Grosvenor: Australian procurement teams have significantly grown their maturity
Procurement teams in Australia have significantly grown in their maturity over the past two years, according to a new study by Grosvenor. There remains however a long road ahead for industry-wide excellence.
As one of the consultancy’s three major lines alongside public sector and property advisory, Grosvenor has been conducting its procurement industry study for more than a decade, but notes a big shift over the past 24 months.
According to its latest annual report – dubbed ‘Stronger Together’ – the levels of maturity among Australia’s procurement functions have risen markedly since 2022 across its five bands, which range from foundational to fully integrated.
For example, the number of organisations falling into the least mature ‘foundation’ bracket, which is categorised as ‘informal, disconnected, and unplanned’ with the procurement function primarily administrative and a matter of ‘fire-fighting’, has dropped to just 3% from above 10% two years ago, while a similar number have moved beyond the ‘established’ middle-mark.
The latter refers to procurement functions which are aligned with and understand business needs, demonstrating engagement and early expertise. This figure has fallen from roughly 40% to 30%, with almost one quarter of respondents now sitting in the ‘strategically executed’ bracket above, where they can be seen to be actively adding value to the businesses they service.
According to Grosvenor, this means they are also more likely to achieve greater savings, better customer experience and supplier relationships, and a closer strategic alignment with overall business goals as compared to their lower-ranked counterparts. The next level however remains elusive, with just 5% of those surveyed considered to be ‘fully integrated’ in their maturity.
Here, the researchers examined the differences between highly mature functions and those less so, and found one aspect that clearly stood out: a deep understanding of and strong relationships having been built with the business areas they support. Essentially, this translates to a focus on softer skills rather than technical ones, with growing evidence of their importance in the modern-day setting.
Engaging with the business
In this respect, the survey data showed that among those organisations assessed to be of a medium level of maturity, more than half (53%) reported a deep understanding of the business areas they service, yet only 37% felt their procurement staff had developed strong relationships with those areas. For highly mature functions, both those figures stood at 94%.
The establishment of strong relationships also correlates to stakeholder satisfaction, with 94% of high maturity teams reporting happy stakeholders, compared to 63% overall. The importance here is in its direct impact on effectiveness, as satisfied stakeholders are generally more cooperative and supportive, which can facilitate better procurement outcomes and then drive further maturity improvements.
“This might seem counterintuitive, as many assume the key to being a successful procurement manager is in the understanding of the external market environment and suppliers. However, it’s the ability to work effectively with internal teams that makes the biggest difference,” the authors conclude, while noting that a solid understanding of the business is still a prerequisite for forming these relationships.
The last is an important point, as understanding the business and being on good terms obviously isn’t going to be enough alone for ‘established’ functions to further level up. Among other areas, highly mature teams also focus on building robust skills and capabilities, with 76% reporting that staff development initiatives are delivering clear benefits, as compared to 42% at the established level.
