A detailed look at how global organizations perceive procurement's value

1. $
THE CPO’S NEW ROLE
WITHIN THE GLOBAL ORGANIZATON

2. Procurement teams have aligned more comfortably with the
businesses they serve as their mission becomes more widely valued.
A tactical focus on cost reduction used to be CPOs’ modus operandi,
but in recent movements to strategic procurement, they’ve
sidestepped the negative stigma around cutting back and given
other business leaders incentive to cooperate.
For CPOs who have regularly consulted with other executives for a
while, now might be a good time to check in on the perception of
procurement’s value in supporting the larger business strategy.
At ProcureCon Indirect West 2017, a benchmarking survey gathered
the data from 98 executives.
How do global
organizations perceive
procurement’s value?
02

3. “If you’re seen and perceived as a value-add,
your leaders will invest in you. If you’re not,
you’re less likely to get that investment.”
Darren Lynch, VP Consulting, Europe, GEP
03

4. 15%
21%
24%
40%
We advise on business, operations, or go-to-market strategies
We mostly execute in a tactical role – contract support, “order takers”
We’re innovation leaders and promoters of cross-functional collaboration
We mostly own cost control and are judged by our savings
Source: Charting the Technological and Strategic Transformation
of the Procurement Department, ProcureCon, 2018
04
According to the survey’s results, cost control and saving
creation are still the prime factors by which 40% of CPOs
are judged. Another 21% of procurement leaders occupy
a primarily tactical role.
On the other hand, a quarter of respondents have
managed to redefine their roles to focus on high-end
strategic concepts, and 15% are advisors on
developing greater efficiency.
Procurement’s
value relies heavily
on strategic
transformation…

5. Source: Charting the Technological and Strategic Transformation
of the Procurement Department, ProcureCon, 2018
05
The study also asked respondents what
metrics are being used in the C-Suite to
assess procurement’s value.
The prominence of ROI suggests that most
organizations prioritize a simple way of
looking at performance. But with ROI as the
bedrock of value measurement, stronger
forms of analysis—which would naturally be
pursued in more advanced departments—
are also being explored.
…and the
attitude of
the C-Suite.
ROI on
functional cost
vs. P&L savings
EBITDA %
contribution
COGS %
contribution
Third-party
budget %
reduction
SG&A %
contribution
59%
41%
31%
25%
16%

6. 06
“Organizations in which procurement has moved to using a COGS
percentage contribution or SG&A percentage contribution to
evaluate performance are providing much higher value. They have
stood up and defined a value proposition that is broader than a
purely third-party cost and cost-reduction focus.”
Darren Lynch, VP Consulting, Europe, GEP

7. 07
Successful globalization requires commitment and coordination across
the entire organization. But after a long history of enlisting procurement
late in the process, some business units are still in the habit of leaving
CPOs out of strategic decisions.
In these cases, CPOs must up-level the discussion, educating internal
customers about the many benefits of engaging them earlier. This
means demonstrating the tangible value of strategic procurement,
sharing insights for mutual success, and ultimately forging partnerships
that will help all stakeholders reach your brand’s globalization goals.
What if your organization
doesn’t yet support
procurement’s vision?

8. 08
Our recent whitepaper, The Strategic Shift:
Localization’s Fast Track to Driving Greater
Business Value, was written with localization
buyers in mind—but contains a myriad of useful
tips applicable to engaging stakeholders in
strategic procurement.
Alternatively, download the full ProcureCon
CPO Study for more on how CPOs are
aligning their work with larger business goals.

9. About Lionbridge
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