Survey says CEO to take on yet one more direct report
By Staff -- Manufacturing Business Technology, 9/1/2005 12:00:00 AM
A survey by the Economist Intelligence Unit for SAP reveals that purchasing is starting to be viewed as a more strategic function, but "it's still not a fast track for senior management," says Faheem Ahmed, product marketing manager for mySAP SRM.
Because supplier relationship management (SRM) is the fastest-growing part of SAP's business, the enterprise vendor wants to understand what's driving demand.
Conducted from a global sample of 350 executives, more than half of whom were drawn from outside the ranks of purchasing, the SAP survey drew some surprising answers. For instance, 60 percent of those polled expect that throughout the next decade, their organization will institute a chief purchasing officer (CPO) position reporting to the CEO. Nearly half expect procurement, rather than product development or production, to own supplier relationships.
The survey also confirms that existing trends, such as companies consolidating to a small core of strategic suppliers, would intensify during the next decade as manufacturers establish deep networks resembling the Japanese keiretsu (umbrella corporations); or South Korean chaebol (conglomerate) paradigm. These interlocking networks would be managed through nonbinding, long-term contracts. Thus, long-term costs—rather than short-term low bids—would drive the supplier relationships of the future.
According to the report, the CPO of the future will have to do more than wear the traditional green eyeshades. "Their mission won't stop at reducing the cost of buying," says Ahmed. "Their goal will be to drive continuous improvement in the process."
