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The CPO of a leading consumer goods company told us, ‘What is frustrating is that we deliver significant savings, the team is extremely capable, but we are still unknown by the business, which continues to see us as a support function. How can I convince the rest of the company that procurement is a strategic partner?’
There is evidence that the CPO’s concern is justified. Most of our clients face the same perception that reflects a hard truth: in most organizations, procurement is not strategic. The question implicit in the CPO’s comments is ‘but why not?’ Surely procurement’s successes over the past two decades in improving the bottom line should give it access to the C-suite?
Yes and no. Our analysis suggests that for procurement to be perceived as a strategic partner it needs to act like one. This demands that the function should be embedded within the business units and that it should be in a position to help shape the strategic goals of the organization. We estimate that only 20 percent of companies have developed these capabilities in procurement. Those that have exhibit very different characteristics to their less developed peers.