Challenges of the mid-market CPO

1 comment January 4th, 2007 David Bush - Iasta

Aberdeen has short research study available which goes into some detail about the effectiveness of supply management and CPOs in the mid-market enterprise (defined as sub $1b turnover). From a technology perspective, mid-market companies heavily favor on-demand technologies due to lower cost points. In the report, these companies adopt e-Sourcing technology at a rate of 37% vs best in class larger companies which stand at 62% utilization.

Among the recommendations for CPOs in the mid-market:

• Adopt key performance indicators for procurement. These include: implemented/realized cost reduction savings; percent of spend under management; cost avoidance; procurement ROI; percent of suppliers which equals 80% of spend.
• Adopt a spend analysis solution.
• Build supplier teams to foster relationships and implement programs to sustain improvements.

All of these recommendations should be available in an e-Sourcing application and allow sourcing teams to build data and track results easily. It is also a good practice whether your company is $500M or $5B in sales.

Entry Filed under: Analysts/Research, General, Technology, e-Sourcing Marketplace