What can we learn from Deloitte's procurement leaders?

Deloitte have now published their 2016 Global CPO survey
which is worth a read and perhaps even using as a benchmark. Remember it isn't a state of the world but based on the views of an abnormal sample of 324 procurement leaders. Nevertheless some key findings jump out at me:

• Cost reduction remains a key business strategy for the next 12 months for 74% of the respondents. I do not think it is fair to assume that the other 26% do not see cost reduction as a strategy, but perhaps the question was misunderstood and answered from the perspective of primary objective?
• 62% of 'procurement leaders' believe of their team do not have the skills to deliver the procurement strategy. While we all know there is an overall skills deficit, what concerns me here is why CPOs would be producing a strategy which they don't have confidence can be delivered - a good CPO will recognise the constraints of people and produce a strategy shaped by those limitations. Of course a good procurement strategy will address skills development too. (As an aside I expect to pick up on the issue of producing a unachievable procurement strategy in a future post so keep watching)!
• 40% have a clear digital procurement strategy addressing cognitive analytics, crowdsourcing and digital reporting - aka 60% don;y have a strategy! 40% appears to be surprisingly high to me and when I consider only 16% are engaging through the use of social media and 42% with mobile technologies, I suspect there is a misunderstanding of what a digital procurement strategy should comprise (see my white paper). 
• Given the recent procurement disasters the suggestion that only 25% are 'fully involved in the management of risk' is not only disappointing but a bit scary, remember the respondents are 'leaders"!
• While I frequently hear claims of high procurement influence over spend, the report appears to contradict that, for example, only 66% involved in make/buy decisions. Now if you are a procurement leader and 34% of make/buy decisions are passing you buy - big spend decisions - while I think you may well be honest, how on earth do so many of the 'procurement pack' claim they've influence over ≥ 70% spend?

Sadly, the report didn't pick up on many of the indicators of leading practice I discussed before, but my big lesson is, there remains plenty of opportunity for procurement to improve procurement contribution but first we need to be honest about where we are at the present.

Do you really try to become a preferred customer?

18 months ago I co-authored a Whitepaper warning that adopting a short-term approach to procurement strategy could prove detrimental when recovery from the Great Recession arrives. As we approach elections in the UK we are told recovery has been reached, whether or not you feel and see that is debatable.

Today's Financial Times reports on research for the European Payment Index (EPI) that suggests, across the EU, €360bn has been written off as a result or late payment of bills and invoices. The research considered responses from the 31 European companies plus Turkey and Russia. It appears that suppliers are waiting 47 days beyond the contracted term for payment. Now just think what the impact would be on you if your employer told you that you would have to wait a month and a half for your salary.

Of course the 47 days is a sweeping generalisation, but how do you think your firm's payment record would compare if benchmarked against Sweden's delay in payment in the public sector of seven days and with days in the private sector? The Swedes have adopted a system of fining debtors with automatic penalties to protect suppliers.

In the grand scheme of procurement swings and roundabouts there is a time when suppliers have to make decisions between competing buyers as to which should receive preferential service, or indeed delivery at all. When there are plenty of alternative suppliers the buyer can perhaps be a bit complacent and arrogant, assuming suppliers will want to supply. But if you have a history of late payment, don't expect suppliers to be beating a path to supply you, others, perhaps those based in Sweden, can expect to be more attractive for the delivery of quality, price and lead-time. But things could be even worse: what if that critical source for your manufacturing line goes into liquidation due to cash-flow problems?

The report should be a warning that it may well be time to get your payment process improved before your suppliers opt to delay in supplying you.

Are you ready for Procurement Visibility: ProcureTruths

I wonder how many of you have come across Glassdoor; a website where potential employees can identify a particular organisation, the typical salaries paid to their varying levels of staff, what questions were asked in interviews, others experience of the recruitment process and what those who were successful in the selection process subsequently thought about working for the organisation. Some really interesting insights and all free of charge.

It came as quite a surprise to someone who recently wanted to discuss a 'compelling opportunity' with me, when I explained that the comments on Glassdoor made it clear to me there was little value in progressing the discussion.

I can see how Glassdoor could be used as part of procurement research in providing useful insights on bidding firms. Of course as Peter Smith rightly implies have we information overload?

However, visualise a similar service for the supply market, let's call it, 'ProcureTruths'. Perhaps ProcureTruths already exists unbeknown to me (please enlighten me if you know of it?).

Nevertheless, let's visualise that ProcureTruths, provides potential suppliers with information on specific buying organisations, say:

1. Key decision makers in the procurement process;
2. Procurements influence over spend;
3. Typical questions asked during the procurement process; 
4. Organisational tendency to maverick spend;
5. Buyers qualifications and currency of training;
6. Understanding and application of procurement best practice;