In post 1 on Pulse of Procurement 2014 series we discussed the Pain Areas for 2014 and the future expectations of Procurement Execs. In this blog, we will explore the current state of Procurement i.e. the Procurement Benchmarks.
In terms of self evaluation for gaining strategic procurement maturity, very little has changed in the last two years. The top 2 categories for maturity, systematic delivery wins and global best-in-class, have gained only a single point between 2012 and 2014.
This reveals a constant dissatisfaction among procurement execs in bridging the gap from sporadic performance to a systematic, sustainable and diverse business value contribution by the procurement function. A deeper investigation into the matter reveals that the prominent factor responsible for this is adoption & inconsistent use of available procurement automation solutions.
Top tiers for Spend Under Management (SUM) benchmark has gained six points in the last two years. organizations are also continuously expanding influence on not only direct but also complex indirect and services spend categories such as contingent labor and consulting; marketing; advertising and communications; legal, financial services and so forth.
Organizations in the top echelons for procurement SUM display substantially higher adoption and use of procurement automation among both decentralized procurement personnel and spend stakeholders, viz-a-viz low SUM companies.
While the upper echelon for cost savings performance has grown around six points in the last two years, the largest percentage (44%) of procurement organizations still linger below the 10% threshold for documented cumulative cost savings of total corporate cost spending. Majority (55%) of low saving organizations uses ‘primarily homegrown’ procurement technology, 27% of these companies rely on ERP technology.
On the other hand, 43% of companies in highest cost saving echelon use dedicated procurement technology application. Furthermore, out of these around 80% companies use integrated procurement technology suite from a single service provider.
For more insights stay tuned…
