2014 Procurement & Strategic
Sourcing Data Survey
INTRODUCTION
2014 Procurement & Strategic Sourcing Data Survey
Over time, the corporate procurement function has evolved from manager of a series of operational tasks into a strategic partner of the business. The role of today’s Chief Procurement Officer goes beyond one-off purchasing decisions and supplier relationship management, characterized instead by a broad focus on bottom-line growth and the pursuit of new opportunities to drive major organizational initiatives. Now more than ever, the procurement function must increase innovation, hire the right global talent to support its needs, and formulate a global risk-management policy to protect against the unknown. As 2014 continues to unfold, a robust procurement and strategic sourcing strategy will provide an organization with the necessary tools to thrive in an evolving global marketplace.
This survey was developed in connection with an invitation-only event hosted by Consero Group in February 2014 for a collection of Chief Procurement Officers from Fortune 1000 companies. While the survey was limited to 49 participants, the answers provide some useful benchmarking data, as well as valuable insight into the perspective and concerns of this group of senior corporate executives.
Survey Structure And Methodology
Consero’s 2014 Procurement & Strategic Sourcing Data Survey included a total of 13 questions in the following areas:
» Budget and Resources
» Corporate Strategy
» Risk Management
» Supplier Relationship Management
The questions were posed to all Fortune 1000 CPOs in attendance at Consero’s invitation-only February 2014 Procurement & Strategic Sourcing Forum. The responses appear with brief analysis on the pages that follow.
Survey At A Glance
» Chief Procurement Officers generally lack enough resources for the procurement function
» Short-term cost reduction is a higher priority than long-term growth for a majority of businesses
» A majority of businesses reduced the number of their suppliers over the past 12 months
BUDGET AND RESOURCES
A Majority Of Survey Respondents (59%) Do Not See A
Sufficient Talent Pool To Support Hiring Needs
A majority of procurement executives surveyed experienced an increase in departmental budget over the last year, despite a shaky economic environment. However, there remains a talent gap in the procurement and sourcing space, as 59% reported a lack of access to a sufficient pool of trained procurement talent to support their organizational needs. This may explain why the same percentage (59%) of Chief Procurement Officers surveyed do not feel they have sufficient access to the resources required to execute their function. The remainder of 2014 will require that the procurement function focus on training current in-house talent to meet their needs, and to continue to push for necessary resources from top management.
Figure 1: How Has Your Departmental Budget Changed Over
The Last 12 Months?
Increased Decreased No Change 49% 20% 31%
Fifty-nine
percent of Chief
Procurement
Officers surveyed do
not feel they have
sufficient access
to the resources
required to execute
their function.
BUDGET AND RESOURCES
Figure 3: Do You Have Enough Resources To Manage
Your Procurement Operations Effectively?
Figure 2: Is There A Sufficient Pool Of Trained Procurement
Talent Available To Support Your Hiring Needs?
No 59% No 59% Yes 41% Yes 41%
CORPORATE STRATEGY
A Majority (57%) Of Surveyed Chief Procurement Officers
Declare Short-Term Cost Reduction As A Higher Priority
Than Long-Term Growth In 2014
A company’s ability to procure the resources it needs efficiently is fundamental to financial success. It is therefore no surprise that 94% of surveyed CPOs report that their sourcing strategy is tied to the overall business goals of their companies. In looking forward, 57% of the surveyed procurement executives identify cost reduction as a main priority for 2014, while 43% will spend their time primarily focused on long-term growth. Just over half (51%) of the Chief Procurement Officers surveyed anticipate investing more in e-procurement and e-sourcing tools over the next year.
Figure 4: Is Your Sourcing Strategy Tied To The Over
Business Goals Of Your Organization?
Yes 94% No 6%
Figure 5: Which Is A Higher Priority For You In 2014?
Short-Term Cost Reduction
57% Long-Term Growth 43%
Figure 6: Do You Plan To Increase Your Investment On
E-Procurement Tools And E-Sourcing Solutions Over The
Next 12 Months?
