparency and efficiency.
• Centralizing procurement systems and using real-time data led to better decision-making and cost savings.

What is a sustainable procurement process?

Sustainable procurement is a critical part of supply chain management, aiming to reduce energy consumption and environmental impact. Companies like Walmart have implemented sustainable procurement strategies to reduce their carbon footprint. 12 Sustainable procurement can have a significant impact on the environment and the bottom line.

What is supply chain optimization?

Optimizing the supply chain is a key aspect of procurement, involving the management of parties involved in the procurement process. Competitive bidding and digital solutions can help procurement teams streamline their processes and reduce costs. Data obtained from supply chain optimization can provide detailed information on procurement processes and help procurement professionals make better decisions. Procurement teams play a critical part in the procurement process, requiring strategic goals and specific contracts to achieve success.

Further Readings

• Top 10 Procurement Software Features & Pr i ces Analyzed

10 AI Procurement Use Cases & Case Studies

• Non-profit procurement: Checklist & Challenges
• Healthcare Procurement Challenges & Effective Solutions
• Procurement Software Comparison, Testing & Benchmarking

If you need further help in finding a vendor or have any questions, feel free to contact us:

External Links

• 1. Leading Utility Mitigates Supply Risk and Reduces Costs With GEP . GEP SMART. Accessed: 20/August/2024.
• 2. How a Fortune 500 Oil & Gas Major Partnered With GEP To Achieve a 15% Jump in Procurement ROI . GEP Smart. Accessed: 20/August/2024.
• 3. How a Fortune 500 Oil & Gas Major Partnered With GEP To Achieve a 15% Jump in Procurement ROI . GEP Smart. Accessed: 20/August/2024.
• 4. Memorial Hospital of Sweetwater County Reduces Costs with PairSoft . PairSoft. Accessed: 20/August/2024.
• 5. PairSoft Helps Central Park Conservancy Streamline Procurement . PairSoft. Accessed: 20/August/2024.
• 6. How Hellenic Bank Transformed Its Indirect Procurement Operations With GEP Software . GEP Smart. Accessed: 20/August/2024.
• 7. High Speed 2’s approach to building supply chain transparency . Procurement leaders. Accessed: 21/August/2024.
• 8. DSM: Digitalizing global procurement processes for strategic source-to-pay capability . SAP Ariba. Accessed: 21/August/2024.
• 9. Working with suppliers to achieve social opportunities . PROCURA+. Accessed: 21/August/2024.
• 10. Jumio Fights Fraud By Delivering a Smarter Identity Verification Experience . Tipalti. Accessed: 21/August/2024.
• 11. Pearson Gets an A in Business Spend Management . Coupa. Accessed: 21/August/2024.
• 12. Product Supply Chain Sustainability . Walmart. Accessed: 20/August/2024.

Next to Read

Healthcare procurement challenges & effective solutions in ‘24.

Your email address will not be published. All fields are required.

Related research

Top 5 ai procurement software by use cases & tools, 18 best process modeling tools and techniques to know in ’24.

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

Procurement Case Studies — 11 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 takeaways

• Procurement case studies are real-word examples that provide valuable insights into the complexities of 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.

Procurement case studies are helpful to draw inspiration from as they offer real-life examples of challenges and solutions, allowing you to learn from the successes and mistakes of others.

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.  

I have created a free-to-download editable procurement strategy template . It’s a PowerPoint file you can use to create your own strategy after being inspired by the case studies below. I even created a video where I’ll explain how you can use this template.

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 Whole Foods Market. In other words, the CEO of Whole Foods Market needs help to retain his position.

In light of the pressure that comes from the activist hedge fund, four different equity firms sent 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 a 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 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 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 on becoming 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 can 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 toward 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. However, 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 with 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 in retreating when the outcome will be good and that the negotiation is about to end.

Featured Download: Want to get better at negotiation skills? Click here to accelerate your career: Negotiation Preparation Toolkit template to help you prepare for your upcoming negotiation.

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 negotiating limited resources. 

