Research & Surveys
Great News for Up-and-Coming Supply Managers! Procurement Has the Limelight, Post-Recession
March/April 2011, eSide Supply Management Vol. 4, No. 2
An annual Capgemini Consulting survey shows the global recession improved the image of purchasing — at the board level — in 2010.
An annual Capgemini Consulting survey — Global Chief Procurement Officer Survey 2010 — shows 62 percent of the 150 CPOs and senior supply chain leaders surveyed believe the procurement function emerged from the global economic downturn in 2010 with a higher profile. "Nearly 70 percent said the purchasing function reports directly into the boardroom, and one-quarter said procurement reports directly to the CEO," the report states.
Additionally, many CPOs and senior supply chain leaders said the buying team is well-positioned for future growth in the aftermath of the most recent recession — another great sign for emerging supply management professionals who are looking to build their careers, as well as their visibility among executives within their organizations. One indicator is the fact that organizational spend controlled by procurement has increased slightly compared to 2009: For more than 70 percent of the companies surveyed, that spend is now well above 60 percent.
"[Respondents] attributed this trend to the increasing influence of procurement on the sourcing of various nontraditional categories, such as legal or other professional services," the report explains.
Procurement Has the Spotlight — But for How Long?
However, while procurement enjoys a leading role in cost reduction, bottom-line improvement and budget-impacting change at the moment, the report warns that this influence might be short-lived. "As budgets become more generous, procurement teams face the risk of fading from the limelight," it states.
But, it continues, procurement professionals have an opportunity to cement the function's leadership position and secure its place in the CEO's agenda by focusing on delivering strategic growth and innovation — both of which would position the supply management function well for recognition as a key player in a company's strategic direction.
"The last few years have seen a subtle trend wherein procurement is maintaining its support of the CFO's objectives, while shifting their alignment to the CEO," the report explains. "This signals a focus on more strategic objectives."
Sustained Recognition Requires Added Value
Nearly eight out of 10 CPO respondents said top management expected their teams to improve the overall value contribution of procurement last year — primarily by shifting the focus from short-term cost cutting to long-term, value-based relationships with suppliers.
"This drove deeper savings throughout the supply chain and brought true innovation into the company, allowing for top-line growth as well as continued bottom-line reduction," the report surmises. "It required [team members to hone] new skill sets, such as the ability to understand market mechanisms and the macro- and microeconomic influences in the end-to-end product supply chain."
Challenges and Opportunities
Reflecting on 2009 and 2010, most CPOs surveyed admitted that it has been a difficult environment consisting of increased pressure on procurement. On a more positive note, the majority — more than six out of 10 — also confirm that the economic crisis has left the procurement function more of a winner than a loser.
"Caution and moderate optimism are the general feelings of the CPOs," according to the report. "In the aftermath, the procurement function has clearly increased its awareness, gained more control over spend, and proven its value to the organization."
Looking ahead, Capgemini analysts assert that the main challenges for procurement teams in coming years are clearly marked: sustaining and further improving its position in the organization, looking for innovative ways to continue to drive costs down, and stretching its ability to add more and more value.
Download the full report online at the Capgemini website.
RaeAnn Slaybaugh is a writer for the Institute for Supply Management™. To contact this author, please send an e-mail to email@example.com.
For more research and survey findings, visit the ISM articles database.
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