CEOs of almost eight out of 10 businesses are turning to procurement as “the secret weapon” for business growth and resilience, Ivalua and Forrester Consulting research has revealed.
The research revealed that businesses are increasingly focusing on top line growth and turning to procurement departments to support more objectives (79%) than in the past.
This comes as suppliers become more important to achieving business objectives.
But challenges are limiting procurement’s agility in today’s volatile market and forcing tradeoffs between different priorities.
The study is based on a survey of 470 procurement decision-makers at companies with 1,000 or more employees in North America, Europe, and Asia Pacific.
Ivalua found 73% of those surveyed indicated that they have compromised on other objectives to ensure supply continuity in the past year, and 76% have compromised on supplier due diligence, exposing businesses to unknown risk.
The study, “Procurement: A CEO’s Secret Weapon for Growth and Resilience in Turbulent Times”, outlines successful strategies being followed by organisations to support their top business objectives.
“Procurement is contributing most by driving sustainability efforts through increased supplier collaboration, identifying and enabling new revenue opportunities, and reducing product costs to increase competitiveness,” Ivalua says.
Cost control remains a high priority as procurement plays a greater role in supporting top line growth.
The top strategies being applied to mitigate the effects of inflation on profitability are:
- finding new, lower cost sources of supply (32%)
- increasing operational efficiency (31%)
- and collaborating with existing suppliers to find ways to reduce total costs (30%).
Businesses are increasingly partnering with suppliers – even more so since the pandemic.
“78% indicated they collaborate more with suppliers today than prior to the pandemic, and 81% stated that their organisation makes significant efforts to establish themselves as customer of choice,” Ivalua says.
In the past year, 50% have increased information sharing with suppliers and 45% collaborated with suppliers to launch new products or services the research says.
“How businesses engage with and manage their suppliers can be a significant competitive advantage in today’s market,” commented Alex Saric, smart procurement expert at Ivalua.
“As a result, procurement leaders must be included in boardroom discussions and their teams given a clear mandate and the resources needed to succeed.”
Technology is playing a greater role
More than half of respondents (53%) of respondents said the top supplier strategy implemented in the past year was systems to better manage supplier performance and risk (SRPM).
Existing technology solutions often limit agility with 39% indicating existing solutions are too rigid to support current ways of doing business.
“Technology is a critical enabler of effective supplier management strategies, providing the data needed to assess and monitor suppliers and the ability to collaborate efficiently with them,” said Saric.
“Yet many of today’s solutions deliver speed at the cost of agility. Given rapidly evolving market conditions, regulations and business priorities, leaders must evaluate technologies based both on their ability to meet today’s requirements and their flexibility to quickly support new processes and data.”
Get a copy of Procurement: A CEO’s Secret Weapon for Growth and Resilience in Turbulent Times.