Deloitte targets procurement transformation with managed services integration

With the shifting focus toward building value-based businesses and digitally integrated processes, procurement is evolving as a strategic enterprise function beyond cost savings. Deloitte is also adopting a distinctive approach to broaden its procurement proposition to support innovation and growth.

Chief procurement officers (CPOs) are trying to integrate multiple priorities into their value proposition to influence business outcomes and meet new goals around risks, sustainability, compliance, and enhanced enterprise growth (see Exhibit 1). Similarly, responding to evolving business needs, Deloitte’s approach enables clients to look at broader business outcomes through the spectrum of procurement.

Exhibit 1: CPOs are looking to develop a value proposition enhancing broader business outcomes

Sample: 300 procurement executives across Global 2000 enterprises, 2022
Source: HFS Research, 2023

Procurement moves beyond savings

Deloitte’s “Operate” services capabilities include proprietary solutions, alliances, and a training and development delivery model. It is an integrated and comprehensive model leveraging market disruptors and Deloitte’s broader expertise to drive innovation and value while also focusing on providing services to advise, implement recommendations, and operate to transform clients’ businesses. Deloitte’s industry knowledge, domain expertise, and artificial intelligence and cloud-based solutions delivered overall year-over-year revenue growth of approximately 20% in FY22.

Deloitte has built an industry-specific service model covering the entire spectrum of source-to-pay (S2P) offerings with 50+ delivery centers. Its Spend Management-as-a-Service capability aims to accelerate savings, deliver proprietary digital assets, and create unique savings programs. Collaboration continues throughout its procurement life cycle.

Deloitte uses AI, machine learning, and cloud-based proprietary digital tools to drive efficiency and enhancement across procurement business to create differentiation. These allow real-time collaboration among all the key stakeholders, with actionable data points delivered to those who need them, standardization, autonomous processes, and visibility into sourcing and supply chain processes.

In one case, Deloitte implemented sourcing strategies and digital tools at a Fortune 50 company, driving savings of at least $100 million annually. At a leading agricultural product company, it achieved annual savings of more than $600 million.

The right talent and training are crucial to driving business value

Deloitte’s training and development program acts as a catalyst in driving client engagement and value. Deloitte emphasizes domain training on the entire upstream and downstream value chain in procurement, ensuring it has a complete view of the work the client requires and the ability to fluidly operate day-to-day activities.

Additionally, it facilitates personalized and interactive experiences for executives through its CPO executive transition, digital procurement, and customized labs. Its CPO executive transition labs help to determine how to work with the managed service providers and understand and ideate around business needs.

The Bottom Line: Deloitte has taken up a broader agenda to empower CPOs to harness digital tools and talent to drive cost efficiency, optimize processes, and deliver effective decision making.

Deloitte has always been known for its consulting business; its procurement service lets it operate throughout the enterprise across the value chain of managed services. In our view, that’s a smart move elevating it above being just another BPO service provider in the procurement services marketplace.

Many service providers have business process services capabilities, but only market leaders are straddling consulting and the managed services value chain. Deloitte is carving itself a place by catching up on the operations and execution side of the business, leveraging its transformational procurement practice.