A new report by Vertice argues that just 18% of businesses have the budget and mandate to “optimise” their procurement processes.

Optimising your procurement process could support innovation and reduce time to market. However, just one-in-six businesses are providing the necessary tools, funding, and support to optimise their procurement, according to a new report by procurement SaaS provider Vertice

“Clear correlation” between procurement maturity and overall commercial performance

Vertice’s study surveyed 300 global procurement leaders, asking them to rate their business’ purchasing processes and also their business performance across 8 key metrics. These ranged from cost control and budgeting to the ability to maintain compliance. According to the report, a clear correlation emerged between businesses with a mature procurement function and those with a healthier overall commercial performance. 

Of course, there’s a possibility that a number of other factors that contribute to a business’ success could also be at play, and that those factors could also encourage investment in better procurement processes, rather than better procurement being the root cause. Investment in procurement is not a guarantee of overall business improvement. 

The problem is reportedly worse in the US than the UK, where Vertice’s report found that almost half of businesses (44%) are in the lowest maturity levels, in comparison to the UK where two-thirds of businesses (67%) are in the more advanced stages of procurement maturity with more reliance on automation, AI and integrations.

Procurement underappreciated in the “race to innovate” 

Just under 40% of procurement leaders blamed their struggles to evolve and improve on the overall business’ “poor perception of procurement’s strategic value.” Vertice’s research identified what they call a “procurement innovation gap”, where companies who have invested the most heavily in advanced procurement capabilities are also the fastest to innovate. 

These companies are seizing the competitive advantage by being 32% more able to implement new initiatives and 29% faster in bringing new products and services to market. Not only that, but the more mature a procurement organisation is, the better prepared it is to tackle complexities and disruption.

Businesses with the most mature departments were found to be faster to put innovation into practice than other companies, but only 1 in 6 businesses have reached this level. Meanwhile the remaining 82% of businesses — whose procurement teams rely instead on decentralised, reactive and manual procurement processes — all perform worse. By comparison, companies with the most advanced purchasing were found to experience a 27% jump in efficiency and ease of collaboration, a 22% improvement in budget control, and a 20% increase in an business’ ability to maintain IT and security compliance.

“Procurement is an important catalyst to business innovation; the secret weapon that often goes unnoticed. Quick, intelligent, integrated processes can equip teams faster, with safe and compliant tools, accelerating overall project timelines. But most procurement departments have been unable to mature their outdated, manual processes, throttling the business’ progress and reinforcing an unnecessary negative perception,” said Eldar Tuvey, CEO and founder of Vertice

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