Last week a study entitled “The AT Kearney 2011 Assessment of Excellence in Procurement Study” was published by AT Kearney, a management consultancy based in London.
The study found that, of the 185 global companies surveyed, 90% believed that the procurement function is performing more of a strategic role, dynamically participating in business strategy development. The report then goes on to claim that there is a new way of thinking on procurement, stating, “It’s not just business as usual, its business as unbelievable”.
In 1992, when the regular study was first launched, procurement was found to be primarily a back office function; over the past decade there has been a documented shift from this to how procurement is now viewed today, with apparently around 75% of staff dedicated to strategic activities and other value-adding procurement performing activities.
Amongst those that responded to the survey, 13 companies were found to have consistently demonstrated high levels of procurement performance, and the study managed to identify seven key characteristics. These are:
• Procurement strategy has to be aligned with the business goals of the organisation. The study found that primary procurement functions are 85% aligned while they are only 37% aligned in the less successful companies. These 13 companies outclass the others that were surveyed in their contributions to top and bottom line strategies.
• The top companies are experts at managing risk, whilst the study suggests that 80% of the other companies are not so adept at managing risk systematically.
• To further develop innovation, growth, improve risk management and supply chains, supplier relationship management is used in a more consistent and structured way in the successful companies.
• These organisations leading in procurement are more likely to adopt new technologies, and are mostly fully automated, using technologies to support compliance and manage contracts in real time.
• All of these firms have adopted a more aggressive approach to ‘winning the war’ for talent, building strong relationships with top universities in order to attract skilled individuals with relevant experience.
• Tailored category strategies are used by these organisations. Using more advanced toolkits, they systematically employ over twice the number of methods than their followers, allowing them to tailor their approaches to each situation.
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