Centralization and the Development of Direct Procurement

brought to you by WBR Insights

Procurement's transition to an empowered, centralized function is mostly complete. Now, CPOs are poised to help deliver value across the organization, finds a recent study from WBR Insights in partnership with ProcureCon.

While in the past, a decentralized approach to procurement may have been a tolerated strategy, today the majority of organizations have recognized that procurement is most effective when given the power to consolidate spending across the organization under their umbrella. Leveraging economies of scale allows procurement to deliver the full weight of the organization within each negotiation, as well as eliminate as much extraneous spending as possible that would otherwise not be optimized.

The progress of the procurement department towards centralization has unlocked the ability to become more strategic, making choices that can help yield value across the organization. Here again, the majority (69%) of procurement leaders have either transitioned away from a tactical focus to a strategic focus, or are on pace with their transitions (22%).

The importance of driving innovation through sourcing new suppliers also opens the door for potential risks, something that procurement leaders are deeply attuned to.

In a climate of rapid technology change and the need to compete within a global economy, sourcing innovative and reliable suppliers is one of the key ways that procurement leadership can bring value to their organizations. That stated, it's also the area of risk that has them most concerned, ahead of global trade challenges and risks presented by climate events.

While making strategic gains, procurement must ultimately be able to translate the fruit of their efforts into tangible value to their key stakeholders. The majority have been highly successful in this regard.

Procurement's continued ascendency is contingent on being able to communicate the value that they are creating. Without the ability to speak the same language as key-stakeholders, that becomes a fraught idea. Fortunately, 77% of procurement leadership feel that they have been able to develop a reliable foundation of communications that can propel them forward in their missions.

These statistics, gathered in ProcureCon Direct's latest benchmarking survey, indicate that the stage is set for the procurement department to take a leading role in strategic discussions that will define the trajectories of their organizations. For the full survey results, look out for ProcureCon's next research study, coming soon to our content center!

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