Growth: the cost and digital imperative
Deloitte has published its yearly survey addressed to Chief Procurement Officers. This year’s issue highlights the changes implemented in procurement strategies and practices due to the overall economic background and the rising importance of digitalisation.
Growth ambitions are high in an uncertain market, the pace of change and increased uncertainty requires superior levels of funding. Defensive strategies being implemented by Chief Financial Officers are demanding rapid, sustained cost reduction in parallel to a greater focus on risk from procurement. Deloitte is sure that the traditional procurement operating model has to change. This has been driven by a lack of talent and an increase in digital innovation.
There are four key themes within the report this year and Deloitte provides clear incremental and exponential actions for procurement leaders to consider:
- CPOs are supporting growth in uncertain times through continued delivery of cost and cashflow benefits to the business. CPOs should use high internal business support to build capabilities in collaboration, talent and digital procurement
- Collaboration: Longer term value levers of supplier collaboration and restructuring of relationships remain at lower levels. Business partnering is strong, but there is a consistent gap versus where procurement leaders want to be and an acknowledged lack in the leadership skills to be able to close this gap
- Talent: Whilst there is an increased requirement for leadership and digital skills there is limited change in the investment or approach to close the talent gap. With improvements in technology enabling automation, the skills of the past will not deliver the needs of the future – organisations should look to attract and develop the next generation of procurement leaders who will act as innovators, challengers, and digitally minded-thinkers
- Digital: Three quarters of respondents believe that procurements’ role in digital will increase. Procurement leaders are looking to overcome key barriers in data and capability in order to achieve significant impact from both their core operational systems and their new digital and analytical solutions.
- 79% of procurement leaders to focus on cost reduction, and 48 per cent want to increase cashflow;
- Almost six in ten see managing risks as a priority;
- 52% of procurement leaders are focused on new products, services and market development;
- Executive support for procurement change exists for 75 per cent of procurement leaders;
- The majority of CPOs rate their current effectiveness of business partnering at less than 70% and have an ambition for future effectiveness to be greater than 90%; 60% of CPOs do not believe their teams have the skills to deliver their procurement strategy
- 25% spend less than 1% of their budget on training
- 75% of CPOs believe that procurement’s role in delivering digital strategy will increase in the future
- Analytics will have the largest impact for over 65% of procurement leaders
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