An important news item coming from our attendance at this week’s 2013 Smarter Commerce Summit, was the release of IBM”s first Chief Procurement Officer (CPO) study. Readers familiar with IBM will note that the IBM Institute of Business Value has conducted ongoing high-profile surveys of various C-Suite executives which include the CEO, CFO and CMO. Readers can download this study at this web link.
This new CPO study surveyed over 1100 executives in 22 countries, thus it has important global scope. The primary headline from the survey findings is that companies defined as top-performing procurement organizations reported 13 percent higher profit and 22 percent higher product margins than lower performing organizations.
That conclusion should not be a surprise to other functional supply chain or product management teams. CPO’s are well noted for their relentless focus and organizational zeal on corporate spend savings.
What Supply Chain Matters found of interest are the findings related to internal collaboration and leveraged use of analytics. According to the IBM CPO study findings, the majority, over 80 percent of high-performing companies report that collaboration among internal departments such as IT, marketing, sales, and presumably product management and supply chain, is a reported key strength and an investment priority. Again, not a complete surprise since other studies related to top-performing supply chains continually point to high rates of internal and external focused collaboration.
However, in our travels, procurement teams do not on the whole tend to gain high marks concerning internal collaboration. Too often, leaning on executive mandates for cost savings tends to rule the conversation and indeed the opportunity for team synergies. This study points to the fact that greater gains are garnered by two-way collaboration. Readers are invited to weigh-in on your own observations, but there is an obvious sign posts for CPO’s.
Another important finding in this survey noted that 73 percent of top performing procurement organizations are effective in gathering insights from the supplier base, compared with 16 percent for lower performing counterparts. Effective mining of information and supply insights are the obvious tools being unleashed by these top performing teams.
Other separate studies that we have reviewed and discussed with clients reinforce that procurement leaders remained concerned about gaining broader leadership skills, and at the same time, perceive skill gaps within their organizations regarding the comprehension and leveraged use of todays more sophisticated analytical and decision support skills.
Thus, survey data is reinforcing similar insights. Procurement teams benefit more from enhanced internal communication, collaboration and cross-functional leadership. They must also address the need to further skill their team members in awareness of the power of analytics and the mining of supplier and product insights.