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Companies with top performing procurement organizations report profit margins 15 percent higher than the average company – and 22 percent higher margins than companies with low performing procurement organizations. High performers were found to have built an agile supply network designed to adapt to changing market conditions.
For example, the study showed that 73 percent of high performing CPOs are highly effective at responding to product redesign and demand challenges compared to just 16 percent of the low performers. They excelled through the use of analytics and collaboration:
- 83 percent of high performing CPOs excel at leveraging analytics compared to just 63 percent of the lowest performers.
- 80 percent of high-performing companies report that collaboration across departments, such as IT, marketing and sales, is both a key strength and an investment priority, compared to only approximately 45 percent of low performers
- Top performers direct 38 percent more of their annual spend through strategic alliances than low-performing organizations
For more information or to download the full report visit www.ibm.com/business/value/chief-procurement-officer
7 comments:
Great info graphic.
"High performers were found to have built an agile supply network designed to adapt to changing market conditions." Isn't that what high performers do in any industry?
It is nice to see credit going to those who excel as a rule. Unfortunately, there is too much "old school" thinking in every aspect of the business world.
Cimetra
Great info graphic.
"High performers were found to have built an agile supply network designed to adapt to changing market conditions." Isn't that what high performers do in any industry?
It is nice to see credit going to those who excel as a rule. Unfortunately, there is too much "old school" thinking in every aspect of the business world.
Cimetra
Great info graphic.
"High performers were found to have built an agile supply network designed to adapt to changing market conditions." Isn't that what high performers do in any industry?
It is nice to see credit going to those who excel as a rule. Unfortunately, there is too much "old school" thinking in every aspect of the business world.
Cimetra
Great article! I think a great way to sum up this realization is by saying that top performing procurement specialists are implementing Kaizen within their companies and their practices. Kaizen combines the number two, three and five points that were presented on the “New CPO” diagram. It is the idea of continuous small improvements combined with more large-scale innovations while making sure that everyone in the process is on board and involved.
The one thing that seemed odd to me from this diagram was the statistics on big data analytics. Of the lower performing companies from a procurement standpoint, it seems that they are not necessarily not participating in the big data analytics, but they simply do not know how to interpret the information they gain from the analyses. If 63% are using big data, then why are only 17% able to react to the market conditions that are revealed by big data. Is it because they aren’t using the data they have or is it because they do not know how to react correctly to the information they interpret?
Great article! I think a great way to sum up this realization is by saying that top performing procurement specialists are implementing Kaizen within their companies and their practices. Kaizen combines the number two, three and five points that were presented on the “New CPO” diagram. It is the idea of continuous small improvements combined with more large-scale innovations while making sure that everyone in the process is on board and involved.
The one thing that seemed odd to me from this diagram was the statistics on big data analytics. Of the lower performing companies from a procurement standpoint, it seems that they are not necessarily not participating in the big data analytics, but they simply do not know how to interpret the information they gain from the analyses. If 63% are using big data, then why are only 17% able to react to the market conditions that are revealed by big data. Is it because they aren’t using the data they have or is it because they do not know how to react correctly to the information they interpret?
This is an insightful report and a testimony to the fact that procurement has become more and more strategic than being just a support function. "80 percent of high-performing companies report that collaboration across departments, such as IT, marketing and sales, is both a key strength and an investment priority, compared to only approximately 45 percent of low performers". This shows that the need for a collaborative, often centralized, and strategic sourcing can significantly influence performance. The data that strategic procurement is drive 22% higher margins shows the enormous opportunity that procurement plays to the bottom line of any company.
This is an insightful report and a testimony to the fact that procurement has become more and more strategic than being just a support function. "80 percent of high-performing companies report that collaboration across departments, such as IT, marketing and sales, is both a key strength and an investment priority, compared to only approximately 45 percent of low performers". This shows that the need for a collaborative, often centralized, and strategic sourcing can significantly influence performance. The data that strategic procurement is drive 22% higher margins shows the enormous opportunity that procurement plays to the bottom line of any company.
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