A Hackett Group Study reveals that procurement leaders are looking to do more than simply reduce purchasing costs.
The 2014 Hackett Group 2014 Key Issues Study reveals that procurement leaders rank their ability to expand their influence in key areas of the enterprise, including innovation, company strategy, and the always complex issue of indirect spend.
According to the study, procurement’s main concern for 2013 was cost reduction/avoidance. So this shift to having more influence on company policy and strategy is quite notable. In fact, reducing and avoiding purchasing costs ranks #4; that is remarkable. When procurement leaders were asked to list their top priorities for 2014:
- 76% wanted to expand their scope/influence
- 69% listed providing innovation and product/service support
- 58% wanted to deepen their influence on complex indirect spend categories to drive value beyond sourcing
Just 52% put reducing and avoiding purchasing costs on their top priority list.
The Hackett Group study surmises that, in many organizations, procurement has achieved cost reductions as much as possible, so they are looking for new ways to find additional savings for the enterprise.
When it comes to technology, procurement is looking to get the greatest value out of their existing tools by actually analyzing the huge amounts of data that these tools provide, so many of them are looking to Business intelligence and analytic applications to help them do this. One of the findings is that, although a number of companies had implemented some form of supplier network solution, they had never fully utilized it to uncover valuable data to assess value and risk associated with the supplier base.
And procurement leaders expect to be under the microscope when it comes to measuring their success. That’s why 69% of those surveyed for this study rank “measuring and monitoring their value contribution as a key objective.” It’s only through evaluating KPIs that procurement will be able to convince those in the C-suite that the expansion of procurement’s influence will be highly beneficial to the company’s overall growth.
The study itself summarizes it best, “To help execute an innovation-based business strategy, procurement needs to be a high-value-added, best-practice-driven internal service provider, rather than a department whose main goal is to continually expand its control over spending.”