Procurement models ineffective, say 51% of executives

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Hands_raised_survey.jpgA survey conducted by the Ayming Consulting Group, found that more than half of the procurement executives (51%) interviewed do not think their current procurement model is effective. The survey involved a number of executives from different size businesses, across a range of sectors.

The survey of 200 executives - including CEOs, CFOs and CPOs - found that only 17% of respondents thought their business's procurement function was "entirely strategically focused". Fewer than one in five, thought the function had driven significant value for their organisation in recent years.

Disparate view of the procurement function and goals

Ayming Consulting Group’s survey, also identified a gap between how heads of procurement and CEOs view the procurement function’s performance. Similar disparities were found in the perceived procurement goals.

More than half (58%) of the CPOs interviewed, said delivering savings was a key concern, but less than half (48%) of CEOs thought so. While nearly half (48%) of CPOs thought value creation, or cost savings through procurement, would be part of their company’s core strategy, less than a third (28%) of CEOs felt the same.

The answer to improving procurement efficiency

The report said, that “while [CPOs] are looking to external fixes such as new technology to improve performance, the executive team is more likely to want procurement teams to change their culture and become more proactive in seeking out a central role in business strategy.” It found that 90% of CPOs thought technology was the answer to improving efficiency, while only 26% said it was departmental reorganisation. Answering the same question, 76% of CEOs said technology, and 58% reorganisation.

Alejandro Alvarez, director of operations performance at Ayming, said procurement needed to make sure communication with its stakeholders was “as seamless as possible”. He added that global political uncertainty - including climate change and Brexit - created an opportunity for procurement to “drive value and deliver resilience”, but that this would only happen if its objectives were aligned with those of the wider business functions. “Those [CPOs] who help their companies grow by delivering the services they need, at the best possible value, will earn their place at the top table,” he said.

Adapted from Supply Management.

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