RISK MANAGEMENT
A Majority Of Surveyed Chief Procurement Officers Believe
Their Company’s Risk Management Efforts Are Effective
Procurement executives face a variety of complex risks when working with outside suppliers. While a majority (60%) of the surveyed CPOs believe that their overall organizational risk management efforts are effective, there is clearly room for improvement in this area. This is particularly true given that more than half (53%) of the survey participants report not having a global risk management policy in place. In light of the wide array of tangible risks relating to doing business with third parties, from interruptions in supply to data breaches, this is an area that seems to warrant greater attention from Chief Procurement Officers in 2014.
Figure 7: Do You Have A Global Risk Management Policy?
Figure 8: Are Your Company’s Current Risk Management
Efforts Effective?
Yes 47% No 53%
No
SUPPLIER RELATIONSHIP
MANAGEMENT
Nearly Three Quarters (73%) Of Surveyed Chief
Procurement Officers Report Improved Key Supplier
Relationships Over The Last Year
One of the main responsibilities of the Chief Procurement Officer is to drive cost savings and operational excellence through supplier relationship management. Fortunately, 73% of those surveyed reveal having a better relationship with their current suppliers than they did 12 months ago. Leveraging this strong relationship will permit CPOs to drive growth and innovation within the
enterprise. A smaller majority (59%) of those surveyed anticipate more supplier-driven innovation in 2014 than they saw in 2013—a positive sign for CPOs seeking greater value from their vendors.
While 79% percent of attendees indicated that their suppliers meet the needs of their corporate social responsibility efforts, 67% percent reported that sustainable business practices have not resulted in cost reductions. This issue seems to indicate that corporate social responsibility could benefit from greater innovation and cooperation between businesses and suppliers to find lasting solutions.
Fifty-nine percent of those surveyed also reported that they have decreased the number of their suppliers over the last 12 months. This could indicate that businesses are simply removing suppliers they no longer use; however, it could also signal a cost-reducing effort that improves efficiency. In either case, CPOs must be mindful of minimizing risk from investing in too few suppliers, which could heighten exposure to supplier-driven problems.
Figure 9: Do You Have A Better Relationship With Your Key
Suppliers Than You Did 12 Months Ago?
Yes 73% No 27%
73 percent of
those surveyed
report improved
relationships with
suppliers.
Figure 11: Do Your Suppliers Support The Demands Of Your
Corporate Social Responsibility Strategy?
SUPPLIER RELATIONSHIP
MANAGEMENT
Figure 10: Do You Anticipate More Or Less
Supplier-Driven Innovation In 2014 Than You Saw In 2013?
More In 2014 59% No Change 33% Less In 2014 8% No 21% Yes 79%
Figure 12: Have You Achieved Tangible Cost Reductions
Through The Use Of A Sustainability Program?
Figure 13: Have You Increased Or Decreased The Number Of
Your Suppliers Over The Last 12 Months?
SUPPLIER RELATIONSHIP
MANAGEMENT
No 67% Yes 33% Increased No Change Decreased 20% 20% 60%CONCLUSION
Lessons For The Industry
Chief Procurement Officers play a key role in driving growth for the enterprise. The data in this survey suggests that CPOs must leverage their existing budgets and supplier relationships to deliver cost reduction and long-term growth, while facing a lack of sufficient talent in the industry. The upcoming year will likely see a focus on driving innovation within supplier networks, managing risks, and expanding the current in-house talent pool to fulfill corporate requirements.
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1 Gonsalves, Antone. “Consero Takes Aim at Bored C-Suiters with Its ‘Anti-Conferences.’” Bloomberg. Jan. 28, 2011. <www.bloomberg.com/news/2011-01-28/consero-takes-aim-at-bored-c-suiters-with-its-anti-conferences-.html> Jan. 28, 2011.
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