Measuring Procurement’s Expanding Influence

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Procurement has undergone a profound transformation over the last decade or two, evolving from a primarily transactional role and into one that’s focused on strategy, collaboration and growth. From risk management to digital transformation to sustainability, procurement drives organizational success on numerous fronts.

A recent report from the Chartered Institute of Procurement and Supply (CIPS), in partnership with GEP, highlights the growing influence of both procurement and supply chain functions. The recently-released Global State of Procurement and Supply 2024 report surveyed chief procurement officers, directors and leaders from 122 organizations with combined revenues of $73 billion. 

ESG, Automation and Supplier Diversification

The findings offer insights into the evolving landscape for procurement and supply chain leaders. The company also posed questions about sustainability, automation, business volatility and other hot topics that are on the minds of both procurement and supply chain professionals this year. 

Here are some of the key findings from the report:

• Three-quarters of procurement and supply leaders (78%) believe that environmental, social and governance (ESG) issues are growing in importance in their organizations.
• Half (49%) of procurement and supply leaders want to improve upon their ability to enhance sustainability in the year ahead.  
• While just 2% of procurement functions are fully automated, more than half of the survey respondents are pushing for partial or full automation. 
•  The key contributors to volatility right now are geopolitical factors, with other key supply chain risks being inflation and labor shortages. 
• Companies are using supplier diversification, insourcing and holding more stock to mitigate supply chain disruption. 
  

Headcount Stabilizes and Grows

Among the procurement and supply teams that CIPS surveyed, many were relatively small with 51% reporting that they number fewer than 20 people. Positively, headcount is more likely to have grown rather than shrunk in the last 12 months; a third feel that headcount will grow in the next 12 months. Half of the survey’s respondents believe staff numbers will remain stable, with only 14% expecting a reduction in staff numbers. 

The largest proportion of teams are split 50-50 in terms of men and women. Overall, there are more men than women in the procurement and supply teams surveyed. Just 4% of the procurement and supply teams were all-female. 

“Overall, a majority (70%) of procurement leaders who responded to our survey say they feel their organization is taking active steps to implement progressive recruitment policies,” CIPS says.

Seeing the Bigger Picture

As procurement’s influence in organizations has grown, CIPS wanted to know whether the governance, reporting lines and communications channels for procurement and supply professionals were also expanding. From its research, the organization learned that just one in five organizations (19%) has a board of directors that includes a senior procurement officer.

The survey results also uncovered challenges relating to how well procurement and supply chain departments are aligned with their organizations’ board and senior management. Around a third (39%) of respondents feel their function is well aligned and supported, for example, and a similar proportion (35%) say it’s not. 

A Significant Impact on Spending

When it comes to influencing organizational spending, survey respondents believe they occupy a “unique position” in their organizations. This position allows them to collaborate across the entire enterprise and also see the bigger picture in terms of spend. 

For example, two-thirds of respondents manage 60% or more of organizational spend on direct goods. Office supplies and furnishings (80%) is the top category where procurement and supply manages or has an influence on spend, closely followed by facilities (78%) and professional services (74%). 

“The influence of procurement and supply over organizational spend is growing, according to our respondents,” CIPS points out. “More than half (59%) feel that procurement and supply is seen as a positive influence on efficacy of spend within companies.”