Procurement emerges as winner from downturn

6 October 2010

6 October 2010 | Angeline Albert

World recession has improved the image of purchasing at board level, according to the Global Chief Procurement Officer Survey 2010.

The research, carried out by Capgemini Consulting found that more than 60 per cent of CPOs believe the procurement function has emerged from the global economic downturn as a winner, with a better profile at their organisations. And an additional 20 per cent said buying team is now positioned well for future growth.

The amount of organisational spend controlled by procurement has increased slightly compared to last year, the report found.

For more than 70 per cent of the firms surveyed, spend under the control of procurement is well above 60 per cent. They attributed this trend to the increasing influence of procurement on the sourcing of various non-traditional categories such as legal or other professional services.

The annual survey is based on the views of 150 CPOs and senior supply chain leaders around the world. Another sign that procurement’s profile has been raised is the fact that nearly 70 per cent of those surveyed said the purchasing function reports directly into the boardroom. A quarter said procurement reports directly to the CEO.

With its raised profile comes challenges to deliver value for the board. Almost 80 per cent of those surveyed said top management expected them to improve the overall value contribution of procurement.

There exists greater focus on initiatives that can enhance the value delivered by procurement teams, they said. These strategies include innovation; contribution to corporate sustainability objectives; developing reciprocity agreements with suppliers and increasing speed to market. 

Cost reduction continues to be a major focus area with savings targets increasing. More than 40 per cent of respondents have savings targets of nearly 10 per cent for 2010. Strategies that procurement executives are employing to achieve these targets include contract re-negotiation, tighter contract compliance, global sourcing, hedging and moving to outsourced procurement services.

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