Strategies for success in procurement

Filed in archive Research on November 9, 2005

Aberdeen Group recently made a survey and interviewed procurement executives at 100 global enterprises. The research, published in a report entitled "The CPO's Agenda," found that procurement's role in strategic operations has increased dramatically over the past five years. While procurement organizations are still focused on reducing costs and ensuring supply availability, there's now a heightened emphasis on contributing to market expansion, product innovation, and regulatory compliance. In short, procurement and supply management are now expected to be major contributors of value across the enterprise.

Aberdeen's research has identified five primary strategies that leaders are adopting to transform procurement's role from one of cost containment to one of value generation. These strategies, each discussed in detail in this article, are:
- Improve supplier development and collaboration.
- Enhance and integrate procurement automation infrastructure.
- Adopt low-cost country supply initiatives.
- Transition to a center-led procurement organization.
- Increase amount of spend under management while improving spend compliance

Notably, some procurement leaders such as ExxonMobil, Hewlett-Packard, and Procter & Gamble have organized procedures, resources, and systems so that they can pursue all of the spend management strategies in an integrated and coordinated fashion. But while it's not necessary to take on all five initiatives at once, it is critical to get moving on the procurement transformation. In fact, the strategic initiatives described here are interrelated. So progress on any front is likely to bring improvements on another.

The report includes valuable insights and information and can be obtained through the www.aberdeen.com website.