Purchasing's remit grows in Europe and the US

17 December 2010
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17 December 2010 | Angeline Albert  

Procurement’s role in European and US firms has moved beyond cost reduction to have more focus on supplier relationships. 

That was the conclusion of a survey of 162 procurement directors and managers in July 2010 by market research firm TNS-Sofres, published this week.

The buyers from firms based in the US and Europe, said the recent financial crisis has broadened the scope of the procurement function with the financial health and sustainability of suppliers becoming one of their top priorities.

Some 60 per cent of buyers interviewed believe their relationship with suppliers is changing.

The sudden drop in economic activity, combined with the credit crunch, resulted in a high number of bankruptcies in 2008 and 2009. Buyers said the objective now is to monitor and identify risk to prevent disruptions in the supply chain resulting from such business failures.

Some 59 per cent of buyers said suppliers’ financial health and sustainability is monitored by strengthening their partnerships with key vendors.

Purchasers, who in the past were often considered just negotiators, said they are now playing an increasingly prominent role in their company, acting as experts capable of proposing solutions such as product design improvements for their management, internal customers and suppliers.

The survey also shows buying departments making widespread use of new technologies to support the growing importance of their role. For example, procurement is increasingly acquiring IT tools to optimise workflows and automate the procure-to-pay process to allow buyers to focus more on strategic tasks.

Procurement leaders said they are employing spend analytics, e-sourcing, supplier quality monitoring scorecards and contract lifecycle management to optimise their strategic role. 

However, the survey also reveals that building corporate social responsibility into the procurement process took a back seat with regard to purchasing priorities in 2009. Buyers said they perceive it as a necessity, but that it remains difficult to put into practice. While 90 per cent of companies have integrated sustainable development into their priorities, only seven per cent believe they have achieved their objectives in this area.

The survey was conducted by telephone in June and July 2010 and commissioned by IT services firm CSC.

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