iS
A LACK OF COLLABORATION TO BLAME FOR PROCUREMENT PERCEPTION GAP?
Is a
lack of collaboration between procurement and critical business functions to
blame for squandering budgets of UK businesses?
Procurement’s true value is held back
by restrictive corporate cost saving edicts according to new research
published today.
The
‘Procurement Perceptions’ study was carried out by Redshift on behalf of Wax
Digital. It took into account the views of 200 procurement, finance,
IT and sales & marketing department decision makers in medium to large UK
organisations.
The
main brunt of the report aims to address the scale of rule breakers using risky
suppliers and spending without necessarily seeking permission from
decision-makers.
Daniel Ball, Director, Wax Digital, says: “Business functions
are not working effectively and closely with procurement experts to source the
right suppliers, strategically manage their spending and ensure they are
following compliant purchasing processes. This suggests a high level of
maverick spending behaviour which can lead to poor value for money, cash flow
issues and contract risk.
Daniel continues: “Procurement wants to control and influence
departments’ supplier choices and spending, however, many of these other
departments are pushing back, seeking more supplier and spending freedom and
believing that procurement just gets in the way.”
The comments are backed-up by figures that reveal 24 per cent of
procurement respondents said that supplier selection was a joint decision with
the department in question. This is in stark contrast to the 8 per cent in
IT, 6 per cent and 2 per cent in sales and marketing.
Procurement
perception gaps
The study found that part of the problem lies in the perception
of procurement amongst other departments. Procurement is typically viewed as
being more administrative than strategic, while in reality the balance lies
somewhere in the middle. In Wax Digital’s research Just 15 per cent of other
department respondents saw procurement as mainly or wholly strategic but 46 per
cent saw procurement as mainly or wholly administrative.
Other findings include: 54 per cent of procurement respondents
say departments follow a formal tender process, compared to 24 per cent in
sales and marketing.
36 per cent of procurement say they shortlist suppliers on
behalf of these departments against their business requirements, but only 12
per cent in IT agree.
In conclusion Daniel offers a few recommendations: “This
research indicates that there is still some distance to go by procurement, or a
need for improved communication, before other critical departments understand
the benefits of procurement, stop breaking the rules and close the perception
gap.”
