Procurement at the Tipping Point?

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At Emptoris Empower Europe, CPOs Report That Global Growth, Volatility and Risk Are Putting Procurement Center Stage

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“In procurement, the status quo no longer meets the demands of the business. New challenges require new solutions," said Eric Allen, EMEA, Emptoris, Inc.

Procurement organisations are at the “Tipping Point” – gaining critical influence within their organisations as corporations are grappling with the complexities of global growth, volatility and risk – all areas where Procurement plays a significant role in achieving corporate objectives. This was one of the key themes that emerged in presentations and discussions by the more than 120 Global 1000 executives and consultants who gathered in Barcelona for Emptoris Empower Europe.

“In procurement, the status quo no longer meets the demands of the business,” said Eric Allen, senior vice president and general manager, EMEA, Emptoris, Inc. “New challenges require new solutions. As companies increasingly focus on managing issues related to global growth, volatility and risk, procurement organizations must adapt and evolve. While there are significant challenges to address, there is also opportunity for procurement to define and expand its strategic value to the organisation.”

Many of the keynote sessions at the Emptoris Empower Europe conference examined how procurement organisations are becoming of increasing strategic value to their companies. The consensus was that while cost savings is still a top priority, procurement must now support broader corporate objectives, particularly in terms of global growth and innovation. Executives also reported a growing recognition of the critical role of procurement in mitigating volatility and risk, and in managing compliance, as those challenges rise to the top of corporate agendas.

In his keynote address, Mark Edwards, procurement development manager for BP Castrol, discussed the procurement transformation within that global organisation and said there was “a need to challenge and change the traditionally held view that procurement is only about delivering back Euros.” Edwards said that an expanded role for procurement can be challenging because the organisation must transform, while at the same time continuing to “deliver savings across the whole value chain.” However, he said that an expanded role for procurement was an imperative for organisations that wanted to remain globally competitive.

Professor Andrew Cox, one of the founders of the International Institute for Advanced Purchasing and Supply (IIAPS), provided the opening keynote address for the conference, and examined the changing role of procurement at the global organisation. He said that successful companies had a “fully mandated procurement function” – one that was empowered by the leadership of the company. He further outlined the “pillars required for a world-class procurement and supply organisation.” Those pillars centered around best-in-class processes, people and technologies – all of which Cox said must be measured to ensure high performance.

“The problem is you don’t know what you don’t know. There is always room for improvement and expansion of the value proposition for the procurement organisation at global companies. However, you need the data and intelligence to know where you’re performing well and where you’re falling short,” said Professor Cox.

Intelligence – whether market, supplier, spend or best practice intelligence – was also a repeated theme at the event. The assembled executives emphasized that the right intelligence and data, readily accessible, was critical to making the right decisions at the most impactful time. The consensus was that such intelligence is essential for managing growth, enforcing compliance, and mitigating volatility and risk – and thus enabling the strategic position of Procurement in driving best value for the company.

Patrick D. Quirk, president and chief executive officer, touched on an “intelligence – decision – value” theme in his keynote address, “Business intelligence is a significant competitive advantage for companies. It enables optimal decision making – and delivers impactful business results across the board. The challenge, however, lies in ensuring that your business intelligence is accessible, accurate and actionable. Technology is essential to achieving this business intelligence.”

Quirk noted that companies are often “surrounded by a sea of data” –but that data is located in disperse systems and not easily accessible nor easily consumable: “There are companies with twenty plus ERP systems, but no real-time spend visibility. There are companies with subscriptions to dozens of supplier and business information services, but they are still blind to supplier risks. There are companies that spend millions creating and negotiating optimal contracts, but then don’t enforce compliance to the terms of those contracts. These are common problems at global companies – all of which can be significantly improved or solved with actionable business intelligence.”

Emptoris’ Empower conferences are designed to offer companies best-in-class strategies and practices to accelerate business results –and address the complexities of spend, risk and compliance management. Accenture, Anglo American, Agenor International, BP Castrol, Novartis and L’Oreal were among the companies sharing best practices at the Emptoris Empower Europe 2011 conference.

The Emptoris Empower International Conference will take place from October 18th to 20th, 2011 at the Westin Copley Place in the heart of Boston’s historic Back Bay.

About Emptoris
Emptoris is a world leader in strategic supply, category spend, and enterprise contract management that empower enterprises to realize best value and accelerate profitable growth. Emptoris solutions are used by successful Global 1000 companies in every industry, and customers include American Express, Boeing, GlaxoSmithKline, Kraft, Motorola, Syngenta and Vodafone. For further information, visit http://www.emptoris.com.

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Dan Cahill
Emptoris
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