Critical procurement barriers holding back UK businesses
Survey of FDs blames short term perspectives and lack of discussions
By CFOWorld.co.uk staff | CFO UK | Published 12:09, 14 January 13
Companies in the UK and Ireland are battling a host of finance and procurement barriers according to a recent survey conducted by Expense Reduction Analysts (ERA).
In its survey, of 100 financial directors from companies with revenues between £10 million and £500 million in the UK and Ireland, the strategic procurement consultancy found that FDs are struggling to master the delicate balance between cutting and managing current costs, and investing for the future.
Nearly 77 percent of respondents said they only consider the short term picture and immediately default to a defensive cost-cutting mentality in times of austerity. Furthermore, only 4 percent said they planned to increase research and development spending on new products and services in the coming years.
The ERA survey also found a lack of procurement understanding at board level with 46 percent of the companies surveyed stating that their company discussed procurement at board level only once a year or never.
Furthermore, 4 out of 5 organisations did not have a specialist procurement team or individual. Some 52 percent of FDs surveyed felt that employees suffer from a lack of time, experience and energy when it comes to securing the best supplier deals. Only 1 in 10 respondents felt employees had excellent attitudes to procurement.
More than 1 in 3 FDs said they leave procurement responsibility to individual departments. But 58 percent of respondents stated that some departments have resisted efforts to establish professional procurement practices.
Additionally 57 percent felt some departments believed procurement was hindering the effectiveness of their department for the sake of cost cutting. Elsewhere in the study, ERA found that only 21 percent of FDs surveyed viewed their suppliers as strategic partners.
Rob Allison, managing director of ERA, said, "Organisations must start thinking long term instead of short term. Cutting costs may keep businesses afloat temporarily, but it won’t enable them to compete long term."
"A smarter spending strategy, combining effective cost control and development for innovation and investment is the only way businesses will be able to successfully ride this storm," he added.
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