Procurement teams are responding to challenges by improving collaboration with stakeholders © Photo by Braun S via Getty Images
Procurement teams are responding to challenges by improving collaboration with stakeholders © Photo by Braun S via Getty Images

The top four hurdles CPOs face in 2022

17 June 2022

The average savings target for procurement teams in 2022 has dropped to 6.1%, according to a survey.

In a report Ardent Partners said this was down 19% on 2021’s average target – a “very significant drop”.

The report said actual average savings in 2021 were 6%, which again was down 18% on the 2020 figure.

“These are very significant drops year-over-year and are a clear indication that inflation impacted performance in 2021, and is expected by CPOs to do so again in 2022,” said the report.

“The numbers also show that many CPOs missed their 2021 savings target by a sizeable amount.”

However, the survey – involving 369 procurement leaders from January to March 2022 – found two-thirds of all procurement teams made either a “significant” (58%) or “game-changing” (8%) impact on their enterprise last year.

“The other third of procurement departments also made a generally positive, albeit more subdued, impact,” said the report.

The report said average spend under management was 67.4% in 2022, up 7% on last year, and against research that shows enterprises realise savings of 6-12% “on every new dollar of spend placed under procurement’s control”.

The survey identified four hurdles CPOs are facing in 2022:

1. Budget constraints

Rising inflation means that 35% of respondents faced budgetary restriction, as CFO’s “tighten their belts.” Just over half (52%) of respondents said they had “good” levels of collaboration with budget-holders to source and order supply.

2. Supplier performance

Of equal importance was managing supplier performance and supply assurance, with 35% also listing this as a top concern. Additionally, 63% said they were planning to use some form of supplier management solution within the next 12-18 months.

3. Lack of technology

Despite increases in adoption, budget and intent to invest in technology, 34% of procurement leaders said they were struggling with missing or incomplete technology. The survey also found “best-in-class” procurement teams were 51% more likely to use strategic sourcing technology.

4. Stakeholder engagement

Engagement was considered to be expanding overall, but 33% of respondents claimed their top issue was still engaging stakeholders. However 24% said the best way to take their current performance to the next level was through better communication with business stakeholders.

In response to these challenges there were several strategies procurement leaders were taking:

  Improving internal collaboration (37%)

  Pursuing a digital transformation (37%)

  Improving staff capabilities (34%)

  Improving external collaboration (31%)

•  Streamlining current systems and processes (29%)

  Increasing sourcing activity (24%)

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