Purchasing is 'misunderstood'

10 August 2008
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11 August 2008 | Jake Kanter

Procurement is gaining greater control over corporate spend, but suffers from being "misunderstood" and "undervalued", according to a major new study.

The global report by KPMG, called Beyond purchasing: next steps for the procurement profession, surveyed 600 senior business figures, of whom half were buyers. It aimed to discover procurement's prominence in business culture and its future growth potential.

The review found 74 per cent of the respondents rated the importance of procurement as either "high" or "very high". Some 49 per cent of the business officials said procurement controls between 50 and 99 per cent of their firm's direct and indirect spend. As many as 60 per cent forecasted the same level of control in three years, while nine per cent argued purchasing would account for their company's entire spend.

However, the study revealed some barriers to procurement's overall growth - 54 per cent of buyers said parts of their firm lack interest in, or understanding of, procurement. And 34 per cent of the non-purchasers said buyers don't have a good knowledge of the wider business. While 44 per cent of buyers said stakeholders fail to consult them early enough on major acquisitions.

Most (53 per cent) of non-buyers felt purchasers focus too much on cost-cutting, rather than achieving overall value. Some 40 per cent of non-buyers also agreed purchasers are more concerned with compliance and rules than delivering innovation.

Richard Nixon, partner at KPMG Advisory and co-author of the report, told SM: "It doesn't surprise me that procurement is gaining more control over spending. The current climate is forcing businesses to look at their cost base. But it's critical procurement understands the wider agenda."

See full report on http://www.tinyurl.com/5w6ts2


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