Only one in five FDs see suppliers as strategic partners

Only one in five finance directors see their suppliers as ‘strategic partners’, according to a survey of finance leaders in the UK and Ireland carried out by Expense Reduction Analysts (ERA). The report also revealed that 77 per cent of companies work on a short term basis when procuring products and services and resort to a defensive cost-cutting mentality when money is tight.

The report also found that just over half of respondents had resisted the development of professional procurement practices, believing it would hinder the effectiveness of their department. Half (46 per cent) said their company never discussed procurement at board level or only once a year. Eighty per cent of organisations don’t have a specialist procurement function, while 52 per cent of finance directors felt employees suffered from a lack of time and experience when it came to securing the best deals from suppliers.

Commenting on the results, Rob Allison, managing director at ERA, said: “Businesses and government have responded to the economic downturn by implementing wide-ranging cost-cutting initiatives. Cutting costs may keep businesses afloat temporarily, but it won’t enable them to compete long-term. This illustrates a cultural issue which should be addressed – if nothing else, finance directors must be equipped with procurement knowledge and the appropriate skill set. Ultimately, finance should drive and influence procurement, enabling businesses to free up cash, drive growth and deliver more sustainable and profitable smarter spending habits.”