Inside Supply Management: Is Procurement Lacking Needed Resources?

Originally Published in Inside Supply Management | October 29, 2014 | By Mary Siegfried

Cost reduction is a top priority for supply chain leaders in the year ahead, while supplier risk remains a major concern. However, two-thirds of the CPOs surveyed in the Fall 2014 Procurement and Strategic Sourcing Data Survey say they don’t have enough resources to manage their procurement operations effectively.

“These finding indicate that procurement may not be sharing fully in the availability of new resources, and are of some concern given procurement’s vital role within today’s corporation,” says Paul Mandell, Consero founder and CEO. The survey was created in connection with a Consero Group invitation-only event for Fortune 1,000 CPOs.

Talent surfaced as another top-level concern, with 66 percent of procurement executives saying they don’t believe there is a sufficient pool of trained procurement talent available to support hiring needs. “Given the potential link between dissatisfaction with resources and low supply of available talent, CPOs may look to spend more time and effort on recruiting and talent development to fuel procurement operations,” the survey suggests.

When asked about their priorities for the next 12 months, the top results were:

  • Cost reduction, 85 percent
  • Talent management, 73 percent
  • Spend analytics, 73 percent
  • Consolidating supplier base, 58 percent.

In addition to supplier risk, other risk concerns include contract risk, 48 percent, and commodity risk, 44 percent.

Seventy-two percent of CPOs report they have not been able to achieve tangible cost reductions through the use of sustainability programs. “Procurement executives have less of an incentive to pursue sustainability efforts if there is no link to cost reduction — even in an improving economy,” the survey says. Mandell suggests supply chain leaders explore ways to fuel their sustainability efforts while driving down expenses, including looking outside the organization for guidance when needed.

Additional survey findings include:

  • A total of 73 percent of CPOs say their organization uses a procurement dashboard to measure performance.
  • Fifty-eight percent believe that certain metrics used to evaluate procurement can drive the wrong behavior within the organization.
  • A majority of CPOs, 90 percent, say they have a better relationship with key suppliers than they did 12 months ago.
  • About 40 percent report increasing the number of suppliers they work with over the last year, while 31 percent decreased the number of suppliers.
  • Personal relationships between procurement and suppliers have a positive impact on partnerships, the survey finds, with 40 percent reporting a high impact and 52 percent indicating a medium impact.