May it is Accenture’s 5 steps process, AT Kearney’s 7 step process, or BCG’s 10 step Process, Opportunity Analysis is the starting point in any strategic sourcing process. For category teams, an Opportunity Analysis is a critical part of the first step in the sourcing process. It is during the Opportunity Analysis that the magnitude of the potential value and the level of difficulty is predicted. Ultimately the outcome of these assessments is to prioritize opportunities to drive immediate and medium-term cost reductions and cash-flow improvements.

Different organizations use versatile approaches to run opportunity analysis. I however I trust that below stepwise opportunity analysis process delivers the best in class results

Most of my clientele used to ask me one question regularly -  ‘Which tangents we should look for saving (and Value) opportunities’. Below are the top opportunity analysis levers which have helped the majority of Procurement leaders to explore maximum saving+value -

• Use the industry benchmarks (Spend wise, category wise and industry - sector-wise)
• How and with whom we are spending
• Review spend history
• Identify poor supplier performance
• Possibilities to improve competition
• Investigating outsourcing opportunities
• Identify maverick spending
• Consolidation and spend concentration
• Volume redistribution possibilities
• Price-performance variation
• Index-based pricing
• Payment term rationalizing
• Design standardization
• Substitution opportunities
• Vendor performance and inefficiency
• Quality – Price break even
• Improving vendor compliance
• Tightening spend management
• TCO Optimization
• Study inventory management, demand planning, and production planning strategies
• Competitive positioning

In the last I would say, it's not the process but the overall approach to delivering value mirrorifies in the opportunity analysis phase.

Comments and questions are welcome!