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23 March 2015

Compliance "vital for procurement"

Content team

The importance of compliance for the procurement function has been highlighted in a new whitepaper.

According to AirPlus International and Supply Management, this area is a key priority for leaders in the profession.

The organisation highlighted research from AT Kearney, which revealed chief procurement officers are responsible for more than 70 per cent of their businesses' spending decisions and can deliver savings of between five and 20 per cent as evidence of the importance of ensuring compliance.

"Ensuring that policies, contracts and procedures have compliance processes in place is vitally important for bottom line results," the whitepaper stated.

The organisations said the procurement profession is affected by compliance in a number of ways, ranging from quality measures and ethical pressures to tracking the spending of other departments within an organisation.

Highlighting the significant impact non-compliance can have on a business, the whitepaper stated: "The way in which companies and employees pay suppliers is often not top of the boardroom agenda, but mismanagement of corporate payment systems can have a significant effect on the way an organisation operates."

A number of signs of non-compliance were highlighted by the organisations. These include spending with suppliers not on the preferred supplier list, paying for goods and services outside of payment systems, not adhering to the procurement process for making payments and lack of compliance on payment methods.

The whitepaper highlighted the need for the importance of procurement to be communicated to employees and also called for businesses to assess their efforts in this area in order to see if any improvements can be made.

According to recent research from the Hackett Group, 53 per cent of procurement professionals see reducing supplier risk as a key aim for the year ahead.

Content team, Bureau van Dijk

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