Has Procurement Really Changed?

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Author: Tim Cummins

The field of Procurement has been undergoing rapid and significant change. All the experts predict that the era of change is not over – indeed, quite the opposite – it is speeding up.

How successful has Procurement been in making the adjustments expected of it? IACCM has been undertaking research – ‘Procurement Present & Future’ – to find the answer and to discover priorities for further improvement. While input from the function itself has been welcomed, our particular focus has been  on those who interact with Procurement – other internal functions and stakeholders, plus suppliers.

What’s the verdict?

There is widespread agreement that Procurement has become more influential. This has been especially noticeable in its focus on compliance and allocating greater risk to suppliers. Around 70% have also noted the relentless pursuit of lower prices, with around a third noting a shift towards the broader measurement of ‘cost of ownership’.

Given these observations, it is not surprising that few perceive Procurement becoming better at building collaborative relationships. In fact, internal colleagues actually think that Procurement has gone backwards in this regard; supplier personnel are a little more generous, but still only give a rating of 6 out of 10 for this capability.

SRM is a bright spot; technology gets mixed reviews

Supplier Relationship Management (SRM) receives positive reviews for the contribution it makes to improved results. Category management is also seen as helpful. In organizations where they have been introduced, both of these initiatives link to perceptions of increased professionalism.

Technology has been an area of major investment for many Procurement groups, so has this generated a positive return? Views are mixed. There is consensus that systems are generating better data, supporting improved conversations and performance management. However, outside Procurement, there is no great feeling that automation has streamlined procedures, nor has it resulted in fairer rewards. Indeed, suppliers identify procure to pay systems in particular as overall damaging to business results and the ‘fairness’ associated with contract award.

So does it add up to greater value?

Overall, the results support the view that change has been occurring. Certainly Procurement appears to have been increasing its control and making its presence felt – and it is not surprising that these characteristics are not popular with everyone. But of course the real question is whether those increased controls are starting to deliver real business benefit. That is where the jury appears still to be out.

Scores in areas such as business judgment, delivering innovation and operating flexibly are on average negative – and this sums up to very mixed views on whether Procurement has actually increased its business value contribution in the last five years. By a small margin, suppliers feel that value has increased; by a slightly larger margin, internal colleagues feel that it has not. Clearly, there is still progress to be made – and the pressures for rapid change will only increase.

To participate in the IACCM survey and receive a full copy of the ‘Procurement Present & Future’ report, visit https://www.research.net/r/Procurementpresentandfuture

 

 

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