Opportunity Assessment
Why is Opportunity Assessment Important?
Opportunity assessment is essential for identifying and prioritizing potential areas for cost reduction and value creation within an organization. It enables businesses to systematically evaluate their current operations, market conditions, and competitive landscape to uncover new opportunities for growth and efficiency. By conducting a thorough opportunity assessment, organizations can make informed decisions, prioritize and allocate resources to the most cost beneficial initiatives, and mitigate risks associated with new initiatives.
How to Conduct an Opportunity Assessment?
When conducting an opportunity assessment, PIR involves a systematic approach to identify and evaluate potential areas for cost improvements and growth opportunities within an organization. This process ensures that all relevant factors are considered, and the most promising opportunities are prioritized. Here are the key steps to conduct an effective opportunity assessment:
- Information gathering & analysis – Establish detailed transparency of spend, current situation and projections of future demand, through data analysis, contract reviews, and market analysis to develop initial opportunity hypotheses
- Stakeholder engagement – Engage key stakeholders, validate data analysis & cost drivers, as well as further develop & validate opportunity hypotheses
- Category deep dives – Cross-functional workshops based on PIR’s value lever framework to formulate initiatives & estimate associated value
- Execution planning – Prioritization and consolidation of initiatives, definition of execution plans and mobilization of delivery team(s)
The key activity during the opportunity assessment is the cross-functional value lever workshops. The value lever framework used during workshops is designed to help organizations identify cost reduction and value creation opportunities. It categorizes value levers into four main types, each focusing on different aspects of procurement and operational efficiency:
- Spend smarter – Introduce step-changes in ways of buying & seek out cost-beneficial investments opening for new value add, i.e. “new conditions, better value”
- Buy better – Increase internal process efficiency & optimize supply chain flows, i.e. “new process, better cost”
- Buy less – Standardize and optimize specifications & control consumption patterns, i.e. “less product, same price”
- Buy cheaper – Bundle volumes & improve commercial leverage, i.e. “same product, better price”
The framework emphasizes a comprehensive approach to opportunity identification through stakeholder engagement and cross-functional collaboration. By leveraging these value levers, PIR has helped many different clients optimize cost and create value.
What Ensures a Successful Opportunity Assessment?
Based on our experience there are a few success factors to have in mind when planning and conducting an opportunity assessment. These factors ensure the identified and developed initiatives are aligned with business objectives. Here are the key success factors to consider:
Dialogues fueled by data and insights
Detailed, reliable and comprehensive data capture and analysis are crucial for effective business dialogues and to accurately generate and assess opportunities, and by that winning the trust of key stakeholders
Stakeholder involvement
Engaging stakeholders throughout the process ensures alignment with business goals and strategies. Their insights and buy-in are critical for the successful identification and implementation of viable initiatives
Cross-functional collaboration
Involving various departments and functions in the assessment process brings diverse perspectives and expertise, leading to more robust and innovative solutions, as well alignment on common goals and way forward
Clear prioritization
Establishing clear criteria for prioritizing initiatives based on potential impact and feasibility helps in focusing efforts on the most promising opportunities to be agreed and made ready for execution
What Value Does an Opportunity Assessment Bring?
By systematically engaging stakeholders, analyzing data, and conducting category deep dives, organizations can uncover valuable opportunities for cost reduction and value creation. Key success factors such as detailed and accurate data collection, stakeholder involvement, cross-functional collaboration, clear prioritization, and strategic alignment ensure the effectiveness of the assessment process. Ultimately, a well-executed opportunity assessment delivers significant value to clients by enabling informed decision-making, allocating resources to most cost beneficial initiative for execution, and driving sustainable growth.
