CPOs lack formal plan

27 March 2008
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27 March 2008

More than a fifth of CPOs have no formal plan to direct their purchasing strategy, a report has claimed.

The latest annual study into CPO strategy, carried out by the Aberdeen Group, found 45 per cent of procurement chiefs have a plan covering more than one year, and 34 per cent use a one-year plan. But 21 per cent have no formal plan.

Most CPOs said a plan was vital. "We have more than 100,000 suppliers. If we did not have a strategic road map, we'd be road-kill," said one CPO of a Fortune 500 firm. "You can't collaborate without a strategy," added Shelly Stewart, CPO at US manufacturer Tyco.

Aberdeen Group predicts 2008 will be the year of the "CPO rising" as they embed their position and their importance to the business over the next 12 months. "Like a Roman centurion, the chief procurement officer leads his/her team from the frontlines, exposed on the flanks by an increasingly volatile and increasingly global marketplace and marked by an increasing prominence that demands greater performance," said the report, which interviewed 350 procurement leaders worldwide.

The top priority for CPOs in the next three years is to increase the amount of spend they manage. But among the top firms, improving supplier management was the primary goal - as they already control around 70 per cent of their firm's spend.

People management also continues to be a priority, with just under half of all firms expected to increase the size of their procurement team within five years. The study also found hiring regional staff and establishing an international purchasing office were more important to low-cost country sourcing strategies than three years ago.


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