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 would 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 knew that only a few vaccines would 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 vulnerable populations 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 instead of negotiating by themselves with drugmakers. 

To encourage coordination when allocating scarce resources, countries must plan, 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. 

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. 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 who 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 broadened 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 continued 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 to 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 they include 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 is 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 as to 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 in 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 who 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 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 to find a solution before they take the matter 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 to 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 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 03, 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 has 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 could 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 would 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 began, North Korea accused the South’s response of being 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 in 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 to 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, 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 who 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 to gain 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 on all the important decisions before dealing with someone at the negotiation table. 

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

Example 11 — The Added Value of E-Auctions

As the Procurement Manager of the largest retailer in the Netherlands and Belgium, I have personally experienced the power of online auctions.

Actual Case: 

In this case, I would like to explain when we used e-auctions and what the outcome was of the different auctions.

When did we use an e-auction ? In many cases, you can use e-auctions. However, I also realize that using them is complex and time-consuming. For that reason, I used this method very sparingly. The only times I used it were for purchasing Private Label Commodity products. The definition of commodity products is that they are homogeneous, meaning there is little difference between the products from different producers. Within FMCG, you can think of items like rice, pasta, olive oil, milk, or toilet paper.

To conduct an e-auction, you need several suppliers who are willing to participate and with whom you are prepared to purchase if they offer the best bid. This means that before the auction, you must have conducted the necessary checks with these suppliers to ensure they can actually deliver the desired quality, handle the volume, are financially reliable, have the necessary certifications, and other relevant factors.

I clearly remember a negotiation for a commodity product involving a very large contract (around 50 million euros). Given the importance of this contract and the potential savings that could be achieved, I invested a lot of time into it. I negotiated hard and long with four different suppliers. I did this not only with my counterpart but also by visiting the various management teams or having them visit me at the office. After six or seven meetings with a particular supplier who had been supplying the company I worked for many years, I was convinced that I had negotiated an extremely good price. Proudly, I returned to the office with the news that I had saved two million euros in the negotiation.

Nevertheless, I had already decided in advance that I definitely wanted to conduct an e-auction. Since I had already achieved a considerable saving, I had little confidence that much more would come out of it. Still, I made all the necessary preparations and asked four suppliers to participate in the auction. The great thing about an e-auction is that you can watch online what the different suppliers are doing. 

In this case, we chose a Dutch auction where the price starts high and gradually decreases until all parties drop out and the one who offers the lowest purchase price wins the auction. The first two parties quickly dropped out, and we reached the price I had negotiated myself. I expected the e-auction to end at this point, but it didn’t. The auction continued for more than an hour, and in the end, I realized an additional saving of three million euros on top of the two million I had already negotiated.

What can we learn from this? 

My most important lesson was that I thought I was good at negotiating, but I found that using an e-auction resulted in an even better outcome. In hindsight, I was very proud that I had used this method and extremely pleased with the result. I also learned that after an auction, you really need to work on the relationship. 

Both the winning party, which went much lower in price than desired, and all the losing parties were not amused by this form of negotiation. Given the achieved result, I still stand by the process, but if you want to ensure they will continue to do business with you in the future, it is important to handle this carefully.

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.

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 , Director of Profitable & Responsible Buying

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

Tricia 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.

How Walmart Automated Supplier Negotiations

by Remko Van Hoek , Michael DeWitt , Mary Lacity and Travis Johnson

Summary .   

Walmart, like most organizations with large procurement operations, can’t possibly conduct focused negotiations with all of its 100,000-plus suppliers. As a result, around 20% of its suppliers have signed agreements with cookie-cutter terms that are often not negotiated. It’s not the optimal way to engage with these “tail-end suppliers.” But the cost of hiring more human buyers to negotiate with them would exceed any additional value.

Partner Center

KPMG Personalization

• Home ›
• Insights ›

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.

© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit https://kpmg.com/governance .

Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. Any trademarks or service marks herein are the property of their respective owners.

Connect with us

• Find office locations kpmg.findOfficeLocations
• Email us kpmg.emailUs
• Social media @ KPMG kpmg.socialMedia
• Request for proposal