Deloitte: Is procurement at a digital tipping point?

6 April, 2016 – Rising risk levels and a skills shortage are amongst procurement leaders’ main concerns, according to Deloitte’s global chief procurement officer (CPO) survey recently launched.

Forty-five per cent of CPOs reported a rise in procurement related risk, such as volatility in emerging markets and geopolitical uncertainty affecting their supply chain. Fifty-five per cent reported an increase in external financial and economic uncertainty. Of all the industries surveyed, consumer business respondents were the most concerned, given procurement’s role to ensure product availability in locations now affected by uncertainty, instability and security risk.

Deloitte’s research also shows resourcing continues to be a challenge. Sixty-two per cent of CPOs said their team does not have the skills and capabilities to deliver their procurement strategy, yet just under half of CPOs reported that attracting talent in the last 12 months has been difficult. One-third reported that their training budgets are now less than one per cent of total operating budgets, one-quarter of what might be considered best practice.

“Risk and the widening skills gap are clearly a concern for CPOs. Weakness in global economic metrics and heightened levels of geopolitical uncertainty are two of the major themes for CPOs this year,” said Siebe Butter, Middle East Supply Chain Leader. “On the talent side, we’re seeing training budgets being cut and a push towards outsourcing as a way to plug the skills gap. This trend is most prevalent in the largest organisations, where 40 per cent are expected to pursue outsourcing for some element of their function.”*

Time for a digital transformation

Despite these challenges, Deloitte’s research shows an increase in digital technology spend, perhaps suggesting that CPOs are looking at innovative solutions to address their business problems.

“Digital technology spend is on the rise, with 70 per cent investing in self-service solutions, up by more than one-third in a year. Investment in mobile, cloud and social media is also increasing. These statistics suggest a shift to digital, but careful work needs to be done first as 60 per cent of CPOs admit they do not have a clear digital strategy,” Butter added. “The key will be to get this strategy in place first, so the right technology is being used in the right way. Done correctly, a digital strategy can improve accuracy, speed and outcomes. This is potentially a double edged sword – digital can either reinvigorate or replace procurement’s role. It’s up to the CPO to set the strategy and lead the change, or risk being left behind.”

To view the whole report, go to: http://bit.ly/1S1iHkP

Notes to editors

*The “largest” organizations have an annual turnover in excess of US$50bn.

About the global CPO survey

Conducted in association with Odgers Berndtson, the global CPO survey is an annual survey of chief procurement officer’s across the world. The survey comprises a benchmark indicator of sentiment in the procurement function. The report is based on data received between 2011 and 2015. This edition contains responses from 324 of the most senior procurement leaders from 33 countries, who have a combined annual turnover of $4.4 trillion. 

About Deloitte:

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence.

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About Deloitte & Touche (M.E.):

Deloitte & Touche (M.E.) is a member firm of Deloitte Touche Tohmatsu Limited (DTTL) and is the first Arab professional services firm established in the Middle East region with uninterrupted presence since 1926.

Deloitte is among the region’s leading professional services firms, providing audit, tax, consulting, and financial advisory services through 26 offices in 15 countries with around 3,000 partners, directors and staff. It is a Tier 1 Tax advisor in the GCC region since 2010 (according to the International Tax Review World Tax Rankings). It has received numerous awards in the last few years which include Best Employer in the Middle East, best consulting firm, and the Middle East Training & Development Excellence Award by the Institute of Chartered Accountants in England and Wales (ICAEW).