Purchasers find risk a tricky business

30 April 2010

30 April 2010 | Allie Anderson

Buyers need to brush up on risk management skills, according to a study by consultancy ADR International.

The survey of 3,000 procurement professionals found that the weakest areas of competence were risk management and supply market analysis, which scored 62 and 55 per cent respectively on ADR’s performance ranking.

Using self-assessment questionnaires at more than 40 private and public sector organisations worldwide, the study ranked performance in key areas of purchasing practice as “basic” (with scores ranging from 20 to 40 per cent), “developing” (40 to 60 per cent), “proficient” (60 to 80 per cent) and “advanced” (80 to 100 per cent).

It found that the highest scoring area of competence was negotiation, with an average score across all sectors of 74 per cent, closely followed by tender management and contracting, which averaged scores of 72 per cent. These are the most basic areas of procurement and where buyers are most likely to feel confident, the report said.

Telecoms was the best performing sector, scoring an average of 79 per cent across all competencies, while the public sector and pharmaceuticals trailed at the bottom of the pack with scores of 58 per cent and 57 per cent respectively.

While tight margins and fast product development cycles in the telecoms industry may help boost skills, the high profit margins and long development cycles in the pharmaceuticals sector may mean procurement is overlooked as a source of competitive advantage, the report said.

Competency in all areas paralleled seniority and experience. The most senior buyers surveyed achieved average scores of 74 per cent, with the least senior roles scoring 57 per cent on average.

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