The journey to value

Transforming procurement to drive the enterprise agenda

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The link between procurement performance and enterprise success is widely accepted and well documented; our 2013 CPO study, found, for example, that companies with high-performing procurement organizations have higher profit margins than companies with underperforming procurement departments. Indeed, while many CPOs have led companies to dramatic increases in revenue or impressive levels of profitability, few are adequately recognized for these achievements. Those CPOs – the ones we call procurement role models – drive top-line revenue, bring innovation into the company and improve competitive advantage. They contribute to overall enterprise success and, as a result, certainly deserve a seat at the corporate leadership table.

To identify procurement operations worthy of such praise, as well as to understand the underpinnings of their success, the IBM Institute for Business Value and Economist Intelligence Unit surveyed 1,023 CPOs from organizations with annual revenue in excess of US$1 billion. We also took a close look at the 100 companies that achieved the most impressive revenue and profit performance relative to their industry peers so that we could understand the strategies and actions that account for their uniquely valuable contributions to the enterprise.

Through our research, we identified three common attributes that separate procurement role models from the pack:

  1. They focus on improving enterprise success, not just procurement performance.
  2. They engage with stakeholders to understand and anticipate their needs and values.
  3. They embrace progressive procurement practices and tools to drive results.

CPOs can take a few simple steps to help ensure their procurement organizations are positioned to become role models and make the most contribution to overall enterprise performance. To explore those steps in detail, download the IBM Institute for Business Value executive report.

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Meet the author

Steve Peterson

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, Global Travel and Transportation Leader, IBM Institute for Business Value

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