Buying chiefs move closer to boards but not services

3 March 2005
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03 March 2005 | David Arminas

The number of European purchasing chiefs who report directly to the board has risen to more than 70 per cent from 50 per cent a year ago, according to new research.

The claim, illustrating top-level recognition of the profession's role, appears in the fourth annual European Spend Agenda from the London Business School, software company Ariba and the European School of Management and Technology (ESMT) in Berlin.

It also found that boards are placing greater pressure on purchasing departments.

The study revealed that demands for annual savings are now 13 per cent on goods and services, up from an average of 7-10 per cent over the previous three years.

Company boards now demand that employees follow company purchasing policies, and executives recognise procurement's role in managing spend, said Jamie Anderson, ESMT senior lecturer and author of the report.

"Purchasers now work directly on behalf of chief executives with this mandate," he said.

However, although the report found that directors want to give purchasers responsibility for more areas, it concluded that buyers remain excluded from most services purchasing.

"The board is giving purchasers the mandate to chase savings but respondents say that they have poor visibility of what departments buy, when and with whom, which is critical," he said.

More than a third of respondents said they can track less than 10 per cent of what their company spends on services in the next year (see graph below).

The average visibility of spend is only 30 per cent.

The report's 227 respondents were all heads of procurement in large financial services and manufacturing firms in Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain and the UK.

Each respondent works for an organisation with an annual turnover of more than ?400 million.



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