Empowering CPOs through EY’s strategic solutions for procurement, tax, and sustainability

The current dynamic business landscape demands efficient procurement orchestration to guarantee a firm’s success. Procurement leaders face multiple barriers such as supply chain disruptions, rising costs, and the complexities of managing vendor relationships, ensuring compliance, and mitigating risks. Internal communication gaps and resistance to adopting new technologies also significantly hinder efficiency.

Global professional services firm EY (Ernst & Young) has devised a cutting-edge approach to procurement orchestration—uniquely integrating its robust global tax function with its supply chain, finance, and risk capabilities, helping procurement leaders break through the multi-pronged barriers they are currently battling. This report examines the ways procurement leaders can benefit from tax optimization solutions that drive sustainable procurement practices, enhancing overall business value.

Addressing cost management challenges with tax efficiency

Cost management remains a top priority for CPOs, particularly in an era of inflationary pressures and unpredictable supply chain dynamics. EY is addressing this need with its procurement strategies—designed to optimize spending and deliver quantifiable financial impact. Tax considerations are directly integrated into its procurement processes and operating model design, helping procurement leaders make informed, cost-effective decisions and create tax-efficient designs.

EY’s procurement services, supported by its global consulting services, are integrated across four service lines: Assurance, Tax, Strategy and Transactions, and Consulting. This comprehensive approach addresses a broad spectrum of business requirements, ensuring depth and breadth in procurement solutions. EY’s Global Delivery Services (GDS) network supports these efforts, operating in multiple countries, including India, the Philippines, Mexico, and Argentina.

Driving sustainability—EY’s commitment to green procurement practices

CPOs are prioritizing sustainable procurement practices by choosing suppliers and products that adhere to environmental and social standards. These include minimizing carbon footprints, ensuring ethical labor practices, and promoting circularity. Aligned to CSOs’ requirements, sustainability and innovation are key pillars of EY’s procurement services:

• Sustainable practices: EY helps clients align procurement operations with sustainability targets, ensuring compliance and fostering a positive environmental impact. For example, it helped a global retailer align with the Corporate Sustainability Reporting Directive (CSRD) by selecting low-emission suppliers, reducing their supply chain’s carbon footprint by 25%.
• Collaboration and research: Partnerships with industry leaders such as SAP Ariba allow EY to deliver innovative, cost-saving e-procurement solutions that enhance financial and operational stability.

Delivering customized solutions for industry needs

Drawing on its sector-specific expertise, EY has tailored its procurement strategies to the unique needs of different industries. Recognizing that a one-size-fits-all approach doesn’t work, it aims to deliver specialized knowledge across sectors such as manufacturing and consumer goods for more effective vendor management and risk mitigation.

The power of tax optimization—providing an added edge for procurement leaders

EY’s global tax function plays a pivotal role in the firm’s procurement services and serves as a key differentiator from peers offering managed services for procurement. The solutions enable CPOs to make tax-efficient decisions, lower costs, and ensure regulatory compliance, ultimately improving financial performance.

• Seamless integration: EY aims to weave tax considerations into the client’s procurement decision. For instance, it embedded tax rules into a pharmaceutical company’s procurement system, automating compliance and reducing tax exposure.
• Tax value propositions: The tax optimization strategies encompass several key areas such as corporate entity tax benefits, sales tax optimization, and global trade tax considerations to address cross-border tax implications. EY helped a manufacturing company lower tax costs by restructuring vendor agreements.
• Significant savings and compliance: EY helps enterprises achieve substantial tax savings through rigorous assessment and optimization of tax structures and transactions. Compliance benefits are an added advantage. For a multinational firm, it conducted a tax structure assessment that led to a 12% reduction in procurement-related tax liabilities while ensuring compliance with local and international tax laws.
• Complex legal entity structures: Global organizations with intricate legal entity setups can benefit from EY’s expertise and tailored solutions to address specific tax challenges, achieving overall financial health. EY recently helped a global enterprise streamline intercompany procurement with a tailored tax solution, boosting financial efficiency.

The Bottom Line: CPOs under pressure to balance cost, sustainability, and tax compliance must explore EY’s integrated solutions to boost efficiency in their end-to-end procurement processes.

As the procurement landscape evolves, enterprises are increasingly seeing the value in integrated solutions that combine tax, procurement, and more. EY’s focus on cross-pollinating these offerings reflects a forward-thinking approach to managed services.

While it may take time for organizations to fully understand and adopt this comprehensive model, those seeking streamlined, all-in-one solutions can find significant benefits. Clear articulation of EY’s unique differentiators will be key to engaging with them effectively.