Purchasers urged to be strategic

2 November 2006
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02 November 2006 | Anusha Bradley

Only 20 per cent of Australian and New Zealand organisations regard procurement as a "critical function" which contributes significant benefits and helps achieve strategic goals.

The findings, from a study by Portland Group, commissioned by the Chartered Institute of Purchasing & Supply Australia (CIPSA), were presented at its Innovation in Procurement conference in Melbourne, Australia, last month.

Fifty-five public and private sector firms, including ANZ Bank, Fletcher Building, Cadbury Schweppes and Telecom New Zealand were interviewed for the research.

It found Australasian purchasers are most concerned with ensuring continued support for the function and its expansion. Only three procurement heads interviewed reported directly to the chief executive. Most reported to another function, at a level at least three steps below the chief executive.

Procurement in these countries tends to be involved in buying less complex items such as office supplies, travel and print services. It was not so involved in purchasing legal, engineering or outsourcing services.

Only 15 per cent of purchasers were happy with the existing reach. More than half (56 per cent) said they did not have an input into the budget process which meant they missed opportunities to identify areas in which they could help.

Gavin Solsky, managing director of Portland Group, said: "Many procurement functions are less than two years old in terms of their strategic nature. And 44 per cent are less than five years old. There is still opportunity for procurement to grow."

Paul Cousins, professor of supply chain management at Manchester Business School, said: "Ask yourself what the pressures and priorities of the business are, and how that fits with your supply strategy. Strategic means you are important. If you are not being strategic then you are just being annoying."

SMnov2006

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