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Blog : BOARD TALK

Spare a Thought For CPOs Amid Global Risk And Digital Challenge

Posted on February 9, 2017 at 11:20 AM

Cost reduction and managing risk unsurprisingly top the list of procurement leaders’ business priorities in 2017, according to Deloitte’s annual global Chief Procurement Officer (CPO) survey, just out.


The number one priority for 79% of CPOs is reducing costs. Over half (57%) are worried about managing risk - particularly true of those who are based in the United Kingdom, with uncertainty around Brexit and outcomes from upcoming trade negotiations.


Other key global risks cited include weakness and volatility in emerging markets; rising geopolitical risk; the possibility of a renewed Euro crisis and spill over effects of any slowdown from China.


In addition, 54%  of global respondents report a resurfacing of procurement risk, which could include price volatility, disruptions in supply and supplier bankruptcy. This is up from 42%  in 2014.


 “Like other business leaders managing a global backdrop of economic and political risks, CPOs continue to focus on cost and risk management in 2017 to support growth in an uncertain market. So far, this is proving successful for CPOs, with 58% achieving better savings performance than last year. However challenges with talent and poor adoption of digital technology still hinder progress. Unless addressed quickly, these could jeopardise the future of procurement” said Lance Younger, Deloitte UK head of sourcing & procurement.


Indeed. And the findings are depressingly familiar when it comes to digital transformation.


Source: Deloitte Global CPO Survey 2017



“We continue to see procurement functions shrink in size, whilst the breadth of responsibilities and expectations continue to increase. Companies are demanding greater productivity, but overworked employees are not the solution. Instead, new, sustainable operating models are required. One approach is to empower talent by embracing digital and innovative technologies – such as automation, cognitive procurement and analytics – at a much greater scale” said Mr Younger.


 

This year's global survey reveals that 75%  of CPOs believe that procurement’s role in delivering digital strategy will increase in the future.

 


They report that the impact of automation and robotics on their function will steadily increase from 50% to 88% in five years’ time, and 93% by 2025.


Source: Deloitte Global CPO Survey 2017

 


Some 65% see analytics as the technology area that will have the most impact on the function in the next two years, but many see the quality of data available as a significant barrier to adoption. However an issue with talent is apparent, with 62% claiming that there is still a "large to moderate skills gap" across analytical abilities.

 


“As the rapid speed of technological change continues to sweep over businesses globally, procurement is at a tipping point and must take advantage of high levels of executive support. Digital will amplify great talent and strong CPOs must align the digital transformation of the function with ongoing business priorities” said Mr Younger.


Like I said, spare a thought for the CPO.


Note:

Conducted in association with Odgers Berndtson, the Deloitte  global CPO survey is an annual survey of chief procurement officer’s across the world. 480 procurement leaders from 36 countries around the world took part in this year’s survey, representing organisations with a combined annual turnover of $US4.9 trillion.

 

Specific UK statistics are based on 79 respondents with combined annual turnovers of £677 billion.


Categories: Risk, Supply Chain, Technology