November 28, 2014 | Written by: Matt McGovern
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What kind of Chief Procurement Officer (CPO) gets a seat at the corporate leadership table? According to the IBM Institute for Business Value (IBV) Chief Procurement Officer (CPO) Study, one of the largest known surveys of procurement leaders, the key attributes of leading procurement organizations are that they are capable, influential and innovative.
The study documents a very high correlation between procurement being influential and being successful at other business objectives, including sustainably reducing costs and mitigating risk.
Of course, CPOs intuitively know this – in order to tackle more complex categories, deepen compliance and protect against risks, procurement must build and maintain relationships with other parts of the business. Influence helps procurement integrate more deeply with the business, and thus attain more impactful results.
The IBM IBV CPO study also found a specific strategic area in which successful and influential procurement organizations operate – Corporate Social Responsibility (CSR). Ninety-seven percent of high performing procurement organizations are significantly involved in sustainable and environmentally responsible business initiatives; versus only 61 percent of all companies.
Taking an active role in CSR is part of redefining procurement’s role and value proposition in a new era of business. It is a vehicle which procurement can leverage to move from the traditional “back-office” role to being perceived as a modern, strategic asset for the business.
CSR can also have a tremendous impact on the bottom-line and can create new business value.
Companies with high performing procurement organizations have profit margins 15 percent higher than the average company and 22 percent higher than those of companies with lower performing procurement organizations, according to the IBM IBV CPO study. Another IBM IBV study, which surveyed 250 senior business leaders, found that 68 percent are now utilizing CSR as an opportunity or platform for growth.
The evidence clearly shows CSR’s impact on the bottom line: Harvard Business School researchers found that high-sustainability companies significantly outperform their counterparts over the long term, both in terms of stock market and financial performance.
From a purely procurement perspective, CSR initiatives are reported to have added business value by (1) supporting supplier risk mitigation programs, (2) assisting in the identification of savings opportunities, (3) aiding supplier development and diversity programs, and (4) fostering greater collaboration and innovation with suppliers.
IBM has developed a whitepaper that examines the importance of CSR to procurement and the business – and offer suggestions on how procurement can contribute to achieving corporate CSR objectives. Click the paper, Procurement: Leading the Way in Corporate Social Responsibility to download now. For more information about IBM Emptoris procurement solutions visit http://ibm.com/procurement-solutions.