Latest Procurement CPO Survey from IBM

Enterprise success, not just procurement performance; strong relationships forging shared values and adopting the perspective of your key stakeholders, sets high performing organisations procurement functions ahead of their peers, according to this latest survey by IBM Institute for Business Value.

In their report they surveyed more than 1000 Procurement Leaders looking at best performing procurement role model Procurement teams compared to underperforming procurement functions. The report defines "Procurement role models as those select few organisations that, relative to their peers, were in the top 20 percent in revenue growth and in the top 15 percent in profit improvement. This exclusive group, approximately 10 percent of the organisations we surveyed, is clearly adding significant value to the companies they serve. They provide rich insights for the rest of the procurement community. Role models think about procurement in broader terms than their peers; they are more likely to embrace priorities that serve more strategic enterprise objectives; they seek to extend procurement’s value through collaboration; and they adopt leading-edge, procurement-related technologies and solutions to further simplify the mundane-but-important aspects of transaction support.

Procurement role models focus on strategic priorities. Excelling at traditional procurement capabilities is important, but the hope of most CPOs is to influence and improve the way the business operates. In this regard, priorities seem to matter, as procurement role models have a very different focus than their underperforming peers. Fully 38 percent of respondents from top-performing organisations say that introducing innovation into the enterprise from suppliers and other sources is among their top three priorities. This compares to just half as many (20 percent) of procurement underperformers. Similarly, 42 percent of procurement role models say revenue growth and increased competitive advantage are among their top three priorities, while only 28 percent of underperforming respondents share this view.

What notably differentiates the two groups is that procurement role models have a more holistic view of the enterprise—in part because of the close connections they form with its various constituents. Role models meet more frequently with stakeholders in multiple arenas, and they deeply value, and in some cases act on, the suggestions these interactions produce. This helps them to deeply embrace the objectives of those they serve, which, in turn, makes iteasier for them to deliver against shared enterprise objectives.

 

Procurement role models adopt the perspective of their key stakeholders
The report says that procurement tends to thrive when it is well-connected to the rest of the company. “Compared to underperformers, which are likely to have a more silo-oriented outlook on the role of procurement, procurement role models believe internal interactions add value to procurement. Indeed, 93 percent of procurement role models hold this view, compared to only 72 percent of underperformers.”

To read more about the IBM Institute for Business Value report or a summary in Supply Management