When Finance Wants to Help Procurement, Start With the Reporting Relationship

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A couple of weeks back, I had the chance to sit through a great presentation from Chris Lynch, CFO of Rio Tinto, in London (see my write-up of his talk here, here, here and here). Chris spent a good deal of time on his view of procurement and procurement success – and how to make it a success. But more generically, what can finance do to influence procurement?

Perhaps the best place to start is where finance and procurement organizations are today. In a recent Spend Matters/ISM snap poll, we asked the question: What is finance’s role related to influencing procurement? The preliminary results – these are based on a sample size of 98 participants; the final will be closer to 200 – from a few weeks back suggest the following (note: my colleague Pierre Mitchell presented these along with Paul Lee from ISM at the annual ISM conference).

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Perhaps what’s most curious is what’s not on the chart. Namely that for “setting/negotiating procurement targets” (including savings, efficiency, etc.), the 18% respondent level jumps to 50% when procurement is reporting into finance. In other words, reporting structure has what appears to be a correlation with the setting of overall metrics, KPIs, etc.

We’ll continue dissecting these findings in the coming days.

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