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What role does benchmarking have in modern business? How much time should CPOs dedicate to sense-checking their plans with other organisations?
From our recent events and research, it is clear to those of us working at Procurement Leaders, that strategy is a difficult business. Many senior executives approach us for ’best practice’ on a particular topic area. There is an expectation that many complex areas can be easily reduced to a simple playbook formula, resolving long-lasting tensions through following a simple five-step process.
The truth, sadly, is far more difficult.
The areas that we look at (operating models, outsourcing, risk management, etc.) rarely have an easy answer. Differences between industries and geographies is another complicating factor, which further obscures answers from CPO’s view.
The possibility for finding a definitive answer itself is questionable. Companies at different stages of maturity often have different solutions for the same problem. For instance, negotiated cost savings are often the priority for new procurement departments, but deriving innovation from collaborative supplier relationships is central to mature functions. Both strike at the heart of the business of purchasing: adding value to the wider business.
Perhaps the most efficient aid to decision-making is simply to gain a notion of how peers are addressing similar problems that are faced within their own organisation. As well understanding how they configure their businesses to provide positive productive output, they can provide useful examples of success, failure or even just on alternative approaches. Mostly, the question is of weighing the pros against the cons.
It is in this spirit that we have launched our latest benchmarking survey. In this, we look to explore some of the key benchmarks in the following strategic areas:
We hope that we can use this data to gain a broad understanding of the pressures against which a modern procurement function works.
Moreover, we are also attempting to access the value of the function and the return on investment in installing additional resources in one of these key areas.
For instance, in our study last year, we found that investment in technology was key in enhancing the efficiency of the procurement function to a moderate level of maturity. Once this point was reached, additional function savings could only be found in the more so-called ‘advanced’ areas, such as category management and SRM.
This year, we hope to find where some of the leading organisations have been investing their resources in 2014 and plan to do so in 2015. Are companies going to continue hoping that automation will drive down costs in the long-term, or will more strategic business activities take a central role?
You can take our survey at the link here. All participants will receive the full report.