Webinar Notes: US Fortune 100 Procurement Practices from TradingPartners
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The research as presented by Philip Brown, TradingPartners’ Managing Director of North America, was conducted by analyzing publicly available information on Fortune 100 companies from 2010.
Here are some of the most interesting findings from their research:
- Only 4 have a Chief Procurement Officer (Caterpillar, DuPont, Marathon Oil Corporation, and PepsiCo), but 31 have a VP level Procurement executive
- Spend Management is a publicly-stated key strategic objective for 47% of the CEO’s
- 39% of the companies have a better-than-average EBITDA than their industry’s average, and of those 21% (or 8) have board members with procurement or supply chain backgrounds but only 5% (or 2) have CPOs
Most companies would agree that it is important to have the right People, Processes and Technology (or Platform) behind their supply management initiatives. And yet, at TradingPartners’ CPO Innovation Forum in October 2011, HR recruiters commented that knowledge of sourcing tools is rarely a factor in hiring decisions, ultimately hurting utilization once they are hired.
When asked what trends they observed in the Fortune 100 around spend management tools, TradingPartners responded that they saw companies moving beyond sourcing execution. Instead, they are looking for help deciding what to source – taking a higher level perspective on their own spend. Increased focus on sustainability and emerging markets are pushing companies beyond their traditional methods and sources. While most sustainability initiatives originate with stakeholder concerns, they may ultimately result in lower costs and shorter lead times when local suppliers are used. Despite the potential benefits, both direct and intangible, there are business continuity concerns that should be addressed and monitored based on the size of the supplier.
When BMP connected with Philip after the event, he offered this additional suggestion as to how non-Fortune 100 companies can use the information from the study to gain a competitive advantage, “It was surprising that only 47 CEO’s of the Fortune 100 companies mentioned spend management as a publically stated strategic initiative but that 78 of the companies had advanced sourcing tools. For those organizations outside of the Fortune 100 that do not have advanced sourcing tools, there is an opportunity for them to seize on this apparent lack of usage and invest in spend management reduction programs by utilizing sourcing tools with managed sourcing services to improve margins and sustainability efforts at the same time.”
The research did not undercover much official use of social media by the Fortune 100’s procurement and supply chain groups, although some participated in closed environments such as supplier networks.
The Fortune 500
The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks the top 500 U.S. closely held and public corporations as ranked by their gross revenue after adjustments made by Fortune to exclude the impact of excise taxes companies collect.The list includes publicly and privately-held companies for which revenues are publicly available. The first Fortune 500 list was published in 1955. (Wikipedia, Fortune 500)
EBITDA = Earnings before interest, taxes, depreciation and amortization
Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business)is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby businesses monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. (Wikipedia, Corporate Social Responsibility)