CONCLUSIONS We carried out our research during a period when all businesses in Greece have been affected by the economic downturn. In this environment of uncertainty, diminishing revenues and the quest for hard cash, the often overlooked function of procurement and supply chain is now being asked to step up its business contribution and play a greater role in helping organisations to overcome the crisis.
Management of spend One positive from the economic crisis is that it has forced organisations to be more efficient in their spend management practices. The majority of organisations report regularly on third-party spend and have put in place programmes to deliver cost savings. We do, however, see opportunities that seem to be missed by some organisations, such as challenging internal demand, running strategic sourcing projects and using eSourcing tools. Contract management is a question We were somewhat surprised by the survey results on contract management. These suggest that Greek organisations are outperforming leading global companies that we typically work with in the area of contract management. We thought that the performance of Greek organisations might be overstated in the survey and so we raised this issue with participants at the workshops. There was a consensus that organisations in Greece are typically not as good at managing contracts as the survey results indicate and that there is a lot of room for improvement in this area. Our experience shows that organisations typically believe they are good at contracts management when in fact they are not. Suppliers at arm’s length Throughout this report, we have noted that organisations tend to keep their suppliers at arm’s length, rather than seeking to develop partnership relationships with at least their top-tier suppliers. Specifically, less than one in 10 organisations seek feedback from their suppliers about the performance of procurement functions, and about the same proportion conduct a 360-degree (two- way) feedback assessment with key suppliers. Additionally, communication with suppliers is focused mostly on operational topics (e.g. demand and forecast data, market information and
New business landscape More than eight out of 10 respondents said there are risks in their supply chains. Most of our workshop participants said that the once agreed payment terms are not used and suppliers require payment prior to, or at the point of, delivering products or services. And more than 60% of respondents are concerned about the likelihood of their suppliers’ financial failure. Additionally, pressure for cost savings has increased and there is a stronger requirement for rigorous procurement processes and improving the capabilities of procurement and supply chain teams. Of course, these are not new issues but there is no doubt that they have been amplified during the past few years and are now having a greater impact on companies’ operations. Positioning of procurement One of the highlights of this study and the subsequent workshops was the commitment of procurement practitioners not to squander the opportunity presented to them – namely, to leverage their supply chains and position procurement as a strategic function within their organisations. The procurement manager of one large Greek bank commented that “ the bank is now investing in procurement, as it has understood the benefits it can bring to the organisation ”. One of the reported challenges in the survey has been the difficulty in measuring the benefits delivered by procurement and supply chain functions – a situation that can hinder the effort to promote the function internally and position it at the heart of the organisation. Risk Management Risk management has been a weak area for the majority of organisations that participated in the survey. While they all appear to appreciate how risky the current business environment is, we have noted a relatively low adoption of processes and initiatives to mitigate these risks. We appreciate that risk management is easier to talk about than to put into practice, but we think that organisations need to start being more proactive in the way they manage potential risks within their supply chains.
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