Procurement Intelligence Unit

Next week, the PIU will launch its newest piece of Executive Research, this time exploring organisational alignment. The idea to focus on this topic was triggered by research that the PIU conducted in late 2009, namely its CPO Strategy 2010: Playing the Full Role report.

The report unpacked the issues facing procurement organisations as they approached 2010. A look at the key priorities for the year, for example, revealed that procurement executives were predominantly concerned with cost reduction, category strategy development and risk management. However, when delving into the key success factors in meeting these agenda items, we learned that "aligning procurement goals with the wider business" emerged on top of the list. This finding, along with the feedback received from our membership, provided fuel to make organisational alignment our next executive research topic. 

The organisational alignment report provides procurement executives with a thorough understanding of the topic, its pitfalls, current trends and, ultimately, offers a toolset that procurement executives can apply to their own unique environments.

We split the report into two parts: Part I is concerned with establishing a theoretical framework of organisational alignment; while Part II is based on the results of a survey that the PIU conducted in March/April of this year. As the lead analyst on the latter, statistical part, I'd like to share some of the exciting findings we uncovered:

• We received a positive response rate of over 200 procurement executives around the world, mostly from large multinational players. Surprisingly - or perhaps not - the vast majority of our sample indicated an exceptionally strong alignment self-perception, which led us to wonder if these procurement organisations are truly that accomplished in alignment or if there were other reasons underpinning this extraordinarily positive picture, such as the inability to truthfully assess alignment performance or the unwillingness to admit weakness.

• We embarked on an exploration to benchmark and assess the current state of play in alignment. Within this context, our leading question became: How accomplished are procurement organisations in aligning themselves up to the Board, vertically to the business units and sideways to their peers? This helped us to gain close to a 360 degree assessment of alignment. Here, we finally came to an understanding of which alignment processes were harder to accomplish than others. One of our key findings showed that cross-functional team alignment is the most challenging area of alignment, with job rotations representing the biggest stumbling block by far.

• Via means of advanced statistical analysis, we then set out to explore specific levels for alignment improvement: what works and helps drive improved alignment across the company? At this state of analysis, my personal focus was drawn to the role CSR (corporate social responsibility) plays as part of organisational alignment. Here, the bad news was the realisation that there is a significant disconnect between procurement and its suppliers in measuring CSR compliance, but reversely, the good news was that certain alignment strategies can help procurement become a vital driver for, and executer of, CSR initiatives across the entire supply chain. Another piece of good news: our report explains how to go about it.

Overall, the survey yielded rich input from our response base, based on which we were able to perform some sophisticated statistical tests such as multiple regression analysis and independent sample t-tests. On a personal note, I am grateful for the opportunity to have worked with some remarkable CPOs on this complex project, all of whom have made this report a rich piece of insight, which will provide guidance on how to make procurement's alignment with the wider organisation more successful.

So watch this space for the published report, The Measures That Matter: Procurement and Business Aligned.