61% of respondents reported resources are not in place to deliver expected results while 29% “don’t know or don’t believe their definition of savings is properly ‘aligned’ to deliver optimal P&L impact”

Fine Tune, a provider of indirect expense management services, today released results from its joint survey with Procurement Foundry which shows organizations are struggling to define, quantify and ensure savings hits the P&L.

The full report, “Procurement’s Role in Ensuring P&L Impact,” can be downloaded here.

In a survey of 100 Procurement Foundry members circulated and completed in May 2021, respondents report a general belief that “both systems and reporting structures are not aligned to support” proper and effective tail spend monitoring—which negatively impacts the P&L. As a result, this toxic combination of a lack of resources and systems as well as reporting misalignment manifests a real challenge for procurement professionals to be strategic, let alone take the lead in managing the more complex categories of tail spend.

Key findings from the survey include:

• 61% of respondents do not believe or don’t know if they are adequately resourced to deliver P&L impact
• Only 32% believe their definition of savings is aligned to ensure P&L impact AND believe they are properly resourced
• Alarmingly, 29% do not believe their definition of savings is aligned to ensure P&L impact and do not believe they are properly resourced
• The majority (58 respondents, or 58%) think their organization is doing a good job aligning savings definitions and tracking methodologies. But:
  • Only 21 of those 58 respondents (36%) say procurement is responsible for measuring and tracking P&L impact of savings initiatives
  • 23 of those 58 respondents (nearly half) say savings is credited/rewarded at the start of the savings effort
• Only 38% of respondents said savings is credited/rewarded “as P&L impact is realized,” revealing a significant majority get rewarded for savings without assurance it actually materializes
• While approximately half of respondents seem to think that accounting/finance is the responsible party when it comes to measuring/tracking (54%) and ensuring (41%) P&L impact, only one respondent said that finance/accounting interacts with the vendor on an ongoing basis
• 57% “engage with outside partners to augment Procurement department resources”

“The overwhelming conclusion is that the required resources for optimizing P&L impact are not in place, causing savings to decay over time and erode P&L impact,” said Rich Ham, CEO, Fine Tune. “And for the vast majority of businesses, it takes coordination of multiple areas of the organization to properly manage tail spend post-contract. This is especially difficult at scale. If you don’t have all the parts working in tandem with one another or dedicate the necessary resources to ensure P&L impact, you will struggle to successfully manage tail spend and your indirect suppliers will feast on your bottom line.”

The full report, “Procurement’s Role in Ensuring P&L Impact,” can be downloaded here.

Michael Cadieux, founder of Procurement Foundry, and Rich Ham will discuss the findings from “Procurement’s Role in Ensuring P&L Impact” in an Ask Me Anything event on Tuesday, October 12 at 1:00 p.m. EDT.

Register for the event here.