Supply Chain Management Review: Procurement is Top Area of Risk, Consero Survey Reveals

Originally Published in Supply Chain Management Review | By Patrick Burnson | March 23, 2015

The results were reported as part of the 2015 Global Procurement & Strategic Sourcing Data Survey, compiled by Consero Group.

When assessing areas of risk facing their departments, nearly half (45%) of Chief Procurement Officers named supplier risk as a top concern, according to a new survey by Consero Group.

The results were reported as part of the 2015 Global Procurement & Strategic Sourcing Data Survey, compiled by Consero Group.

“With businesses increasingly relying on third-party suppliers, Chief Procurement Officers are more important to their companies than ever,” said Paul Mandell, Founder & CEO of Consero. “CPOs will need to lead their organizations in thoroughly vetting new suppliers and improving supplier relations, both of which are essential to the efficient sourcing of goods and services for today’s global businesses.”

In addition, nearly two-thirds (64%) of Chief Procurement Officers surveyed do not believe they have enough access to the resources necessary to manage their operations effectively. Furthermore, with regard to human resources, 72 percent of those surveyed do not see a sufficient pool of trained procurement talent available to support their hiring needs.

Mandell adds, “Over the year ahead, CPOs will need to leverage their corporate influence to obtain the resources they need to manage their operations effectively. Additionally, CPOs must remain focused on talent acquisition and retention.”

Additional Findings Included:

  • Cost Reduction Is Top Priority: Forty percent of surveyed executives named cost reduction as their top priority in the next 12 months.
  • Metrics Drive Wrong Behavior: Sixty-three percent of surveyed Chief Procurement Officers believe that certain metrics used to evaluate procurement drive the wrong behavior in their organization.
  • Sustainability Programs Are Working: Forty-nine percent of surveyed executives believe their company has achieved tangible cost reductions through the use of a sustainability program, an increase from 33% in 2014.

The 2015 Global Procurement & Strategic Sourcing Data Survey was developed in connection with an invitation-only event hosted by Consero Group in January 2015 for Chief Procurement Officers from Fortune 1000 companies. A total of 55 responses were recorded.

In an interview with SCMR, Mandell said that the lack of useful metrics to guide effective Procurement behavior is an obvious impediment to long-term success of the function.

“CPOs should spend time over the coming year identifying the behaviors they desire for departmental success, and then pursuing them with customized metrics.,” he said.

Mandell also noted that although today’s large corporations seem to be on firmer ground than in years past, CPOs remain under pressure to operate efficiently and with an eye to cost optimization.

“Fortunately, there are more sophisticated resources than ever before to support CPOs in these efforts,” he said.