The State of the Union - Insights from Quantitative Procurement Benchmarking

The Faculty developed on behalf of its Procurement Roundtable the benchmarking framework and tool below to allow members to quantitatively compare their procurement inputs, processes and outputs, and over time, provide trend analysis on the identified benchmarks that would support the development and implementation of effective improvement strategies. The three key subject areas of Impact, Execution and Enablers provided the structure for the benchmarking project. After several years of implementation the model has demonstrated its value and structural rigour. 

The 2011 research sample consisted of twelve Faculty Roundtable member organisations that included a combined annual spend of almost $14 billion across more than 1,740 staff, with a total procurement staff of 568. The research covered a broad range of industries including Manufacturing, Heavy Industry, Resources, Government and Financial Services, and provides a unique and valuable insight into the state of Procurement within Australia.

Key statistics:

  • Managed spend ranged from 40% - 100% with an average of 74%
  • Realised savings of managed spend had a distribution from 1.6% to 5.6%.

Key findings

‘The greater the investment in resources, the greater the savings achieved on managed spend’.  The Roundtable members were delivering an average of 3.5% cost savings, however the full extent of benefits delivered was not measured. These included product and service innovation driven by supplier relationships and internal process improvements.  

Procurement has achieved significant influence at senior levels to date for members.  Meanwhile the move to the ‘professionalisation’ of procurement has continued with mixed success. As a result, the balance of operational versus managerial and strategic staff varied considerably across member organisations.

With only 37% of organisations using their ERP system spend data without any further manipulation it became clear that the complete P2P process and the integration with other business functions and systems was a critical area for improvement.

Finally, an increased focus on managing suppliers and risk was a key issue amongst all contributors.

To request a full version of the The State of the Union - Insights from Quantitative Procurement Benchmaking, please email The Faculty