Global CPO Survey 2016

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The Deloitte Global CPO Survey 2016

Procurement: at a digital tipping point?

The Deloitte Global CPO Survey profiles the views of senior procurement leaders from around the world on the key issues facing the procurement function. Conducted in association with Odgers Berndtson, this is the fifth edition of the report that provides unprecedented insight into the sentiments of a Chief Procurement Officer, drawing on our largest sample yet of 324 CPOs from 33 countries around the world.

CPO: An Industry Perspective Infographic

Global CPO Survey 2016 Infographic

Overview

How have things evolved over five years? This year's survey considers the state of play in the key issues facing procurement, such as priorities, business engagement, talent and market dynamics, and how these have evolved over recent years.

Looking ahead: Procurement 3.0? This year we explore in more detail how emerging digital technologies are providing fresh opportunities to place procurement at the heart of the business’ challenging growth agenda.

Is the procurement function at a digital tipping point? To what extent will emerging trends such as artificial intelligence and cognitive analytics revolutionise the function? Does your procurement function have the capabilities to embrace the digital storm?

The Deloitte Global CPO Survey 2016

Key findings

As with their global counterparts, South African CPOs have been tasked with sustaining long-term growth in an increasingly challenging macro-economic environment. Given the local economy’s resource-driven structure, Energy & Resources and the Public Sector are the two industries that are most critical to South Africa’s economic recovery and ongoing stability. So what are the key concerns and priorities for CPOs in these sectors?

CPO Survey 2016

Life Sciences overview

  • These CPOs are more likely to be confident about financial prospects than their peers
  • 82 per cent identify cost-cutting activity as a key priority for the next 12 months
  • The number looking to restructure their supply base has doubled since last year to 37 per cent
  • The majority report that procurement related risk has increased over the last 12 months, compared to last year when the majority reported a decrease in procurement risk
  • These CPOs are more actively involved in risk management and mitigation than their peers
  • These CPOs are more likely than their peers to have a clear digital strategy in place
  • They are less likely to see cost as a key consideration when adopting new technologies
  • Almost three quarters report that their team do not have the skills to deliver their procurement strategy
  • These CPOs report a sustained focus on outsourcing non-core elements of their functions.
Life Sciences overview

Consumer Business overview

  • The financial outlook is more optimistic and CPOs are expecting organisational CapEx to increase
  • These CPOs are focused on entering new markets and developing new products over the coming year
  • However, they are significantly more uncertain about the market now than they were 12 months ago
  • These CPOs are typically better informed of changing business requirements than their peers
  • They are also more likely to be involved in shaping the way services are delivered when compared with their peers
  • Consumer business CPOs are more likely to be investing in new technologies, with the number looking to invest in self-service portals doubling since last year
  • CPOs are prioritising retaining existing talent more so than ever since the survey began
  • These CPOs are also much more likely than their peers to be focused on outsourcing operational buying activities.
Consumer Business overview

Manufacturing overview

  • These CPOs are more uncertain about economic conditions than their peers
  • They are looking to focus much more heavily on supplier collaboration than they were last year
  • Seven out of ten are reporting an increased focus on cost cutting
  • Manufacturing CPOs are twice as likely to sit at board level compared to their peers
  • These CPOs are much more likely to have a very good relationship with their CEO
  • Manufacturing CPOs play a more active role in decision making and are better informed of changing business requirements
  • These CPOs are less likely to be investing in digital technologies over the next twelve months, including cloud solutions and analytics
  • These CPOs have shifted their focus away from attracting new talent in a difficult market towards retaining their existing procurement teams
  • Almost two thirds identify training their teams on technical procurement skills as the priority rather than looking to develop soft skills.
Manufacturing overview

Energy and Resources overview
 

  • By taking advantage of currency adjustments (on the back of a weak Rand), CPOs operating in the export market have been able to manage costs
  • For CPOs in the domestic/import market, falling commodity prices are resulting in a need for strong cash flow management in the short-term
  • Many are exploring outsourcing as a strategy to manage costs in the long-term
  •  There is an increasing focus on risk management (health & safety) with regards to suppliers, and less so within their own organisations
  • These CPOs have been actively adopting new digital platforms, and are exploring cloud computing and self-service technologies
  • Where possible, they are looking at integrating cloud-based platforms for solutions that were not previously catered for
  • There is appetite for the development and usage of outsourcing to support internal talent
  • These CPOs are also looking at outsourcing more of the strategic business activities
  • he development of internal talent remains a priority while still assessing the viability of outsourcing
  • Outsourcing is proving more viable  - and successful – among the junior and mid-sized mining houses
  • For CPOs in larger organisations, there is a preference to grow and retain existing talent
Energy and Resources overview

Public Sector overview
 

  • These CPOs are focused on executing capital expenditure programmes
  • There isn’t a strong emphasis on implementing cost saving mechanisms
  • The need to comply with stringent regulatory frameworks and combat corruption are key priorities for CPOs
  • Risk management for these CPOs is closely linked to regulatory compliance and government processes
  • There is a drive to work closely with both government and supply chain management teams
  • These CPOs have fallen behind the technology curve, with older on-premise technology still in place
  • There is a unique opportunity for CPOs to leapfrog into the digital era by adopting new digital platforms and bypassing legacy IT infrastructure
  • These CPOs are concerned with a widening skills gap
  • They are exploring private sector partnerships, as well as outsourcing and co-sourcing models

Is the procurement function at a digital tipping point?

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