Thursday, September 02, 2010
Latest Procurement News
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KNOWLEDGE MANAGEMENT TAGS
"Leadership"
CPOs slow to focus on indirect
New research shows that chief procurement officers are only slowly increasingly their focus on indirect procurement categories such as IT, marketing and advertising, facilities management, MRO, logistics and professional services.
A.T. Kearney, a global management consulting firm, released the results as part of a global report, The indirect procurement study, which identified how organisations are managing the procurement of indirect goods and services.
Jan Fokke van den Bosch, A.T. Kearney procurement and analytic solutions vice president and co-leader of the study, said, "We conducted the first study in 2007 and there were high expectations among the respondents for the adoption of advanced practices like outsourcing of indirect procurement, advanced data analytics and benefits tracking. The 2010 study shows that the adoption of these advanced techniques have taken place at a much slower rate than anticipated. The good news is that with the financial crisis and recession, executives managing indirect procurement have gained substantial influence within their organisations."
The study also revealed that more than two-thirds of respondents measure financial and internal key performance indicators such as addressable spend, identified savings and addressable categories. But less than half of the respondents track compliance management metrics, such as spend integrity or accuracy and supplier commitments, scorecards and reviews.
According to the report, indirect spending accounts for 60% of third-party spend in non-manufacturing companies, more than 90% in the financial services industry and sometimes 50% of spend in manufacturing organisations.
It went on to caution that, rather than using advanced data analytics techniques such as predictive modelling to deliver future insights, indirect procurement groups are too often analysing data to track historical trends.
The most successful indirect procurement organisational model was found to be a central-led organisation with collaboration across business units. Users of this model achieved savings greater than 10% over the last two years in 47% of categories.
Procurement Tag - Leadership
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