Ayming Procurement Survey – Do CEOs Really Want to Re-organise Procurement?

Ayming is, we confess, a new name for us in terms of management consulting in general and procurement consulting. The firm has popped up a couple of times recently though, being shortlisted for a CIPS SM Award for their work with Great Ormond Street Hospital (“Best Consultancy Project”) and now with their Procurement 2020 survey and report

It is hardly an original title, and it joins a long list of consulting firms publishing this sort of work. However, the survey size is reasonable (around 200 respondents is the claim) and there are a couple of interesting points to draw out, primarily arising from the approach, which saw the survey being addressed to both CPOs and CEOs.

So, the main issues for us to consider appear to be around a divide between those two groups. We have seen this to a certain extent in previous reports, but here there seems to be a real divide between the procurement leaders and their ultimate bosses in the CEO role. And that divide is a worrying one for the procurement function / profession.

The first sign of this comes in the findings which report that 58% of CEOs want to “re-organise” the procurement function, yet only 26% of CPOs feel the same. At first sight, this seems a little odd. We haven’t seen many CEOs over the years who sit in their office thinking “I must re-organise procurement”, or who pro-actively think about whether centralised, CLAN, SCAN or de-centralised structures might work best.

However, if asked that question, we suspect it becomes a proxy for “are you satisfied with your procurement function” or even “are you satisfied with your CPO”?  Let’s face it, a re-organisation is often the cover for making changes in senior management. And turning things around, if the CEO were satisfied with procurement and its leadership, then it is unlikely that they would look to re-organise.  This is hardly a re-assuring finding for procurement leaders in that case.

The other possibility – to be more charitable - is that this reflects the continuing uncertainty about the “best” procurement organisational models and structures. Even after 50 years or more of procurement being seen as a professional function, we still see organisations swinging between centralised and de-centralised models.

We have not established a clear sense of best practice here – well, some of us might feel we have a pretty clear view of it, but that is not engrained yet as part of the operating principles for procurement. (We should add that there is no single right answer here for every organisation, Professor Andrews Cox’s thinking on “appropriateness” being relevant as ever here).

Having said that, this does also come back to the question of how satisfied the CEO is with procurement. It often seems that “we need more leverage and aggregation, let’s centralise” or “we need procurement to be closer to the business, let’s de-centralise” are generally just simple diagnoses of a complex set of problems that lead to this high-level dissatisfaction.

Anyway, you can download the Ayming report here, and we will come back to it shortly and look at some of the other findings.

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