Capgemini Consulting Research: Recession Wins Procurement a Position on the CEO Agenda, but Challenges to Deliver Value Lie Ahead

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Key findings include:

  • Around 65% of the CPOs and senior Supply Chain leaders surveyed felt that the economy is showing clear signs of recovery from recession, although the mindset has not completely returned to “business as usual”. Over 60% of respondents however confirmed that the Procurement function has emerged from the global economic downturn as a winner, with an improved image within their organization. An additional 20% of respondents went further to state that Procurement is now positioned strategically for future growth. Cost reduction continues to be a major focus area with savings targets increasing as they did in 2009 (over 40% of respondents have savings targets at nearly 10% for 2010). Strategies that Procurement executives are employing to achieve these targets include contract re-negotiation, tighter contract compliance, global sourcing, hedging and moving to outsourced procurement services.
  • However, almost 80% of survey participants responded that top management expected them to improve the overall value contribution of Procurement. There is a clear and emerging focus on strategic initiatives that can enhance the value delivered by Procurement. These strategies include proactive value creation through innovation; contribution to corporate sustainability objectives; developing Capgemini News Alert reciprocity agreements with suppliers; increasing speed to market and a focus on Total Cost of Ownership.
  • Nearly 70% of the respondents indicated that Procurement reports into the board room and another 25% report directly into the CEO. This clearly shows the improved position and importance of the Procurement function within the organization.
  • There is a continued trend towards Centralized Procurement operating models with over 40% of the surveyed companies favoring the centralized model and another 50% favoring a center-led/hybrid model.
  • The amount of organization spend controlled by Procurement has increased slightly compared to last year. For over 70% of the companies surveyed, “spend under control” of Procurement is well above 60%. This trend is attributable to the increasing influence of Procurement on sourcing various nontraditional categories including for instance legal or other professional services.

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About the 2010 CPO Survey
This fourth CPO Survey marks Capgemini Consulting’s continued efforts to understand the trends and issues affecting Procurement executives across the globe and provides peer-based insights for executives on macroeconomic issues and trends across the Procurement profession. Capgemini Consulting has now conducted in excess of 750 interviews over the past four years, with this edition surveying the CPOs and senior Supply Chain leaders of over 150 global companies worldwide. These enterprises, in over 20 countries from Europe, Asia and the Americas, represent a broad cross-section of sectors including manufacturing, financial services, energy, utilities, retail, public sector and telecommunications.

About Capgemini
Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working, the Collaborative Business ExperienceTM. The Group relies on its global delivery model called Rightshore®, which aims to get the right balance of the best talent from multiple locations, working as one team to create and deliver the optimum solution for clients. Present in more than 30 countries, Capgemini reported 2009 global revenues of EUR 8.4 billion and employs 95,000 people worldwide.

Capgemini Consulting is the Global Strategy and Transformation Consulting brand of the Capgemini Group, specializing in advising and supporting organizations in transforming their business, from the development of innovative strategy through to execution, with a consistent focus on sustainable results. Capgemini Consulting proposes to leading companies and governments a fresh approach which uses innovative methods, technology and the talents of over 4,000 consultants worldwide.

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