THE FACULTY QUARTERLY
MARCH 2016

Cost remains king! The Faculty is excited to announce the completion of its 2015 Roundtable Benchmarking project.

Benchmarking provides participants with invaluable data over 50 practice areas that shows where they are leading their peer-group, and where there is an opportunity for improvement. CPOs then use the report findings to support their business case for investment in a number of areas, ranging from team capability training to IT systems.

Dr Hugo Britt, Research Consultant at The Faculty, says the benchmarking peer-group has set a high standard for Procurement in Australia: “Over the past eight months we’ve deep-dived into the procurement functions of a high-powered group of Australia’s leading organisations. We’ve been gathering data, interviewing team members and business stakeholders. The benchmarked results are very valuable for participating CPOs at the organisational level, but perhaps more importantly, we’ve identified 10 key trends that provide a ‘state of the nation’ for procurement in the region.”

Ten key trends from The Faculty’s Roundtable Benchmarking review:

1. Expanding Influence: Procurement functions continue to grow influence within their wider organisations, with an average managed spend of 73% in 2015, up from 68% in 2011.

2. Savings up: On average, procurement teams have achieved annualised cost savings of 6% of managed spend for 2015, up from 3% in 2011.

3. Strategic roles: Only 15% of procurement roles are described as administrative and supporting, reflecting the increasingly strategic nature of procurement and the subsequent need for professional and managerial-level Full Time Equivalents (FTEs).

4. Increased P2P automation: The adoption of P2P automation has increased hand-in-hand with the decrease in the number of administrative and clerical procurement roles. This trend is expected to continue with the ongoing emergence of new automation-enabling technology.

5. Training investment down: Organisations are spending less on procurement team training, with $2,455 per FTE in 2015, down from $3,500 per FTE in 2011.

6. Cost remains king: Creating a cost-conscious culture has been consistently rated as the top focus of senior management in a challenging economic climate.

7. Systems not supported by training: Organisations are investing heavily in ERP systems, but are failing to properly configure the systems to meet organisational needs and to provide the necessary level of associated training for procurement team and end-users.

8. Poor communication: Communication from procurement to business stakeholders has generally been described as insufficient or ad-hoc. This negatively impacts the perception of procurement’s value proposition, stakeholder collaboration, and contributes to the existing silo-mentality.

9. Low focus on environment: Interviewees report that environmental sustainability is a very low area of focus, and is rarely discussed as part of the sourcing process. CPOs should ensure their targets align to the enterprise-wide commitment to environmental sustainability and build processes, policies and KPIs to facilitate this alignment.

10. Industry-specific knowledge lacking: Technical procurement skills such as tendering and negotiation are regarded as strong across the peer group, however, business stakeholders report that category managers’ technical knowledge of industry-specific tools and requirements is often lacking.

The Faculty benchmarking report contains the most up-to-date benchmarking data in the region. Please contact The Faculty on +61 9654 4900 or email enquiries@thefaculty.com.au to enquire about Benchmarking for your organisation.

The Faculty Roundtable comprises of an influential group of procurement leaders who gather to share their experiences and insights, to achieve greater commercial success for their organisations. Through The Roundtable, members have access to leading-edge thought leadership and commentators, a ready supply of valuable expertise through exclusive market intelligence, as well as networking and professional development opportunities for themselves and their team members.

The Asia-Pacific CPO Forum is the region’s premier procurement event dedicated to accelerating commercial leadership at the highest level. It is a once-a-year opportunity for leading Chief Procurement Officers to engage with peers and like-minded business leaders in an intimate and interactive setting. The Forum is designed for delegates to facilitate the sharing of best practice strategies, develop innovative and responsive procurement approaches, and hear from a compelling speaker line-up of influential thinkers, eminent business leaders and commercially creative minds.

In 2016, The 9th Annual Asia-Pacific CPO Forum will held on 18th and 19th May in Melbourne, Australia. For more information contact Program Manager, Belinda Toohey, on +61 3 9654 4900 or via email.​