Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Procurement
reporting
alignment
kpmg.com
1 | Procurement reporting alignment
Procurement Intelligence
Define Place
Requirements/ Transition Approve Purchase
Specifications Category Requisition Order
Develop
Sourcing Select Process Post
Strategy Suppliers Payment Invoice
© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member
firms of the KPMG network are affiliated. All rights reserved.
Procurement reporting alignment | 2
15% CIO
• Rigor in measuring value delivered—provides both hard and
soft value to the company
• Identifications and management of appropriate enterprise
controls for procurement and supply chain risks Based on KPMG LLP (KPMG) research completed in 2011
(sample size of 322 FORTUNE 500 companies), approximately
• Procurement efficiency and standardization
25 percent of FORTUNE 500 CPOs report to the Chief
• Talent development and retention Executive Officer (CEO), and 22 percent report to the
In recognition of the function’s increasing relevance, we find Chief Operating Officer (CCO).
that there is a trend toward elevating the level of reporting For the top 20 percent of FORTUNE 500 companies in their
of the department head directly to a C-level executive. respective industries (based on 2010 annual net profit margin),
However, there is no clear “standard” as to whom the 78 percent of those CPOs reported to a C-level executive. To
procurement leaders report within companies. The answer whom the CPO reports by itself is not a major driver of overall
varies by industry and business model, and is influenced by company success; however, KPMG’s research suggests that it
factors such as corporate strategy, culture, organizational is a key enabler to set the right conditions for success.
model, and leadership preferences.
The following chart provides additional information broken out by industry sector on
whom the CPO reports to in FORTUNE 500 companies.
100%
90%
Non - CXX
80%
Business
70%
More than 1 function/role
60%
CIO
50%
CAO
40%
COO
30%
CFO
20%
CEO
10%
0%
gy
s
s
m
ry
es
re
ls
IT
ria
ce
le
na
co
ia
er
ca
iti
ap
st
vi
er
En
til
io
le
lth
er
du
St
at
U
et
Te
lS
ea
In
M
er
cr
H
ia
um
is
nc
D
ns
na
er
Co
um
Fi
ns
Co
© 2011KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms
of the KPMG network are affiliated. All rights reserved.
3 | Procurement reporting alignment
The following are some observations regarding CPO and procurement alignment by industry:
Industry Observations
Consumer discretionary • 37% of CPOs report to the CEO—the second largest percentage of any industry
group (other than consumer staples industry) reporting to the CEO
• 18% of CPOs report to the COO
Consumer staples • 58% of CPOs report to the CEO—the largest percentage of any industry group
reporting to the CEO
• 11% of CPOs report to more than one function/role
Financial services • 30% of CPOs report to a non-C-level executive at the company—the second largest
percentage of any industry group (other than utilities industry) reporting to a non-C-
level executive
• 19% of CPOs report to the CFO
• 19% of CPOs report to the CAO—the largest percentage of any industry group
reporting to the CAO
IT • 47% of CPOs report to the COO—the second largest percentage of any industry
group (other than telecom industry) reporting to the COO
• For the majority of top performing IT companies (on 2010 annual net profit margin
ranging from 15% to 29%), CPOs report to a C-level executive
Telecom • 50% of CPOs report to COOs—the largest percentage of any industry group
reporting to the COO
• Remaining telecom companies have CPOs reporting equally to the CFO, have more
than one CPO function/role, and have CPOs reporting to a non-C- level executive
© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member
firms of the KPMG network are affiliated. All rights reserved.
Procurement reporting alignment | 4
© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member
firms of the KPMG network are affiliated. All rights reserved.
5 | Procurement reporting alignment
Understanding the potential benefits and risks of where Procurement is aligned can
help with a company’s decision. The following table summarizes the pros and cons of
different reporting structures:
Benefits Helps enable greatest Helps enable good Sourcing savings CAO is neutral
visibility to what’s going visibility within would be validated ground that creates
on across the enterprise operations by Finance and be a clear separation of
more authoritative approving budget,
account of procurement approving suppliers
achievements and contracting with
suppliers
Provides greatest ability Provides moderate Facilitates healthy Helps enable good
to influence across the ability to influence division with the visibility within
company across the company business to help avoid administrative functions
conflicts of interest
Helps enable greatest Helps enable moderate Helps improve Helps enable moderate
focus on overall focus on overall enforcement of policies focus on overall
company value rather company value rather and procedures company value rather
than focus in one or two than focus in one or two than focus in one or two
specific areas (e.g., cost) specific areas (e.g., cost) specific areas (e.g., cost)
Provides greatest Provides moderate Helps enable end-to-end Helps enable influence
opportunity for opportunity for (P2P) efficiencies across indirect and
departments to departments to corporate spend
collaborate closely on collaborate closely on categories
planning and budgeting planning and budgeting
Risks If Accounts Payable If Accounts Payable Can create optics of a Reinforces perception of
is kept under CFO, is kept under CFO, corporate function rather Procurement as a back-
this could lead to lack of this could lead to lack of than a strategic business office administrative
end-to-end efficiencies end-to-end efficiencies partner function rather than
(P2P) (P2P) a strategic business
partner
May make it difficult to May lead to lax policy May drive more of a If Accounts Payable
broaden the influence compliance due to tacit singular focus on cost is kept under CFO,
across indirect and conflict of interest in rather than more holistic this could lead to lack of
corporate spend enforcing rules with value including risk, end-to-end efficiencies
categories internal customers if service, quality, etc. (P2P)
they are in the same
group
This information was initially published in Procurement Leaders magazine (January – February 2012 issue)
© 2011KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms
of the KPMG network are affiliated. All rights reserved.
Procurement reporting alignment | 6
© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member
firms of the KPMG network are affiliated. All rights reserved.
Contact us
Samir Khushalani
Principal, Business Effectiveness
713-319-3570
skhushalani@kpmg.com
Byron Tatsumi
Director, Business Effectiveness
415-963-7678
btatsumi@kpmg.com
kpmg.com
The views and opinions are those of the author and do not necessarily represent the views and opinions of KPMG LLP. All information
provided is of a general nature and is not intended to address the circumstances of any particular individual or entity.
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 47227DAL The
KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.