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We’re officially into the new financial year, and we can expect it to be a turbulent one given the current climate. This means it is the perfect time to take a step back and press the reset button, to assess priorities and strategies for the year ahead.
But what should procurement teams focus on over the next 12 months? At American Express, we recently surveyed senior financial leaders in the UK, more than half of whom work for companies with more than $1bn in annual revenue. This unique snapshot into what the UK’s most influential leaders are thinking - and more importantly, spending - has revealed what procurement teams should have on their radars for 2017/18.
It goes without saying that there is understandable caution in markets at the moment, due to a number of geopolitical events unfolding around the world. However, rather than tightening the purse strings, almost all the finance chiefs surveyed (99%) say their company’s spending and investment will increase worldwide during the next year. The majority agree that the focus will be on investing to support top-line growth while improving profitability. This means an increased workload for procurement, and an even more critical role for the function to play in delivering value and boosting profits.
Customer service is a key priority for investment in 2017. The majority of CFOs say that pressure has increased over the past couple of years to compete on the quality of customer service and that they will be spending more money than last year to improve this part of the business.
But businesses aren’t just concerned about how they are being judged on their service; it’s becoming increasingly important in their procurement processes too. Three-quarters (75%) of UK CFOs say that, over the past two years, customer service has become more important in their company’s purchasing decisions, compared with other factors such as price, product quality and existing relationships. The top customer service attributes that companies value most in vendors and suppliers are easy access to detailed records (34%), following issues through to resolution (31%) and responsiveness (30%).
At a time of economic uncertainty, it would be easy to assume that price conquers all. But, not only is customer service an increasing priority, ensuring the business is being socially responsible is also key when it comes to boosting competitive advantage.
More than one-fifth (21%) of CFOs surveyed said that a consistent impression of trust, respect and civility is a valuable attribute in vendors and suppliers. And the majority (83%) agree that sustainable, ethical and transparent business practices are important when it comes to their company’s ability to compete effectively in its markets. This priority is only set to increase with 63% believing that, within the next five years, the ability to deploy and document sustainable, ethical, and transparent business practices will be an important basis for competition in their industries.
When it comes to spending, it’s clear that procurement has a huge role to play in boosting efficiency and, in turn, profit. 98% of the CFOs surveyed said that improving end-to-end visibility in transaction processes, including order-to-cash and procure-to-pay processes, would yield a substantial financial benefit.
Dynamic discounting, supply chain financing and non-secured short-term financing, such as credit cards, are the top three methods that CFOs feel their company should make greater use of in order to manage its cash and working capital more effectively.
These findings relay how important it is that businesses have the right tools to operate more effectively – on both a technical and strategic level – and this will be key for procurement teams this year.
Jose Carvalho is senior vice president of Global Commercial Payments Europe at American Express
This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.