What Does the Rest of the Business Think About Procurement? Read This and You’ll Find Out

As you travel through Spend Matters UK material, you will find that, on many occasions, we make reference to the position of the procurement function within an organisation: why it should be viewed as a more strategic member of the business, and its perceived value by other departments. It’s long been a topic of much controversy -- but you don’t have to take our word for it. Last month, Wax Digital published its research findings – carried out by Redshift – “CPO Viewpoint: What the business really thinks about procurement’s value.” If you are one of the procurement heads who are really working hard to integrate the procurement function more, and align new working methods with business goals – then read it at your peril. Some of the findings are quite what we expected!

This study was conducted independently (you may have read the press release highlights on the Wax Digital website or on other procurement-related sites, so this is a review of the report itself); it surveyed 200 senior managers, 50 in each of procurement, finance, IT, and sales and marketing (so not from our list of historical ‘bezzy mates’). They come from medium-size and large organisations in the UK. It was conducted to ascertain departmental perceptions of the procurement function and its effectiveness within the business.

And they are not all, it would seem, on the same page about the end-to-end processes of supplier sourcing and purchasing, or what their spend priorities should be. So how does the rest of the business see procurement, and does it understand procurement’s potential to help them perform better (most of you are probably whispering “No it damn well doesn’t.”) And on the flip side: does procurement really understand the buying needs of the departments? (Most of them are probably whispering “No they damn well don’t.”)

The report is in .pdf format and is an easy-to-read piece of research. It lays out findings in a simple structure, so you don’t have to dig around for the stats or information you are interested in. Each section is ordered according to precisely the kind of question you would want to ask, including: how closely do departments work together to source/review suppliers? How should the procurement function operate within the organisation’s business to deliver maximum benefit? How effective is procurement in helping the organisation to meet overall business goals? And the killer: How does procurement hinder effectiveness? ... and so on.

The sections discuss: relationships and collaboration; roles and effectiveness; and tangible business value. In each of these, alongside graphical representation of results to various questions, is a good summary of findings, and a suggested list of actions to take in light of the results. So it’s a valuable read that will give you a lot of information in a short space of time. Here are just some of the highlights:

  • Relationships and collaboration: “Procurement and IT appear starkly juxtaposed over which one leads on the sourcing of technology. For example, 36% of procurement respondents say that they own this process once the department has specified its requirements, compared to just 12% in IT. In contrast, only 16% in procurement say IT has ultimate authority over sourcing, compared to 32% in IT.”
  • Roles and effectiveness: “The most common procurement hindrance cited by other functions is ‘extending the time to process orders’ (mean 30%), suggesting that there is still a high degree of frustration over procurement ‘red tape’. In contrast, procurement most commonly thinks it hinders departmental progress by ‘prioritising cost over value’ (30%) suggesting that many still have a strong corporate cost saving mentality …”
  • Tangible business value: “There are some interesting discrepancies between procurement’s belief of value and that held by specific departments, in particular the IT function. 42% in procurement see ‘supplier and product quality improvement’ as a delivered value, but only 8% in IT agree. 32% in procurement also see ‘compliance with regulatory requirements/corporate policies’ as delivered value, but again, only 8% in IT (and 8% in finance) agree with this."

The report is packed with useful insight for procurement to absorb and reflect upon (albeit a ‘small’ number of respondents, it is a good cross section that gives an all-round view of what is perceived to work well and not so well). And, while there is no question that procurement has made great strides over the past decade to change and adapt its position in UK businesses, this research highlights the areas that need most work – and goes into some actionable summaries at the end to help identify opportunities to engage better with other business functions.

Wax Digital will continue its CPO Viewpoint research series with future surveys, webinars and insight documents. There are many more findings and stats in this report, so do take the time to download this one here, it’s a quick, interesting and useful read. But let's leave you with our favourite statistic from the report:

"What % of the function agree that procurement merits a position on the board?"
Unsurprisingly -- 'Procurement' came out highest at 78%, then IT at 52% followed closely by Finance at 50%, and what of Sales and Marketing? You'll have to read the report to find out!

 

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