STUDY: IBM release comprehensive procurement results
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IBM has announced the results of a new study that finds top performing procurement organisations are expanding their purview to drive company-wide innovation and top line growth. This is as opposed to confining themselves to their traditional roles as the gatekeepers of corporate spending.
According to the study, top procurement organisations are nearly twice as likely to introduce new innovations into the company and 1.5 times more likely to have influenced senior leadership to enter a new market than their lower performing counterparts.
Conducted by the IBM Institute of Business Value (IBV), the Chief Procurement Officer Study reveals how Chief Procurement Officers (CPOs) are actively reshaping their roles in the leadership suite to provide a positive impact on the growth and maturation of their company.
Over 1,000 senior procurement leaders from $1 billion-plus companies in 41 countries contributed to the study – one of the largest and most comprehensive of its kind.
While the last CPO study reflected the desire of procurement organisations to gain influence in the c-suite and the connection between procurement performance and enterprise value, this year’s study goes one step deeper by focusing on how top CPOs are actively reshaping their responsibilities beyond cost control processes and into a higher level of strategic advising. These top CPOs are driving enterprise agendas through three common initiatives:
- Focusing on the broader goals of the company, not just the procurement function
Top procurement companies are setting their sights beyond mastering the procurement basics and towards driving the vision of the enterprise at large. For example, the study found that top CPOs are nearly twice as likely to focus on driving revenue growth and competitive advantage rather than their lower performing counterparts.
- Serving as a conduit for innovation from strategic partners
When it comes to working with partners, customers and suppliers, top procurement organisations go beyond the tactical aspects of transaction support. The study showed that 92 percent of high performing procurement officers feel they can add value to external stakeholder relationships as opposed to 68 percent of underperformers.
To that end, 52 percent of high performing CPOs have leveraged suppliers to co-develop new technologies for the business versus 39 percent of lower performing CPOs. Top procurement organisations strive to engage with internal stakeholders as well as understand the needs of the end customers to gain a full picture of the business ecosystem.
- Embracing advanced technology to drive higher value results
High performing procurement firms are deploying advanced data-driven tools to make more informed procurement decisions. For example, 41 percent of top CPOs have integrated advanced analytics capabilities into their procurement organization compared to just 16 percent of lower performing CPOs. These top CPOs are also more focused on social collaboration, talent development and automating basic processes as a means to help advance the procurement function.
Terrence Curley, Director of Strategic Supply Management at IBM, said “The most advanced CPOs are proving that focusing on the nuts and bolts of procurement processes is not enough to bring real value to the business.
“True procurement leaders who see the bigger picture can use their unique vantage point in the organisation to drive innovation, grow revenues and expand competitive advantage. The results of this study can serve as a road map for all CPOs to follow who want to provide a real impact on the future of their company.”
To access the full results of the study, listen to the webinar and download an IBM infographic, visit http://ibm.com/business/value/chief-procurement-officer
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”