It’s customary during the holiday season to think about all the things to be thankful for, in business as well as life. So what should procurement be thankful for?
It would be tempting to say that the recession that began some six years ago is one thing since it elevated the importance of procurement in the eyes of many in the corporation, who looked to the function to find the savings that would help them survive. But no one should be thankful for a recession, so we will put that aside.
Still, it’s worthwhile noting that the appreciation of the value procurement brings has certainly risen, and the reasons have much to do with CPOs’ embrace of a strategic mindset. CPOs are busy delivering innovations to their firms rather than concentrating solely on managing spend, according to a recent IBM report. Moreover, consultancy A.T. Kearney’s 2014 Assessment of Excellence in Procurement saw the highest gains in the rate of benefits achieved by procurement in more than two decades of conducting similar studies.
Leading companies – those that fully embrace what procurement can offer and whose procurement organizations communicate the value they can bring in financial terms the business can understand – get twice as much measurable cost reduction as typical companies while capitalizing on their supply bases for innovation and risk management, the report says.
That cost reduction, certainly, is still the top priority for procurement chiefs, but coupling savings efforts with broad strategic initiatives obviously pays dividends in the form of added recognition. And the added recognition, in turn, can make it easier to get approval for investments to further procurement’s ability to contribute to an organization’s success.
The latest Procurement Leaders’ Intentions Report makes that point. The report reveals that a majority of procurement executives would be increasing their investment in technology in the next 12 months, while just under half would be adding head count. Commenting on the report, Procurement Leaders’ Tim Burt says the findings suggest that neither of those investments would be possible without the confidence business leaders apparently have in procurement.
So procurement does indeed have much to be thankful for this year, and it should be gratifying to know that the increased prestige of the function is due in no small part to the efforts of CPOs and their staffs. Keep up the good work, and happy holidays.