Survey Shows Value of Procurement Early Involvement

Spend Matters and the Institute for Supply Management recently teamed up to find out how well procurement and finance organizations work together. Specifically, one of the goals of the survey was to see the differences in savings when procurement was involved earlier in the supply negotiation and contract process versus when procurement was brought in later – maybe too late – in the process.

The survey garnered more than 250 validated responses, and the responses showed a 2% savings difference between early involvement and late involvement. Over on our Chief Procurement Officer website, Spend Matters Chief Research Officer Pierre Mitchell dives into more detail on this finding in the article What’s the ROI of Earlier Spend Influence? Big.

Here is a snippet from the article:

“If you assume that the contracts are 2 years in length and the company is turning over its spend every 2 years, then the steady state advantage as a percentage of spend is 1%. So, if you have $1 billion in indirect spend, that’s $10 million in opportunity just by engaging stakeholders earlier, and better, in the process. Of course, the question then becomes how to capture this opportunity and quantify the investment.”

Another question is how does procurement build a hard business case to prove the value of early involvement? Pierre also offers advice on this topic in the CPO article. Make sure to head over you the Chief Procurement Officer website to check it out!

You can also read up on other new CPO articles below:

How to Become a CPO Before 40: Be Like Frank Ho

Supply Management is a Department: Procurement Myth No. 20

Share on Procurious

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.