Examining Trends in World-class Procurement

Thought leadership discussions series in Europe focuses on procurement excellence, LCCS strategies, locating savings and the role of enabling technologies


London and Burlington, MA — August 2, 2007 — Emptoris, a provider of enterprise supply and contract management solutions, and CPO Agenda, a global business magazine for procurement professionals, today summarized the findings of the first half of the CPO Agenda Executive Debate roundtable sessions, sponsored by Emptoris and Accenture, which focused on examining key trends and practices in achieving world-class procurement at Fortune 1000 and Global 2000 organizations across Europe.

The thought leadership discussions were designed to investigate the trends, strategies and challenges experienced by procurement organizations within global organizations. The sessions saw chief procurement officers and senior procurement executives from more than 100 leading companies come together across the past three months in London, Amsterdam, Stockholm, with subsequent events planned in Milan, Paris and Frankfurt.

"World-class procurement is a term that is often used rather glibly," said Geraint John, editor-in-chief of CPO Agenda. "This series of discussions, and our subsequent coverage of them, aims to draw out and develop the meaning behind that statement, to identify the vision, policies and practices that truly define world-class procurement — and its resulting impact on the bottom line of global organizations."

What is World-class Procurement?

The first thought leadership discussion, held in London, focused on the overarching theme of the series, "world-class procurement." As CPO Agenda stated, "Everybody in business these days, it seems, wants to be 'world class,' but what does this actually mean in practice?" The panel of procurement professionals assembled for the discussions with the following key themes emerging:

Need for Clear, Communicated Strategy: The consensus among participants was that a clear strategic vision is critical. Participating CPOs strongly emphasized the need for successful organizations to match procurement's agenda to the company's overall business goals.

Operational Execution and Benchmarking: However, the CPOs cautioned that execution is as important as strategy, and that leaders often emphasize strategy at the cost of effective execution. Throughout the series of debates, leading CPOs continuously emphasized the need to engage in quality benchmarking to ensure and quantify success; the need to "measure operational activities against a set of calibrated standards" was a clear theme of discussion. However, a few CPOs cautioned that over reliance on benchmarking can result in a company becoming a "follower not a leader."

Supplier Collaboration & Partnership: The assembled CPOs encouraged their peers to ensure suppliers are treated as partners not just vendors — and to ensure that supplier partners deliver advantage to the business that support core objectives, not just deliver cost savings. Also, they urged organizations to ensure suppliers are given room to be "creative." Buyers who don't listen to suppliers and instead just follow defined processes miss out on opportunities brought about by supplier creativity which can reduce costs and improve products.

People Power: World-class procurement requires people skills rather than just technical proficiency. Leaders expressed belief that the emphasis on systems has some times come at the cost of under-using peoples' creativity and instincts.

"Procurement organizations need to position themselves to ensure they're integral to the overall business strategy," said Heather Rodgers, head of general procurement and supplier management at Centrica, the parent company of British Gas. "To me, that's one of the key characteristics that can differentiate procurement departments today."

Executing Global Sourcing Quickly and Effectively

The second thought leadership debate focused on the challenges of executing global sourcing strategies quickly and effectively. With low-cost country sourcing (LCCS) initiatives so prominent in global procurement in 2007, the industry consensus is that many issues and challenges exist that are hampering the movement of required volumes to emerging markets.

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