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Deloitte CPO survey 2017: Cost, risk and digital are top priorities to improve growth in uncertain times

9 February 2017

  • 79 per cent of procurement leaders to focus on cost reduction;
  • Almost six in ten see managing risks as a priority;
  • 52 percent are focused on new products, services and market development;
  • 60 per cent believe their teams lack the skills needed;
  • Three quarters believe their role in delivering digital strategy will increase;
  • 75% of c-suite executives support procurement’s role and further development.

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

With uncertainty and growth ambitions being a constant focus in many organisations, the number one priority for 79 per cent of CPOs is reducing costs. This is closely linked to 48 per cent wanting to increase cash flow to help fund growth. 

Managing risk will also be a strong priority for over half of CPOs this year (57 per cent). Key global risks cited include weakness and volatility in emerging markets; rising geopolitical risk; the possibility of a renewed Euro crisis; spill over effects of any slowdown from China; and uncertainty around Brexit and outcomes from upcoming trade negotiations. Perhaps unsurprisingly, the latter was the highest risk cited by UK based participants.*

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

Lance Younger, UK head of sourcing & procurement, explains: “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 per cent 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.”

The talent gap
87 per cent feel that talent is the single greatest factor in driving procurement performance and 60 per cent of CPOs still do not believe their teams have the skills to deliver their procurement strategy. Yet investment in new talent development approaches and training remains stubbornly low, with 25 per cent spending less than one per cent on training budgets.

Younger continues: “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.”

Digital procurement accelerators
The ambition to do so is apparent, as this year 75 per cent of CPOs believe that procurement’s role in delivering digital strategy will increase in the future.

This will be important too, as CPOs report that the impact of automation and robotics on their function will steadily increase from 50 per cent today to 88 per cent in five years’ time, and up to 93 per cent by 2025.
65 per cent 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, once again, an issue with talent is apparent, with 62 per cent claiming that there is still a large to moderate skills gap across analytical abilities.

Younger concludes: “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.”

End

Notes to editors

* Specific UK statistics, based on 79 respondents with combined annual turnovers of £677 billion:

  • Cost reduction and risk:
    • The number one priority for 2017 for 84 per cent of CPOs is reducing costs, which is closely linked to 51 per cent wanting to increase cash flow.
    • Managing risk is a strong priority for 58 per cent this year. 
    • 50 per cent report a resurfacing of procurement risk specifically.
    • 64 per cent achieved better savings performance than last year.
  • Talent and skills:
    • 88 per cent feel that talent is the single greatest factor in driving procurement performance. 
    • 67 per cent still do not believe their teams have the skills to deliver their procurement strategy. 
    • 23 per cent spend less than one per cent on training budgets.
  • Digital technology: 
    • 81 per cent believe that procurement’s role in delivering digital strategy will increase in the future. 
    • 40 per cent report that automation and robotics has impacted on their procurement function today. This increases to 88 per cent in five years’ time and 94 per cent by 2025.
    • 66 per cent see analytics as the technology area that will have the most impact on the function in the next two years.
    • 65 per cent claim there is still a large to moderate skills gap across analytical abilities.

About Deloitte global chief procurement officer survey
Conducted in association with Odgers Berndtson, the 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.

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.

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