Procurement skill and understanding is limited and undervalued in UK businesses, a new survey has found.
A report published by specialist procurement advisory network Expense Reduction Analysts (ERA) found that 77% of survey respondents took a short term view when it came to spending strategies and focussed on a “defensive” cost-cutting approach rather than smarter procurement.
The Smarter Spending for Business report, based on the responses of 100 financial directors of UK businesses with annual revenues of between £10m to £500m, found that 46% of the businesses, which include manufacturing, communications and advertising firms, discussed procurement at board level only once a year or never. Additionally 80% said that their company did not have a dedicated procurement person or team and almost 60% said that while some departments were responsible for their own spending strategies, they had resisted overall attempts by the company to implement more strategic and efficient procurement practices.
The ERA report outlines a series of recommendations that it says businesses must implement if they are to survive and grow in the current economic landscape. Businesses are advised to embed spending strategies into their companies from the board right down to the shop floor so that employees at all levels understand what the company is trying to achieve. The report also advises companies to ensure that staff who are responsible for procurement fully understand both core and indirect spending strategies and that financial directors are fully informed through effective internal and external reporting.
Keith Copestake, an ERA analyst who specialises in advising on procurement from and by the print industry, said that in his experience the report findings and subsequent advice applied to small and medium businesses in the print industry just as much as they did for large businesses. ”In fact in could be more important because they have little room to manoeuvre as things are getting tougher,” he added. “They must focus not only on how much something is costing them but also what effect cost cutting will have on their clients.
Copestake, who regularly reviews print procurement strategies in commercial firms and supplier spending on consumables, transportation and telecoms, said: “We need to make sure that the procurement side are getting it right and that the printers are achieving their targets,” he added. A major issue, according to Copestake, was that many companies left procurement solely up to their marketing departments, which he said was not necessarily effective. ”Technology is changing so quickly in the print industry and marketing people who are often tasked with procurement really have no understanding of this. They need to understand what print can deliver rather than just looking at how much it costs to put ink on paper,” he said.
Copestake added: “The cost of print has become more competitive as technology has begun to evolve so marketing departments should be getting more for their money in terms of service, not less, but they should certainly not just focus cutting costs.”
Hannah Jordan, Print Week