Cost reduction and managing risks remain the primary focus for procurement leaders as they look to support growth in market uncertainty, according to the 2017 Deloitte Global CPO Survey.
The report, which surveyed 480 senior procurement leaders from 36 countries, found 75% specify cost reduction as their main priority. Six out of 10 said managing risks such as volatility in emerging markets, the possibility of a renewed euro crisis and uncertainty around Brexit outcomes, were a prime concern for the year.
UK head of sourcing and procurement at Deloitte Lance Younger said this strategy was proving positive but warned that a growing talent gap and poor technology implementation could threaten the growth they seek.
“Like other business leaders, managing a global backdrop of economic and political risks, CPOs continue to focus on cost management in 2017 to support growth in an uncertain market,” he said.
“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.”
According to the report, 85% of those surveyed felt that talent was the single greatest factor in driving procurement performance and 60% did not believe that their teams have the skill to deliver their procurement strategy.
However, investment in new talent development approaches and training dropped from 29% in 2016 to 25% this year, with less than 1% of overall budget spent on training.
Younger added companies needed to look towards new sustainable operating models to harness talent and fuel growth.
“We continue to see procurement functions shrink in size, while the breadth of responsibilities and expectation continue to increase,” he said.
“Companies are demanding greater productivity, but overworked employees are not the solution. One approach is to empower talent by embracing digital and innovative technologies – such as automation, cognitive procurement and analytics – at a much greater scale.”
In the survey, 75% thought that procurement’s role in delivering digital strategy will increase in the future, while 65% believed that analytics will have the most impact. The effect of automation and robotics on CPOs will steadily increase, with half saying it impacted them currently but 93% predicting it would by 2025.
However, 62% claim that there is still a moderate to large skills gap across analytical ability and Younger thinks procurement leaders need to start prioritising digital strategy.
“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,” he warned.
“Digital will amplify great talent and strong CPOs must align the digital transformation of the function with on going business priorities.”
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