Definition of Procurement in Business: Strategic Insights from McKinsey, Deloitte & More
Procurement is no longer just a back-office function — it's a strategic driver of value, innovation, and resilience. Yet, many professionals still search for a clear and comprehensive definition of procurement that reflects its modern role.
To bring clarity, this article presents not only a working definition but also how global consulting leaders like McKinsey, Deloitte, KPMG, Capgemini, and Accenture define procurement and support its evolution through real-world projects.
What Is the Definition of Procurement in Business?
The definition of procurement in business refers to the strategic process of identifying, sourcing, acquiring, and managing the goods and services an organization needs to achieve its goals. It goes beyond simple purchasing, encompassing supplier relationship management, risk mitigation, cost optimization, and alignment with business strategy. Leading consulting firms define procurement as a value-generating, innovation-enabling function critical to organizational success.
McKinsey & Company
McKinsey & Company is one of the most influential management consulting firms in the world. It works with governments, large enterprises, and startups on strategic, operational, and digital transformation initiatives.
“Procurement is no longer just about cost savings — it is a strategic function that enables value creation across the business.”
McKinsey sees procurement as a value-creation engine and a core enabler of competitive advantage through better supplier collaboration, resilience, and digital transformation.
Framework
McKinsey applies its Procurement Operating Model (POM) and the concept of “Procurement 5.0”, which integrates analytics, AI, ESG, and supplier-driven innovation. The framework promotes category excellence, digital capabilities, and resilience across the value chain.
Client example
Helped a global automotive company save over $1 billion by redesigning its procurement strategy using data-driven sourcing and supplier collaboration models.
Deloitte
Deloitte is one of the “Big Four” global consulting firms, providing services in audit, risk, tax, and strategy. The firm has extensive experience in digital procurement, supply chain transformation, and regulatory compliance.
“Procurement is the process of identifying, sourcing, and acquiring the goods and services an organization needs to fulfill its business model.”
Deloitte emphasizes risk management, compliance, and structured sourcing, with procurement embedded into the strategic operations of the enterprise.
Framework
Deloitte uses a Procurement Maturity Model alongside structured approaches for Source-to-Contract (S2C) and Procure-to-Pay (P2P). Under its Future of Procurement vision, the firm integrates automation, cloud tools, and ESG metrics into the procurement lifecycle.
Client example
Led a national procurement modernization initiative for the Australian Government, digitizing supplier engagement and improving transparency across public contracts.
KPMG
KPMG is a global professional services firm specializing in audit, tax, and advisory. Known for its strength in risk consulting and operational transformation, KPMG often works in highly regulated industries such as healthcare and finance.
“Procurement is a vital business function that goes beyond purchasing. It’s about aligning sourcing decisions with business strategy.”
KPMG focuses on aligning procurement with enterprise-wide goals, ensuring not just efficiency but also strategic coherence across departments.
Framework
KPMG implements Powered Procurement, part of its Powered Enterprise suite. It provides a pre-configured Target Operating Model integrated with platforms like SAP Ariba and Coupa, emphasizing speed, governance, automation, and risk control.
Client example
Partnered with a large U.S. hospital network to redesign its medical supply chain during the COVID-19 pandemic — strengthening resilience and lowering operational costs.
Capgemini
Capgemini is a French multinational with deep expertise in technology, engineering, and business transformation. The company is recognized for driving digital supply chain initiatives and smart procurement automation.
“Procurement is the engine behind strategic sourcing, supplier collaboration, and digital transformation in the supply chain.”
Capgemini presents procurement as a technology-powered function, central to supply chain automation and innovation.
Framework
Capgemini offers a Digital Procurement Framework focused on ERP/cloud integration, AI-based sourcing, supplier collaboration, and sustainability KPIs. The model uses intelligent automation and advanced analytics for proactive decision-making.
Client example
Designed a scalable, AI-powered sourcing platform for Unilever, improving global procurement responsiveness and enabling data-driven category strategies.
Accenture
Accenture is one of the world’s largest consulting firms, operating in more than 120 countries. It focuses heavily on digital innovation, operational intelligence, and cloud-based transformation across industries.
“Procurement is a critical enabler of business strategy and growth.”
Accenture links procurement with agility, sustainability, and growth, supporting the transition from transactional to intelligent operations.
Framework
Accenture uses an Intelligent Procurement Operating Model, integrating AI, cloud platforms, and real-time analytics. The model supports “Procurement-as-a-Service” and emphasizes ESG, supplier innovation, and cost optimization across global operations.
Client example
Helped Vodafone implement a predictive, cloud-based procurement system with automation and analytics, transforming their global sourcing and improving supplier governance.
👉 Common Themes Across Leading Definitions
While each consulting firm uses its own terminology, their perspectives on procurement converge around key principles. The table below summarizes the most consistent themes found across their definitions and strategic approaches:
| Shared Element | How It Appears in Their Viewpoints |
|---|---|
| Strategic function | All firms highlight procurement’s role in business strategy. |
| Goes beyond purchasing | Procurement involves risk, compliance, innovation, and relationships. |
| Value creation | Seen by McKinsey, Deloitte, and Accenture as a generator of value. |
| Supplier collaboration | Capgemini and McKinsey stress joint innovation with suppliers. |
| Alignment with business goals | Strongly emphasized by KPMG and Accenture. |
| Operational resilience | Key for McKinsey, KPMG, and Capgemini in uncertain supply environments. |
| Digital transformation | Central to Capgemini and Accenture’s definitions. |
| Sustainability and compliance | Highlighted by Deloitte and Accenture. |
📈 Why Understanding the Definition of Procurement Matters
Grasping the modern definition of procurement is essential for:
- Driving better supplier performance
- Enhancing cost control and efficiency
- Supporting digital and ESG goals
- Enabling strategic decision-making across departments
Procurement is no longer a tactical necessity — it is a competitive differentiator.
📚 Next Steps and Related Resources
If you're looking to apply what you've learned or take action within your organization, consider these resources:
