Procurement making progress towards the board, buyers say

8 August 2015

Continuously driving better results, creating talent and improving efficiency are the biggest challenges facing procurement, according to research.

The Procurement Challenges Benchmarking report by ProcureCon Europe also found the role of procurement as part of strategic decision-making was developing.

However while nearly 62 per cent of respondents said procurement was moving towards making board-level decisions, only 10 per cent said the chief procurement officer currently had a place on the board.

Just over a quarter said there was no improvement in this area, and that procurement was still seen as a secondary function, while 2.4 per cent said procurement had become less important at their organisation.

More than 90 per cent of respondents use total cost savings to measure the value of procurement in their organisation and contract compliance was cited by more than half of respondents as a performance metric for value.

When compared to last year, this year has so far seen reduced investment in external consultants, supplier management tools and enterprise resource management while investment in market intelligence, payment solutions and travel management has increased year-on-year.

Some 73 per cent of procurement organisations rated their supplier contract compliance as acceptable, according to the report. A further 8 per cent said it was excellent, but 18 per cent described contract compliance as poor. This year there has been greater emphasis on making sure the right people are in place to deal with this and managing the timetable for making key decisions have become priorities to improve contract management.

The report also found that while procurement typically leads in the qualification of contractors during the bid process, it was quite rare for procurement to be solely responsible, with operations, legal and supply chain functions, also being involved. A supplier’s financial stability risk was the most common assessment when it came down to evaluating them for work, the study found.

The biggest skills gaps were in risk management, relationship management and process management, it found.

The report added factors such as the safety practices of a third-party service provider and the risks of relying solely on a single supplier needed consideration.

It said: “Procurement are not only working to reduce costs in the service and materials of supply chains, they must also be proactive and responsible for how their suppliers comply with corporate social responsibility and safety standards.

“Because it controls all aspects of the supply chain – from materials to maintenance contractors – the procurement department can become a strategic partner in overall risk management and supplier assurance efforts.”

The poll canvassed 123 senior procurement professionals across Europe.

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