For three out of every four companies, procurement operations are a high priority. That’s the good news.

At the same time, about half of the execs responding to the same survey that yielded that stat say procurement at their companies focuses too much on cost prevention, instead of generating value.

The role of procurement is difficult to get a fix on against a background of complex issues and challenges, according to KPMG LLP, the audit, tax and advisory company that sponsored the survey. Cost reduction is only one of those issues.

Other issues include:

• tightening economy
• rising/fluctuating prices, and
• the increasing influence of the global economy.

One of the most direct ways to streamline procurement and increase efficiency is by implementing more computer/Internet solutions, like e-procurement and e-sourcing.

Taking a strategic and integrated approach, the survey said, can reduce procurement costs while improving efficiency.

Probably the biggest barrier to effective company wide integration: at 42% of companies surveyed, procurement was part of Operations. Meanwhile, 38% of companies put procurement under Finance.

If there ever was a major incentive for opening doors and improving communication between Operations and Finance, this should be it. 

Tags: finance, operations, procurement