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What Are Procurement Pioneers Doing Differently?.

Leadership Talent and Leadership
pioneer_procurement.jpg

In this guest post, Procurement Leaders invites Steve Peterson from IBM's Institute for Business Value to look at some of the drivers behind procurement success, as identified by the group's recent research. 

 

What makes a procurement leader a leader? Why do some procurement organisations have more influence and impact than their peer organisations?

 

It's a common question and the reason many of us network with our peers, attend professional conferences and read trade publications and blogs: we want to gain insight into that magic elixir that makes procurement organisations thrive.  

 

It's what drove those of us at IBM's Institute for Business Value (IBV) to conceive and conduct the IBM IBV Chief Procurement Officers (CPO) Study. The study is based on a survey of more than 1,000 procurement executives across more than 40 countries, mostly from Global 2000 companies.

 

The results of the inaugural study last year detailed a striking correlation between the proficiency of the procurement organisation and a company's bottom line: companies with high performing procurement organisations have profit margins 15% higher than the average company and 22% higher than those of companies with lower performing counterparts.

 

IBV conducted a follow-up survey earlier this year to better understand the specific strategies and priorities most impactful to procurement success. This year we paid special attention to procurement pioneers – or as we called them "procurement role models" – those organizations with the most significant impact on revenue growth and profit improvement.

 

The results, which will be released later this month, show that procurement role models have a set of common attributes that separate them from the pack:

 

  • They focus on improving enterprise success, not just procurement performance.
  • They engage with stakeholders to understand and anticipate their needs and values.
  • They embrace progressive procurement practices and technologies to drive results.

 

Procurement role models tend to think about procurement in broader terms than their peers – and they are more likely to embrace strategic enterprise objectives. For instance, they are much more likely to report revenue growth and increased competitive advantage as top priorities as compared with underperforming procurement organisations. Top-performing organisations are also twice as likely to say that introducing innovation into the enterprise from suppliers is a priority.

 

Procurement role models also take a more comprehensive approach to procurement technologies, are significantly more committed to procurement automation and tend to apply more advanced analytics than their peers.

 

The study goes into much greater detail about the common attributes of procurement pioneers – vital insight for organisations looking to take the next steps towards making the greatest contribution to overall enterprise value.

 

For a copy of the executive summary of the IBM Institute for Business Value (IBV) 2014 Chief Procurement Officer (CPO) Study you can register here

Steve Peterson
Posted by Steve Peterson

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