The challenges facing tomorrow’s procurement professionals

According to research recently carried via the “2015 Return on Supply Management Assets,” the best performing procurement departments both in Europe and the United States are delivering financial benefits worth more than 7.5 times the cost of the investments sunk into the supply chain procurement process.

Procurement team performance in supply chains across Europe and the US

The research document which is entitled “Building a Bolder Legacy: the Procurement Mission Is Underway,” reported that 25% of the benefits discovered were derived by applying advanced methodologies to maximize value including asset productivity gains, reductions in complexity, and what is termed “clean sheet redesign.” The report found that the top 25% of procurement teams provide something like $1.25 million worth of financial benefit per annum per procurement capita.

But it’s not just the top 25% who are performing well. The majority of middle tier performers also showed excellent results, generating returnss of between 3 to 5 times the investments sunk into procurement.

The bottom tier of procurement teams achieved returns of up to 1.5 times of the cost of investment.

The survey project was the result of a collaboration between The Chartered Institute of Purchasing and Supply, the Institute for Supply management and consultants A T Kearney.

Inconsistent performance by procurement teams in global supply chains

One thing that was apparent from the report however was the fact that performance varies considerably across the element’s key value drivers, which include things such as: expenditure coverage, designated sourcing programs, the yields and outcomes of special projects, rates of compliance, and operational costs.

The overall conclusion was that “Procurement remains a function which is plagued by its inconsistent performance in delivering across strategic activities.”

Procurement must face up to its mission

Joe Raudabaugh of AT Kearney entered a sober note when he reported that procurement as a discipline faces a period of transformation similar to the transformation that other disciplines have gone through in the past 30 years.

He went on to say that, “Beginning with manufacturing in the 1980s and moving on to supply chains, research, engineering, and more recently, sales and marketing, the mission for procurement organizations is underway-whether procurement is ready or not.”

Positioning procurement as a preferred career choice for tomorrow’s best talent

David Noble of the Charted Institute of Purchasing and Supply is reported as saying, “We can strengthen the position of procurement as a critical source of strategic enterprise value, establish the Chief Purchasing Officer as a core executive team member, integral to the leadership narrative, and position procurement as a preferred career platform for tomorrow’s best talent.”

The CEO of ISM, Thomas Derry, commented that the value from procurement topic continues to drive many conversations and many forums in procurement organization.

This subject is not seen as being a disruptive force, but rather a constructive agent for change which should be embraced as it challenges procurement professionals everywhere to raise their game with regard to both productivity and overall results.

Where do you see the main challenges to procurement in the near future, and how can they be best addressed?

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