Buyers increase their influence

3 January 2008
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03 January 2008 | Paul Snell

The majority of buyers will exert more influence over their organisation's spend this year. And this will be irrespective of plans for expansion or downsizing.

According to a poll of 100 buyers conducted by SM, 61 per cent of purchasers will have more spend under their control in 2008. Only 12 per cent of buyers said they would have less. And 27 per cent said the amount of spend they look after would remain the same.

Many buyers said the expansion of their firm was the primary reason for an increase in the amount of money they are responsible for.

"Our spend under control will be increasing next year because of the growth of the company," said Guy Allen, director of sourcing and supply services at Fujitsu. "I think that if you take a role as head of procurement you have to assume that all spend is under your influence."

Others mentioned the international expansion of their firms, and in many cases the responsibility of the UK purchasing team to take over the procurement for these areas.

Increasing influence in spend categories not traditionally the domain of purchasers was also a common theme. "In 2008 we will be adding to our usual portfolio of traditional spend categories and we have been given a wide-ranging role to examine all external costs. Our global CFO has said 'nothing is off the table' and we are being encouraged to be as creative as possible in identification and delivery of savings," said one head of procurement.

"As the business as a whole and our purchasing and sales team find it harder and harder to reach targets, we need to look at the purchase of all areas thoroughly to ensure that we are only spending what we need, and that we are getting the best possible deal out in the market," said another purchasing manager.

And although public sector budgets may be shrinking following the Comprehensive Spending Review, this is giving buyers an opportunity to exert greater influence, not only in spend terms. "In percentage terms it should be more, but in actual terms it will probably be less as we aim to manage demand better, for example by re-using or making better use of internal stocks of furniture, rather than buying new," said Robin Hunt, director of procurement at the University of Surrey.

Consultants also gave a mixed response as to how the increasing influence of departments would affect their business. Some argued that buyers would turn to consultants to help them deal with the increasing workload. But others said that their volume of contracts would decrease this year.

Controlling more was seen as a positive step for the profession. "Procurement organisations that place more spend under management typically experience a host of other advantages as it relates to cost savings, process efficiency, and the ability to deliver greater strategic value across the enterprise," said Andrew Bartolini, vice-president of global supply management research at the Aberdeen Group. "Our research has shown that enterprises have been able to achieve a 5 per cent to 20 per cent cost savings for each new dollar of spend brought under management."


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