Procurement departments are often not given credit for the savings they achieve for the company, according to new research by global consulting firm Protiviti. It found that almost half of finance leaders claim that 20 per cent or less of procurement savings are being credited for the performance of the company's overall financial results.

The report, Bridging the Gap between Finance and Procurement, asked 440 finance and procurement executives about their views on procurement’s performance and value – and how these are reflected in the company's bottom line.

The survey highlights that there is a perceived disconnect between procurement and finance and there is not enough traceability between procurement savings and the company's overall profit and loss accounts. It therefore calls for procurement departments to track and communicate savings they achieve, as well as collaborate to ensure these savings can be traced to the (positive) performance of the bottom line. To do this, procurement needs to extend its reach and drive additional value, which it can do by:

• improving spend analysis capabilities and tools,
• centralizing core activities where possible, and
• including cash flow and working capital as part of overall savings goals

However, fewer than half of the survey respondents said that they actually track absolute savings, which is a problem for departments that are often called upon to demonstrate their value and contribution to the company. And 41 per cent of those surveyed say that although procurement savings are being tracked, the measurement and value are not being articulated across the company. On a positive note, over a third said there is a collaborative working relationship between finance and procurement, although this does suggest there is much room for improvement.

Protiviti's Bernie Donachie said: “A synergistic finance-procurement relationship appears aspirational for most organisations, as few are currently living up to this ideal. Although the two functions are not seeing eye-to-eye in terms of procurement’s performance or the value it delivers, it’s demonstrably clear that procurement functions have an opportunity to focus on how they drive value and quantify and communicate their performance across their organizations, which can lead to improved profitability."

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CTMfile take: These results really show how important it is to measure - and communicate - your department's achievements. As the survey says, procurement functions need to focus on how they drive value and how they quantify and communicate their performance.