SECTION 1 - PROCUREMENT GOVERNANCE
In the first section of the survey, we asked respondents to describe the current status of Procurement Governance in their organisations.
Procurement Governance is the definition of procurement policies and procedures that provides a framework or guidance to the organisation when procuring products and services.
Procurement Governance provides the basis upon which an organisation sets its procurement strategy and then aligns the processes, people and technology to execute that strategy. Ensuring that this is consistently adopted requires an accountable function and / or individual who acts as the gatekeeper of Procurement Governance. Organisational structure for procurement More than half (55.8%) of organisations have a central procurement function that is responsible for managing all spend on products and services. This is followed by 30.8% of organisations where management of spend occurs at the department level (e.g. marketing), and 13.5% of organisations where spend management occurs at the business unit level.
Figure 5: WHICH OF THE FOLLOWING DESCRIBES BEST THE FRAMEWORK BY WHICH THIRD-PARTY SPEND IS MANAGED IN YOUR ORGANISATION?
Each department manages its third-party spend A central procurement function manages all third-party spend
55.8%
30.8%
Each business unit manages its third-party spend
13.5%
0
10%
20%
30%
40%
50%
60%
For many organisations, centralisation versus decentralisation of spend management is a grey area and there is no right or wrong answer. Procurement is sometimes perceived as a function that can spend the organisation’s money better than anyone else, which is not always true. Departments or business units may often be equally effective in procuring products and services, owing to their domain expertise. At the same time, however, they may miss potential opportunities that could be sought if they had a view of enterprise-wide spending. Procurement has a facilitating role that should combine the subject matter expertise of business users with the skills of procurement in effectively managing supplier selection, engagement, commercial negotiation and contracting. Even when not procuring products and services on behalf of business users, procurement and supply chain should provide guidance and help, ensure consistency, and leverage the buying power across the organisation. Procurement can highlight similar work that has been done in other parts of the organisation, good agreements that are in place, and the record of particular suppliers in meeting the organisation’s performance expectations.
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