Under increased pressure to save money, CPOs are being asked to do more with less. With the emergence of ESG and resilience in recent years as top priorities alongside the function’s bread and butter of cost savings, teams must now simultaneously deliver on short- and long-term corporate goals while maintaining the maximum levels of operational efficiency. 

That is no easy task at the best of times, and it has been made more difficult still by the cacophony of crises businesses have endured in the past few years.

By benchmarking leading organisations alongside others, Procurement Leaders’ Strategic Planning Guide 2024 research reveals the measures procurement chiefs can take to ensure their functions perform at the highest possible level.

Advancing strategic procurement

Reflecting the broad range of areas in which CPOs and their teams are being asked to produce results, leaders highlighted cost savings as their top strategic priority for 2024, closely followed by supply resilience and sustainability. 

For procurement teams to have any impact on these areas, they must first maximise the share of company spend under their control, so they can influence decisions concerning specifications, sourcing and supplier selection. 

The report suggests those teams that are able to increase spend under management and, more specifically, the proportion of spend covered by category strategies, can improve their ability to operate with greater efficiency and effectiveness.

Not only did leaders, or those with more than 75% of managed spend covered with category plans, achieve higher savings relative to their peers, they also outperformed the wider sample on procurement ROI and operating costs as a percentage of spend – demonstrating their ability to deliver superior commercial value with increased efficiency (see Figure 1, below).

Leveraging centralised resources

Team and talent management will be central to procurement’s achieving its 2024 objectives, according to respondents. Specifically, teams will become increasingly specialised as leaders increase their investments in new and emerging procurement priorities. This represents the continuation of a shift seen in successive Procurement Leaders research reports in recent years.

While reducing general procurement roles as a percentage of headcount, the suggests leaders will increase the proportion of personnel in specialist data and digital,  risk management and ESG roles. These changes will translate to an average increase next year in the number of staff in shared services and centres of excellence (COEs) to around 13% and 11% of procurement headcount, respectively.

CPOs may wish to consider whether they can increase those figures further, however. The report found those respondent organisations that allocated more than 15% of headcount each to shared services and COEs outperformed their counterparts in cost savings and procurement ROI.

About Procurement Leaders’ Strategic Planning Guide 2024

Procurement Leaders’ Strategic Planning Guide 2024 offers an indispensable guide to CPOs and purchasing executives as they develop their function’s plans for the coming year. Based on survey responses from 200+ senior procurement professionals, the report provides insights into core functional benchmarks, intentions and investment priorities that will help inform leaders’ plans for the year ahead.

This year’s report, the 11^th edition of the study, offers Procurement Leaders members a deep-dive into the steps leading organisations are taking to leverage strategic procurement and shared-resource models to maximise added value while minimising operating costs.

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If you would like to access our flagship reports, case studies and share new ideas and approaches with other leading procurement executives, contact us to find out what membership options we have available.