Greater expectations of procurement in downturn

27 February 2009

27 February 2009 | Jake Kanter

The recession is driving dramatic change in the way procurement's effectiveness is measured, according to the latest SM poll.

The survey of 100 buyers found that 46 per cent have seen targets change and in many cases get tougher.

The rest said their goals had remained the same, but reported a greater expectancy on procurement to deliver tangible results.

Some purchasers noted increased demand for cost savings, while others revealed they have been asked to review how their whole company spends money.

"The key focus is now far more on cost and less on supplier service and performance," said Neil Dixon, procurement manager at Leaseplan.

"The numbers are also now far more visible at a higher level within the business and there is board interest in savings and cost avoidances delivered."

Peter Tattan, associate director, commercial purchasing at pharmaceutical firm UCB Pharma added: "Simply reporting savings is no longer enough: CFOs are asking with more interest than before 'where is the cash?'"

The demand from senior management is also being felt by buyers at Cancer Research.

"Our board has agreed to mandate procurement policy," said Belinda Prince, procurement director at the charity. "There is a much more rigorous approach to monitoring compliance in general."

Meanwhile, a sourcing manager for one UK bank said she has seen a greater demand on buyers to get involved in "all discussions" regarding external spend.

Many of the respondents also noted increased pressure to manage risk in the supply chain effectively.

Dominic Jephcott, managing director at sourcing and procurement company Vendigital argued there is an expectation that key suppliers will go bust over the next year and risk mapping and mitigation have shot up the agenda.

The purchasers who reported no change in the way procurement's effectiveness is measured, did however note a shift in importance placed on the profession. Martin Wakelin, purchasing manager - Europe, at engineering firm Trelleborg said: "[There are] still the same measures as last year, but what has changed is the focus on them. All of a sudden delivery of purchasing targets becomes key to the survival of the business."

SMfeb2009

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