Global Procurement & Strategic Sourcing Data Survey

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1 Global Procurement & Strategic Sourcing Data Survey Facts & Analysis 2015 Consero Group. Reproduction Prohibited.

2 INTRODUCTION Global Procurement & Strategic Sourcing Data Survey The need for efficient sourcing of goods and services for today s global businesses has made the role of the Chief Procurement Officer more important than ever before. The CPO is faced not only with supplier and spend-management issues, but intensifying needs to tackle commodity risk and talent acquisition. Today s CPOs are increasingly influential in corporate management and critical to sustained growth. Survey Structure And Methodology The 2015 Global Procurement & Strategic Sourcing Data Survey was developed in connection with an invitation-only event hosted by Consero Group in January 2015 for Chief Procurement Officers from Fortune 1000 companies. While the survey was limited to 55 participants, the findings provide valuable insight into the challenges and opportunities presented to this group of senior corporate executives. Table Of Contents 3 Budget & Resources 4 5 Procurement Operations 6 Metrics In Supplier Management 9 Conclusion 10 Consero Consero Group. Reproduction Prohibited.

3 BUDGET & RESOURCES Procurement executives require access to substantial budgetary and talent support in order to execute their function in an effective manner. Unfortunately, about two-thirds of Chief Procurement Officers surveyed do not feel as though they have enough access to resources necessary to manage their operations effectively. However, there is reason for optimism, as 53% of respondents experienced an increase in departmental budget in the past 12 months. With regards to human resources, 72% of those surveyed do not see a sufficient pool of trained procurement talent available to support their hiring needs. For this reason, training current talent to meet the needs of the department is likely to be a main priority for Procurement executives in Figure 1: How has your departmental budget changed over the last 12 months? Increased 53% Decreased 23% Did not change 24% Figure 2: Is there a sufficient pool of trained procurement talent available to support your hiring needs? Yes 28% 72% Figure 3: Do you have enough resources to manage your procurement operations effectively? Yes 36% 64% Consero Group. Reproduction Prohibited.

4 PROCUREMENT OPERATIONS When asked about their priorities for the next 12 months, 40% of surveyed Procurement leaders placed cost reduction at the top, followed by spend analytics at 30%, and consolidating supplier base at 29%. On a positive note, close to half (49%) of CPOs achieved tangible cost reduction through the use of a sustainability program. This compares well to Consero s 2014 Procurement & Strategic Sourcing Survey, in which only 33% of respondents fell into this category. When assessing areas of risk facing their departments, 45% of Chief Procurement Officers named supplier risk as the top category. This is not surprising given the impact of suppliers on the CPO s function. Contract risk and commodity risk are two other main areas of exposure that approximately a quarter of CPOs will be managing this coming year. Figure 4: Have you achieved tangible cost reductions through the use of a sustainability program? Figure 4, In Comparison: 2014 Results Yes 33% 67% Yes 49% 51% Consero Group. Reproduction Prohibited.

5 PROCUREMENT OPERATIONS Figure 5: What are your top priorities for the next 12 months? (Select all that apply.) 45% 40% 35% 30% 25% 20% 15% Cost Reduction 40% Consolidating Supplier Base 29% Talent Management 23% Spend Analytics 30% Other 18% 10% 5% 0% Figure 6: What are your current top areas of risk? (Select all that apply.) 45% Supplier Risk 45% 40% 35% 30% 25% 20% 15% 10% Commodity Risk 24% Foreign Exchange 11% Fraud/Corruption 14% Contract Risk 25% Other 9% 5% 0% Consero Group. Reproduction Prohibited.

6 METRICS IN 2015 Thirty-one percent of CPOs surveyed reported their spend under management to fall in the 76%-100% range, which explains the focus on cost reduction. The survey also found that 70% of Procurement leaders use a procurement dashboard to drive performance in their organization. Interestingly, 63% believe that certain metrics used to evaluate their procurement organization can drive the wrong behavior in their employees. Striking a balance between using performance-driven metrics and maintaining the integrity of the department will be a continuing effort for Chief Procurement Officers in Figure 7: Do you employ the use of a procurement dashboard to measure performance? Yes 70% 30% Figure 8: Do you believe that certain metrics used to evaluate procurement drive the wrong behavior in your organization? Yes 63% 37% Figure 9: What is your percentage 8% 0% 25% of spend under management? 26% 50% 41% 20% 31% 51% 75% 76% 100% Consero Group. Reproduction Prohibited.

7 SUPPLIER MANAGEMENT A vital component of the duties of Chief Procurement Officers is building, maintaining, and improving company-supplier relationships. Fortunately, nearly three quarters of CPOs surveyed reported having a better relationship with their principal suppliers than they did 12 months ago. In recent years, there has been a growing demand for socially responsible corporate strategy. However, in order to implement such a strategy, Chief Procurement Officers may well need buy-in from suppliers. Of those surveyed, less than half perceived support from suppliers in meeting these demands. However, a majority (58%) of surveyed CPOs anticipate more supplier-driven innovation in the next 12 months, and 42% of respondents noted an increase in their number of suppliers over the past year. Figure 10: Do you have a better relationship with your key suppliers than you did 12 months ago? Yes 71% 29% Figure 11: Do your suppliers support the demands of your corporate social responsibility strategy? Yes 45% 24% t applicable 31% Consero Group. Reproduction Prohibited.

8 SUPPLIER MANAGEMENT Figure 12: How has the number of your suppliers changed over the last 12 months? Did not change 16% Increased 42% Decreased 42% Figure 13: Do you anticipate more or less supplier-driven innovation in the next 12 months? change 18% Less 24% More 58% Consero Group. Reproduction Prohibited.

9 CONCLUSION Lessons For The Industry CPOs have a variety of challenges ahead, and their decisions will play a significant role in determining the success of their companies. Based on the survey data above, CPOs will most likely focus their 2015 efforts on cost-reduction strategies and both talent acquisition and retention, in addition to continuing to improve supplier relationships. However, in order for these executives to achieve their goals, corporations will need to do a better job of arming CPOs with the resources necessary to get the job done Consero Group. Reproduction Prohibited.

10 How Is Consero Different From Other Conference Companies? Branded as the anti-conference company 1, Consero improves the traditional model for conferences and trade shows in several important ways. Exclusivity, Intimacy, and Commonality. Consero puts its network of senior executives first. Unlike other conferences, a Consero Forum brings together executives with common levels of experience and seniority, as well as similar business challenges. This ensures optimal networking and collaborative development of best business practices. Original Content and Thought Leadership. Consero views its events as a means to an end solving business problems. Consero prides itself on generating useful, original content that yields takeaways to help participants improve their own performance, as well as that of their departments and organizations. By permitting its programs to evolve until the Forum takes place, Consero can integrate the most current significant industry developments into the solutions that emerge from the Forum. This focus on world-class content is an important differentiator for Consero. Requesting Access To Consero Events Or Consero Connect. All Consero events, from our signature three-day Forums to our single-day Roundtable programs, are by invitation-only. To request an invitation to a particular program, or to obtain information about joining our Consero Connect membership service, please contact us at 1 Gonsalves, Antone. Consero Takes Aim at Bored C-Suiters with Its Anti-Conferences. Bloomberg. Jan. 28, < Jan. 28, Consero Group. Reproduction Prohibited.

11 Opportunities To Participate at Future Consero Forums may be available on a limited basis. Please contact our team for additional information. Consero Group consero.com United States 4915 St. Elmo Ave., Ste. 100 Bethesda, MD Tel (202) Republic of Ireland 5 Fitzwilliam Square East Suite LG1, Dublin 2 Tel +353 (0)

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