Study shows procurement becoming strategically significant

Procurement made slow but steady gains in 2010 toward becoming a generally strategic function despite the recession according to a recent report.

The Procurement Intelligence Unit’s (PIU) CPO Strategy 2011:From Breadth to Depth research, based on the responses of over 200 CPOs and other senior procurement professionals received, shows that while the vast majority of procurement executives (81%) have benefited from the period of the recession, with one quarter (25%) receiving additional resources.

Spend under management rose just 7% in 2010, from 65% to 72%, and spend covered by category plans rose more slowly, from 52% a year ago to 56%.

"Our research shows that functions that operate strategically do so by applying significantly more resource, and resource with different skills to manage their spending," said head of executive research Tom Seal.  

"At this rate of change, it will take the function about five years to complete the task of gaining full control of the organisation's spending, and more than a decade to implement the associated category plans.

"A tactical procurement function can't be quickly remoulded in to a strategic one. In short, procurement may progress strategically, but never relinquishes the basic purchasing tasks," he said. 

However, the report also shows the procurement community to be developing in order to tackle several mega trends it has identified - the most notable of which being green procurement.

The vast majority of procurement groups (81%) have an environmental policy in place, the research reveals. But, while the environmental agenda is increasingly being supported, the research saw a divergence of approaches in how procurement was developing its green procurement strategy.

"Many procurement groups are willing to take on a supporting role, embracing the adoption of greener solutions within 'energy' and 'packaging'. On the other hand, a smaller group is attempting to assess the environmental impact of their operations as a whole by tackling the most environmentally damaging categories, such as 'chemicals' and 'meat'," explained Maggie Slowik, research analyst.  

"If procurement grasps the opportunity to lead these areas by securing the resources and budget there is a high chance it will build its profile. However if we fail to make resource available to take the lead on green procurement and supplier collaboration, another function is sure to take the initiative," Slowik added.

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