Purchasers win strategic roles and responsibilities

27 April 2005
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28 April 2005 | Liam O'Brien

The strategic input of procurement has increased dramatically since 2000 and purchasing professionals are set to increase the range of their responsibilities, according to a new report.

The CPO's Agenda from researchers Aberdeen Group reveals 90 per cent of executives at 100 global companies consider procurement's role in strategic operations had risen hugely over the past five years.

The report found purchasing takes a lead role in managing supply availability in 82 per cent of cases, and safeguards the price of products for over half of respondents. In terms of product and service innovation, it has a lead role in 43 per cent of companies and some role at 44 per cent.

The research also revealed purchasing has a lead role in managing energy costs (32 per cent), combating foreign competition (29 per cent), and meeting regulatory requirements (20 per cent).

Jeff Pikulik, director of buy-side research at Aberdeen Group, said: "The survey shows that there has been a remarkable switch in the role of procurement, from a simple focus on cost-cutting to one where it also helps businesses accomplish value-added goals."

The Aberdeen study also finds that, lured by low costs, procurement managers are aggressively adopting low-cost country sourcing strategies.

More than 86 per cent of manufacturers listed them as a top initiative for the next three years. Use of foreign suppliers will double over the next five years, with offshore suppliers accounting for 27 per cent of the typical company's supply base by 2008.

Despite the move to more of a strategic role, procurement managers face a range of challenges.

Chief among these is aligning procurement procedures and systems across the company, followed by managing supply risk and maintaining skilled talent.

The report also highlighted procurement's changing role. Over the next 12 months, the profession will take on responsibility for temporary staff, consultancy services, maintenance, advertising, marketing and print, and travel services.

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