Re-defining Procurement's Future Function

Analysts continue to debate how long it will take for the global economy to return to "business as usual" status. But, a survey by Capgemini Consulting found that most CPOs and senior supply chain leaders are feeling rather optimistic about both an economic rebound and procurement's future function.

Well more than half (65 percent) of those polled in the Global Chief Procurement Officer Survey 2010 said that the economy is showing clear signs of recovery. In addition, 60 percent confirmed that the procurement function has emerged from the global economic downturn as a winner, with an improved image within their organization.

Despite this optimism, however, significant questions remain. Is procurement's "improved image" solely dependent on procurement's ability to focus on cost reduction? Shouldn't procurement also be contributing to value and innovation?

The survey found that cost reduction continues to be a major focus area with savings targets increasing as they did in 2009. In fact, more than 40 percent of those polled said they have savings targets at nearly 10 percent for 2010.

But and here's where there's a disconnect --the report also reveals that the vast majority (80 percent) of survey participants reported that top management expects them to improve the overall value contribution of procurement.

Obviously, procurement needs to refine its role as a contributor to long-term business value. The cost-cutting that helped organizations weather the recession must mature into a more robust approach that integrates the supply chain into the overall business strategy.

From the report:

Procurement will need to shift the focus from short-term cost cutting to long-term value-based relationships with suppliers, in order to drive deeper savings throughout the supply chain and to bring true innovation into the company, allowing for top-line growth as well as continued bottom-line reduction. This will require new skill sets, such as the ability to understand market mechanisms and the macro- and microeconomic influences in the end-to-end product supply chain. Procurement can then translate this understanding into opportunities to reduce risks and contribute to other corporate objectives, such as growth and corporate responsibility.

The 64-page report is available for download here. This fourth edition of Capgemini Consulting's Global Chief Procurement Officer Survey includes a series of informative articles that examine how procurement can start driving the strategic agenda. These topics include strengthening CFO-CPO collaboration, understanding procurement performance measurement and integrating procurement with the rest of the business.