UK businesses could be squandering budgets, using risky suppliers and spending without permission due to a lack of collaboration with procurement, according to research.
A study published today by Redshift on behalf of Wax Digital questioned over 200 senior decision makers in finance, IT and sales and marketing departments, and concluded there was an “alarming chasm” between their spending behaviour and procurement processes and rules.
While 44 per cent of procurement respondents cited ‘very close’ relationships with the other departments surveyed, only 18 per cent in these other departments agreed.
Twenty-four per cent of procurement respondents said that supplier selection was a joint decision with the department in question, but only 8 per cent in IT, 6 per cent in finance and 2 per cent in sales and marketing agreed.
Each department showed a different perception of procurement, the research showed. So while 54 per cent of procurement respondents said departments followed a formal tender process, only 24 per cent in sales and marketing agreed.
Some 36 per cent of procurement respondents said they shortlisted suppliers on behalf of these departments against their business requirements, but only 12 per cent in IT agreed.
A third in procurement said they led the finance department’s achievement of cost savings but only a third of finance respondents agreed with this.
The research concluded other departments often saw procurement as mainly administrative rather than strategic. One in four procurement respondents viewed their department as “highly effective”, while only 4 per cent in sales and marketing viewed the function as highly effective.
Wax Digital director Daniel Ball said business functions were not working effectively with procurement experts to source the right suppliers, strategically manage their spending and ensure they are following compliant purchasing processes.
“This suggests a high level of maverick spending behaviour which can lead to poor value for money, cash flow issues and contract risk.
“Procurement wants to control and influence departments’ supplier choices and spending, however, many of these other departments are pushing back, seeking more supplier and spending freedom and believing that procurement just gets in the way.”
He added: “We’ve seen many procurement teams across the UK change over recent years, streamlining processes and making it easier for departments to source and buy what they need. However, this research indicates that there is still some distance to go by procurement, or a need for improved communication, before other critical departments understand the benefits of procurement, stop breaking the rules and close the perception gap.”