Science Warehouse survey – a dose of reality for procurement?

Science Warehouse, the Leeds-based eProcurement software firm, recently carried out a survey in conjunction with eWorld Purchasing and Supply. It looked at the situation, priorities and issues for indirect procurement across both public and private sector organisations.

It’s worth pointing out that the sample (263 people responded) was heavily biased towards smaller firms. 42% were from organisations with an indirect spend of under £1 million, and only 31% from those with indirect spend in excess of £10 million.

Here’s one of the core headlines:

“This industry survey revealed that the number one driver for a company’s procurement function in 2013 is cutting costs (76 %) but 60 per cent plan to invest in procurement capability to achieve these reductions”.

Slightly depressing that cost cutting is still top of the list – but maybe not surprising in the current continually challenging economic environment. There’s more though on that rather chastening note:

“Less than half of indirect spend is controlled by procurement in the majority of organisations (60% of organisations have less than 40% of spend under management).

A lack of investment in the procurement may account for this shortfall as this was rated as the biggest challenge for procurement in 2013 (cited by 27% of those surveyed). Lack of appropriate procurement tools may also be a factor as almost two-thirds of organisations (63%) have yet to implement a procure-to-pay solution.

That struck me as a salutary reminder that, however much we go on about great strategic initiatives, there are a large number of organisations where cost cutting is still seen as the main role of procurement, resources are permanently stretched and procurement doesn’t have any influence over large parts of the total spend. And it is somewhat shocking to see the lack of P2P solutions in use, although again bear in mind the number of smaller firms in the sample.

There is some good news...

Whilst 60% of responses expect to increase investment in procurement, 35% will be continuing with the same capability as last year and a minority (5%) will see reduced investment.

So it does look like procurement is still on an up-swing in most organisations! That’s something...

There is more here on the Science Warehouse website, and there’s a good Procurement Trends 2013 infographic here. And while we’re talking about the firm, remember they produce one of the best newsletters in the industry – consistently and genuinely interesting, and well worth a look.

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Voices (2)

  1. bitter and twisted:

    Just because the people with ‘purchasing’ in their job title are clerks, doesn’t mean that good Procurement isn’t being done by others. Whatever the CIPS Mafia say.

  2. Jonathan Betts:

    I think what we’re seeing is a divergence between the procurement leaders and the rest of the pack – those that have been able to leap the chasm between cost & compliance and the sunlit uplands of strategic value creation. As Peter points out, that can be a tough thing to do in a resource-constrained environment.

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