76 % say cutting costs remains the top procurement priority of 2013
60% plan to invest in procurement technology, training or recruitment
Becoming more strategic and a lack of resources present the biggest challenges for procurement organisations
Jonathan Betts, Sales and Marketing Director of Science Warehouse, said: “For the second year running our survey shows that cost reduction remains the number one priority for organisations. This reflects the continued economic uncertainty and on-going government austerity measures affecting investment in both the private and public sectors. Whilst factors such as supply risk and financial control are amongst the important value drivers in procurement, the survey also reveals the challenge that CPOs face in striking the balance between delivery of tactical savings and becoming more strategic. Also, despite the cost drivers, our survey also shows that many businesses have yet to implement simple procurement tools such as procure-to-pay which can deliver quick saving wins and thereby free up resources to drive strategic value creation.”
Cost reduction continues to be the number one priority for many organisations but the survey showed that procurement still has some way to go in achieving its goals – less than half of indirect spend is controlled by procurement in the majority of organisations, (55%) of organisations have less than 40% of spend under management. The survey revealed that there is clear evidence that increasing spend control delivers savings as 84% of respondents said that in their experience up to 20% savings are achieved through improved contract compliance. A lack of investment in the procurement may account for this shortfall as this was rated as the biggest challenge for procurement in 2013 (cited by 27% of those surveyed). Lack of appropriate procurement tools may also be a factor as almost two-thirds of organisations (63%) have yet to implement a procure-to-pay solution.
Whilst cost reduction remains king, a balance needs to be struck between delivering short term savings and driving strategic value over the longer term. 39% of those surveyed identified being seen as a business enabler (rather than a barrier) and becoming more strategic as the biggest challenges for the coming year. People and relationships are also important; talent acquisition and development as well as building relationships across the business are also seen as key (32%). Despite these strategic goals the perennial favourites of computing and office supplies rank as the top two indirect spend categories that will have the highest priority in 2013.
The survey, which covered a wide range of sectors from Manufacturing to Pharmaceuticals and Public Sector, illustrated that procurement is delivering real results with 80 per cent of organisations delivering up to £1 million savings in the last year alone. Public Sector purchasing is increasingly in the spotlight with respondents seeing the Government (32%) and Healthcare (15%) sectors as facing the biggest challenges in procurement in the coming year – this represents a significant shift from last year where manufacturing was seen as the most challenged sector (40%).
Overall, the Science Warehouse results indicate that 2013 will be a year of opportunity for procurement. Our survey covered a broad spread of organisations from those with an indirect spend of under £1 million (42%) to in excess of £10 million (31%). Whilst 60% of responses expect to increase investment in procurement, 35% will be continuing with the same capability as last year and a minority (5%) will see reduced investment. Effective procurement solutions providing good customer service, ease of use and accurate data will be critical in ensuring that projected savings are delivered this year.
For further information please contact Sonia Ali at Science Warehouse, 0333 600 6300, sonia.ali@sci-
Notes to editors
Science Warehouse & eWorld Purchasing and Supply surveyed 263 business professionals in December 2013
About Science Warehouse
Science Warehouse is a leading provider of purpose built on-demand procurement and managed catalogue solutions that deliver purchasing efficiencies and control, spend visibility and drive savings. Science Warehouse help organisations to achieve full procurement control by collating all of their preferred suppliers for indirect goods and services in a single, easy-to-use web-based application. Its fully customisable product suite integrates seamlessly with any finance system and the managed catalogue engine at its core accelerates procure-to-pay programmes. Continuous, customer-driven product development ensures the solution evolves in line with market needs. Science Warehouse counts some of the world’s leading research and teaching organisations amongst its customers as well as businesses of all sizes in sectors as diverse as construction, life sciences and manufacturing. To find out more please visit our website at www.sci-ware.com or join the conversation at www.sci-ware.com/