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Broadening the frame

The case for integrated third-party management

This publication showcases the many opportunities and benefits of an integrated and holistic approach to third-party management (TPM).

The increasing dependence on supply chains and other third-party networks is creating the need for greater coordination between sourcing, contracting, and risk management. Our white paper demonstrates the value a TPM transformation journey can create for your organization.

Benefits from the Integrated approach

 

As an organization’s extended enterprise grows in terms of size, spend, complexity and strategic importance, the business case for integrating TPM becomes stronger, including several financial and non-financial benefits that range from cost-reduction and efficiency improvements on the one hand, to the ability to operate as an agile yet responsible business (with a sustainable supply chain) on the other.

Tangible strategic and financial results

These are the key elements driving profitable growth and shareholder value for an organization that is just starting to embark on a transformational initiative to achieve integrated TPM. These benefits are typically achieved only after the full transformation, including benefits from enhanced executive decision-making and innovation.

Market/custom/stakeholder/perception
  • >95% supply and third-party delivery assurance (enabling rather than inhibiting)
  • Improvement in business responsibility perception
  • >85% customer satisfaction level through innovaion and better decision-making.
  • 2-5% increase in market share.
  • 35-50% top line revenue growt directly attributable to third parties
TPM process efficiency
  • 15-20% improvement in process efficiency (e.g.. 95% touchless invoices)
  • 30-50% reduction in response times
  • Increased agility to respond to market chnages
  • Higher level of process intergration, for example between procurement and legal or between third-party visibiility and risk management.
Techonology, interoperability and related capabilities (e.g.., CLM software connectivity)
  • >75% technology adequacy and user satisfaction (based on user survey)
  • Increased levels of innovation enablement
  • Horizontal/vertical integration through technology
  • Coordination effectiveness across teams including leadership engagement in TPM and executive support
Efficient and effective risk management
  • Increase in TRPM maturity from managed to integrated or optimized levels
  • Lower frquency of high impact thrid-party risk events (impactig customer service, fines and penalties, cotinuity failure and financial loss) quantified in our 2020 and 2021 TRPM survey
  • 6-8% cost and revenue recovery

Read the publication to discover actionable insights which we believe can help you unlock significant organizational value in a post-pandemic environment—a time of unprecedented change, not just in the macro-economic and business environment but also in stakeholder and societal expectations.

Download the report

Managing third parties - the second most valuable organizational asset

This chapter showcases what high-performing TPM teams are doing differently to stand out from the rest as dependence on supply chains and other third-party networks not only continues to increase, but are also becoming intertwined, co-dependent, and complicated. TPM mechanisms in many organizations continue to fall short of expectations, despite increasing leadership focus and investment. This is also reflected in the growing number and criticality of third-party incidents and regulatory intervention.

Siloed management or integrated value creation?

The root cause for most of the challenges described in the earlier chapter typically lies in the silos that exist in these organizations. These silos narrowly focus on just a piece of the business (e.g., a functional area or department), without considering the effects of their decisions and actions on the other areas. Despite technology aggravating the challenge of cross-functional integration, the approach to finding the solution needs to go beyond just systems integration to achieve a wider “unity of effort” that can be possible by reconciling diverse goals, activities, and knowledge into unified action.

Where is your organization on the journey to integrated TPM?

In this chapter, we present a maturity model to help you assess the progress made by your organization in your maturity journey to integrated TPM. Higher maturity can bring several rewards. Despite aspirations to evolve as a digital enterprise, it demonstrates how many organizations struggle to seamlessly integrate diverse TPM systems and smarter solutions that are increasingly becoming available such as applying an “engagement layer” that leverages user interfaces (UI) and analytics to enable interoperability and present a cogent view of their extended enterprise.

The business case for transformation

This chapter explains how the many benefits from a holistic and integrated approach to TPM can actually be realized in practice. We hope this can provide a benchmark in helping you articulate the business case supporting your maturity journey to integrated TPM in your organization. It also sets out the three key mindset changes that organizations need to make in order to reap the enhanced benefits of integrated TPM.

Implementation choices and next steps

A key choice for organizations is whether they would like to do so on an incremental or phased manner by migrating one or two TPM components/processes at a time to a common technology platform (i.e., “land and expand”) or whether they would like to do so all together (“big bang”). Another important choice is to identify key strategic partners, for instance end-to-end managed service delivery providers for TPM who can significantly accelerate this journey for organizations to fully reap the benefits of transformation.

To further explore the key themes and trends, and for more information about how Deloitte can help you succeed with TPM journey, please connect with one of our regional TPM leaders.

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