Does Purchasing Have a Seat at the Big Table?

Approximately 70% of a manufacturing companies’ revenue is spent with third party suppliers.  The importance of the strategic management of that spend, across the entire purchasing lifecycle, cannot be overstated in terms of its impact on an organizations financial success.

But despite that imperative, do we, as purchasing leaders and professionals, have a seat at the big table?

The CPO answer is often a resounding “yes”.  In fact, Deloitte’s 2016 CPO Survey, published just a couple of weeks ago, found that CPO’s of manufacturing companies are twice as likely as their peers to sit at board level, and are also more likely to play a role in corporate decision making.

In the course of our daily discussions with clients and prospects, we hear many manufacturing CPO’s explain that they are struggling to gain influence with the c-suite.  We wanted to understand the other side of the table and so we recently surveyed CEO’s from a cross section of manufacturing firms to get their perspective.  We were alarmed by the result:

58% of CEO’s believe that Purchasing does not create value that drops to the bottom line.

When we took a step back and looked at the differences between the purchasing teams of those CEO’s who do believe that value is created vs. those that do not, we started to see some trends.

We identified six leading characteristics that differentiated those companies where Purchasing has become a competitive advantage.  For example, those purchasing groups that focus on building trust based, collaborative, and open book relationships with their most strategic supplier partners are far more likely to achieve the benefits of being a customer of choice than their competitors.

Find the Deloitte 2016 CPO Survey here.

If you are interested in understanding more, please contact me or a member of the APD team at contact@apurchasingd.com.

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