Deloitte Consulting in association with Odgers Berndtson
Deloitte Consulting in association with Odgers Berndtson

What makes an innovative and successful CPO?

Deloitte survey finds collaboration, talent and leadership, and digital technology are key ingredients, yet many are not using them

There is a direct correlation between stronger leadership capabilities, higher spend on training and enhanced performance, a survey of over 500 CPOs from 39 countries, conducted by Deloitte Consulting, has found. The annual survey lists top capabilities, with leadership, supply chain transparency and a balanced scorecard new for this year. Executive advocacy, talent capability, decision making and digital procurement all feature in 2017 and 2018.

Given the importance of supply chain transparency, the survey found a surprising lack of awareness on the part of CPOs beyond their tier one suppliers. Only 6% felt they had full visibility of the entire supply chain, while 65% had limited or no visibility beyond tier one. “Risk appears at tier two, three, four when you have material shortages or a storm and you don’t have visibility,” says Lance Younger, EMEA head of sourcing and procurement at Deloitte Consulting. “We also identified that high performing organisations are twice as likely to have full visibility of their supply chain.”

The best industries here are real estate (50% limited or no visibility beyond tier one), financial services and insurance (55%) and consumer business (60%).

Digital tools are making it easier to map supply chains, Younger points out. “So it is the natural evolution of procurement and supply chain management.”

The importance of strong leadership continues through to the supply chain, found the survey, with twice as many high performing organisations’ CPOs saying they have strong leaders in their key suppliers – 12% over only 6% in average businesses. While many businesses are looking to introduce supplier metrics and programmes to enhance the performance of a number of suppliers, Younger says, he suggests that developing strong leadership in a few key suppliers will have a higher impact. “Invest in and work more closely with leadership teams in your key suppliers,” he advises.

It is in the area of supplier collaboration where the survey found a paradox, he says. The top strategy for procurement after cost reduction is new product/market development (58%). “If they want to deliver more innovation, they have to increase their supplier collaboration, says Younger. “But they are not.” The importance of collaborating with suppliers fell for the third year to only 23%. “There is a concern here that if this trend continues, procurement’s role will just continue to be that of hard-nosed negotiations and savings,” he warns.

On a more positive note, procurement’s involvement in strategic product development decisions has increased to 49% from 43% last year. 

Looking at tech buzzwords, the survey asked about the extent to which new technologies were being used in procurement, from fully deployed to simply being considered. The survey report states that digital transformation is inevitable, with high performing organisations leading the way in adoption, yet the overall results show that adoption is slow, with procurement leaders appearing hesitant about investigating artificial intelligence, robotics and blockchain. “For all disruptive technologies, they were fully deployed in less than 4%,” says Younger. 

In order to see the real impact of digital transformation and benefit from it, procurement leaders need to review and refine their digital vision and strategy to make it more action-oriented, agile and scalable. Leadership is a key success factor. “Leaders  must be more disruptive, innovative and digital,” he concludes.

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