Supply Chain Management Review: Procurement Value is Not a Cheap Proposition

Originally Published in Supply Chain Management Chain | April 3, 2013 | By Patrick Burnson, Executive Editor

The results were reported as part of the 2013 Procurement & Strategic Sourcing Data Survey

According to a new survey by Consero Group, an international consultancy based in Bethesda, Md, over 50 percent of Chief Procurement Officers said their company pursues short-term savings from suppliers that undermine long-term value.

The results were reported as part of the 2013 Procurement & Strategic Sourcing Data Survey, compiled by Consero Group in partnership with Vantage Partners. The findings mirror those of SCMR contributors ranging from MIT, University of Tennessee, and own guest blogger, Robert Rudzki.

In addition, 65 percent of participants said their company’s procurement strategies are more focused on using competitive pressure to get maximum value from suppliers, while only 35 percent said their company’s strategies are more focused on using collaboration to get maximum value from suppliers.

“Chief Procurement Officers are challenged with the task of driving savings and delivering critical resources with maximum value,” said Paul Mandell, Founder & CEO of Consero. “Our survey reveals a conflict for Chief Procurement Officers, who want to obtain the best overall value, yet often rely on competitive pressure rather than collaboration. Procurement officers should communicate to senior management that pursuing unreasonable short-term savings can be destructive to long-term value.”

The survey also found:

  • 45 percent of respondents said that they do not have enough resources to manage the procurement function effectively.
  • Nearly three-quarters of participants said their procurement budgets are either stable or increasing, but a significant minority (34%) reported a budget decrease.
  • Nearly half (46%) of surveyed participants said that social responsibility and sustainability were “not important” or only “slightly important.”

“These findings are indicative of economic weakness, as a significant portion of respondents say they lack sufficient resources to manage effectively, and many companies continue to put issues like sustainability and social responsibility on the back burner,” said Mandell.

The 2013 Chief Procurement Officer Data Survey, presented in partnership with Vantage Partners, LLC, was comprised of 16 questions that were posed to a group of Fortune 1000 Chief Procurement Officers who were in attendance at an invitation-only event hosted by Consero in January 2013. A total of 42 responses were provided.