individual to manage it). We would therefore question whether it is achievable for the 40% of our sample that do not have a full-time, dedicated individual heading the procurement function to maximise the benefits they can gain from adequately managing the supply chain. Targets, objectives and performance measurement Procurement Governance sets the direction in which procurement in an organisation is heading. Aligned with corporate planning, an integral element of Procurement Governance is the strategy which, at a high level, is reflected by a set of targets and objectives. Cost savings is the top target for the majority of the organisations (87.2%), followed by sourcing at the right price (71.6%) and improving procurement practices and methods (67%). For less than one in 10 organisations (7.3%), targets for procurement are not sufficiently set.
Figure 7: WHICH OF THE FOLLOWING TARGET(S) OR OBJECTIVE(S) ARE FORMALLY SET FOR THE PROCUREMENT AND SUPPLY CHAIN FUNCTION IN YOUR ORGANISATION?
Increase the adoption of technology internal stakeholders of your organisation Improve the role of the procurement and supply chain function in the organisation Improve the capabilities and knowledge in procurement management Cost savings Source products and services at the right price Improve the procurement management practices and methods Improve the degree of collaborationwith suppliers Provide high quality service to the
87.2%
71.6%
67%
51.4%
44%
40.4%
33%
29.4%
Other Targets are not well or formally set Mitigate risk in the supply chain
28.4%
7.3%
5.5%
0
10%
20% 30% 40% 50%
60%
90%
70% 80%
For a lot of organisations, cost savings are equally important to quality and the impact that the purchased products and services have on the end customer. Showcasing the market face of procurement and the fact that it can have a direct effect on sales and end-customer satisfaction, the procurement and supply chain manager of a retail organisation noted that “ a main target of our function is to procure products and services that are not only acceptable by the internal stakeholders but the end customers as well ”. Improving the role and positioning of procurement is a target for 40.4% of our sample but, based on the discussions during the workshops, we believe this is undermined in the survey results. The majority of workshop participants described how their job has attracted a lot of attention recently and how the economic downturn has raised their profile in the organisation. The head of procurement at a consumer electronics company argued: “ I t is now time for procurement professionals to show the value of procurement. ” One finding that has surprised us was the fact that management of risks in the supply chain was mentioned by less than a third of organisations (28.4%). This suggests either that organisations do not feel they are threatened by potentially disruptive events, which may be dangerous in the current volatile environment, or that risk mitigation targets are difficult to measure and therefore not formally set.
What gets measured gets managed (and done) The value of setting formal targets is only realised when performance against these targets
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