NEW YORK, Feb. 16, 2017 /PRNewswire/ -- In an uncertain global market, reducing costs is the biggest priority for chief procurement officers (CPOs), according to findings of the "Deloitte Global Chief Procurement Officer Survey 2017." Technology and talent are also top of mind issues for CPOs, with 75 percent of respondents reporting that procurement's role in delivering digital strategy will increase in the future, and nearly 9 in 10 believing that talent is the single greatest factor in driving procurement performance.
Eighty-four percent of CPOs surveyed in North America said reducing costs is the top priority. CPOs surveyed in South America, APAC (Asia Pacific) and EMEA (Europe, Middle East and Africa) also cited cost reduction as the biggest priority.
Global respondents cited managing risks as the second highest priority, indicating a cautious approach in the face of uncertainty. 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; uncertainty around Brexit; and outcomes from upcoming trade negotiations.
Yet despite uncertainty and growth ambitions being a constant focus in many organizations, 61 percent of surveyed CPOs in North America indicated an improvement in savings performance compared to last year. Additionally, 56 percent of North American respondents stated they felt a high level of support from their executives, designating it the highest-ranking region in the world.
"In today's volatile market, chief procurement officers are still tightly focused on driving down costs and funding growth," said Brian Umbenhauer, principal, Deloitte Consulting LLP and global head of sourcing and procurement. "In North America, this focus is paying off with improvements in cost savings and strong executive support to pursue the procurement agenda. However, these successes all require the right talent and technology in place to execute on procurement strategies; and to continue to drive meaningful value for the business."
Convergence of talent and technology
In this year's survey, 87 percent of respondents said that talent drives procurement performance. However, 62 percent of respondents noted there is still a large to moderate skills gap across analytical abilities. More than 60 percent of CPOs surveyed believe their teams lack the skills needed to deliver their procurement strategies.
"Our findings indicate a persistent procurement talent gap, both in hard and soft skills," said Umbenhauer. "CPOs should focus on developing and preparing talent for new technological and business requirements to ensure the future success of the function."
In addition, investment in new talent development approaches and training remains strikingly low, with 25 percent of respondents spending less than 1 percent on training budgets. Three-quarters (75 percent) claim that procurement will be key to the digital agenda, but less than a third provide digital training for employees.
An increase in digital innovation is requiring the traditional procurement model to change to meet growth, cost and risk objectives. Ninety percent of global respondents this year believe that their industries will be disrupted by digital technology. However, only 44 percent are adequately preparing for these disruptions.
In North America, CPOs see procurement playing a larger role in delivering a digital strategy, with 81 percent of respondents indicating an increase in participation levels.
Sixty-five percent of global CPOs surveyed say that analytics will have the most impact on the function in the next two years. Also, CPOs report that the impact of automation and robotics on their function will steadily increase from 50 percent presently to 88 percent in five years' time, and up to 93 percent by 2025.
"Digital disruption is impacting organizations today, and coupled with a lack of skills to deliver solutions, CPOs may feel pressure to understand and implement emerging technologies," Umbenhauer said. "The challenge for CPOs is to leverage the full potential of digital capabilities while smartly investing in the right technologies that are aligned with business objectives."
About Deloitte's global chief procurement officer survey
Conducted in association with Odgers Berndtson, the global CPO survey is an annual survey of chief procurement officers across the world. Four hundred and eighty procurement leaders from 36 countries around the world took part in this year's survey, representing organizations with a combined annual turnover of $US4.9 trillion.
Access the Deloitte Global Chief Procurement Officer Survey 2017 and infographic.
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