As 2012 comes to a close, it is important to look back and determine what events from this past year will affect procurement industry trends in 2013. Procurement Leaders Magazine published results from a recent study of over 600 respondents in the November/December issue. The study aimed to uncover the state of procurement in 2012 and the future direction of the industry.
The survey revealed strategic areas that Chief Procurement Officers and other executive management were focused on this year including increasing internal collaboration and raising procurement’s visibility. According to preliminary results from Source One’s Procurement Value Survey (full results to be published in the New Year), 69% of those surveyed took conscious steps to promote procurement’s value to the rest of their organization. One of the priority areas that didn’t take the top three was supplier consolidation. Procurement Leaders speculate that the reason could be that the respondents have already implemented this strategy.
The 2012 study also revealed that a large number of companies feel they are still in the developmental stages of supplier collaboration, supplier performance management, and spend analysis capabilities, among others. Most respondents felt that their purchase order management has been optimized. The study also revealed insights into supplier risk management. Over 50% of respondents claimed to have helped manage their risk exposure in 2012 as well as improve their risk mitigation framework.
While 90% of the 600 respondents (more than 25% of which were executive-level purchasing professionals) claimed to have their spend under control with a high concentration on direct spend areas. 44% indicated that commodity markets were very important in 2012 despite a wide range of industries participating in the study. Most respondents indicated volume discounts and long-term contract/escalator clauses to be their main strategies in combating volatile commodity prices in 2012. A significant reason for the high concentration on direct spend could be that only 65% of respondents indicated that indirect spend is managed by procurement.
So what does this mean for 2013?
What we can foresee is an upward trend in the strategic involvement of procurement in shaping and reaching organizational goals. Historically viewed as mainly a tactical function, procurement has seen a shift over the years as executives become more aware of the valuable strategic input they can bring to the table. We hope to see procurement get more involved in all internal departments and their expertise utilized for more complex categories like IT managed services and media buying.
Others in the industry seem to agree with our forecast. The 98th Annual ISM Conference, appropriately titled “Be the Solution” concentrate’s its workshops on best practices, talent management, and how to lead impactful supply chains. ProcureCon Indirect East, hosted early next year, will focus on Strategic Transformation and Value Creation.
While we can’t be sure what 2013 will usher in for the procurement and supply chain industry, we look forward to engaging new companies and helping them reach their goals by augmenting their current procurement resources.