IBM: Top Chief Procurement Officers Drive Higher Profits

By Darryl K. Taft  |  Posted 2013-05-22 Print this article Print

Top performing organizations also are turning to social business for innovative ways to manage their global teams and collaborate with their suppliers. The study found that high performers are more likely to use social tactics such as crowd sourcing (81 percent) and collaborating on product development with suppliers (88 percent), versus their low performing counterparts (38 and 47 percent, respectively).

The third common trait of high performing procurement organizations is that they adapt to changing market conditions. By using big data insights and collaboration, high performing CPOs are in a better position to quickly respond to changing internal and external conditions, from demand changes to supply disruptions and product redesigns. The study showed that 73 percent of top performing procurement organizations are effective at gathering insights from the supplier community, compared with only 16 percent of lower performing counterparts.

"There are tens of millions of dollars at stake, and the IBM IBV CPO study reveals how and why high performing procurement leaders have significant impact on their organization," said Craig Hayman, general manager of IBM Industry Solutions, in a statement. "As CPOs take a broader view of their role and embrace technology, they have an unprecedented opportunity to become even more instrumental in transforming their organizations by modeling themselves against the world's most innovative and effective procurement organizations."

As companies realign their organizations to take a more customer-centric approach, the role of procurement professional is changing from a traditional back-office, transaction-oriented role to one with more visibility and influence among C-suite executives, IBM said. CPOs are well-positioned to help identify and mitigate supply-related vulnerabilities because they serve as the bridge between suppliers and internal consumers. Similarly, procurement teams can utilize data analytics to help improve demand forecasts and identify additional savings opportunities within spend categories.

Moreover, there is a strong correlation between being a top performing procurement organization and effectively using procurement technologies, IBM said. For example, in regard to Supplier Relationship Management, the study found that 94 percent of top performing companies are highly effective in their use of procurement technologies, compared with 44 percent of all surveyed companies are average or below average in their technology effectiveness. The study also found that CPOs think that supplier intelligence solutions, including 360-degree global views of supplier relationships and procurement performance dashboards, will be the most important area of investment over the next three years.

In addition, the study showed that CPOs of top performing procurement organizations understand that success depends on getting the skills and expertise needed to execute the mission they have been given. By percent, twice as many top performers as low performers view recruiting and talent development retention as a key strength. Top performers also extend these human capital advantages because they are equally aggressive in their investment plans for retention, recruiting and talent development, IBM said.



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