Deloitte: 2 in 3 Procurement Leaders Have Limited-to-No Visibility Beyond Tier-One Suppliers
(3 months ago)
NEW YORK: Procurement leaders are cautiously optimistic amid global uncertainty, even as the vast majority lack full visibility into their entire supply chain and have yet to make the most of the digital tools at their disposal, according to the results of Deloitte's "2018 Chief Procurement Officer (CPO) Survey." Sixty-five percent of CPOs have limited visibility beyond their tier-one suppliers, the survey found.
"Lack of visibility is a major concern for CPOs as they look to navigate global headwinds and prepare their teams for the future of procurement and innovative technologies," said Brian Umbenhauer, principal and global head of sourcing and procurement at Deloitte Consulting LLP. "Visibility throughout the supply chain is a key tool for meeting regulatory and corporate social responsibility requirements while mitigating risk. Technology can help procurement leaders deliver value and reduce costs while achieving a more robust view of complex supply chains."
The survey also found that cost reduction (78 percent), product and market development (58 percent) and managing risk (54 percent) are the top business priorities for procurement leaders surveyed in 2018. Despite concerns, 61 percent of CPOs delivered better year-over-year savings performance than last year, with the highest-performing leaders thriving in executive advocacy, leadership, talent and digital.
Yet challenges remain: More than half (51 percent) of procurement leaders surveyed do not believe their teams have the capabilities to deliver their procurement strategy. Even as digital technologies offer unrivaled benefits to procurement teams and could help manage risk and increase visibility, a mere 3 percent of leaders believe their teams possess the skills required to maximize digital capabilities.
"There's no doubt that digital is a game-changer in procurement," said Michael Daher, principal and U.S. leader of sourcing and procurement, Deloitte Consulting LLP. "Chief procurement officers should define a clear strategy and vision for digital transformation that is action-oriented. Leadership and training weigh heavily on the success of digital projects and directly correlate with enhanced performance, but CPOs aren't yet prioritizing digital as they should be."
Deloitte's survey found that, despite identifying digital skills as a major challenge for their organization, only 16 percent of procurement leaders surveyed were focused on enhancing these skills. In a sign of shifting cost priorities, 72 percent of procurement leaders are spending less than 2 percent of their budget on training, compared to 66 percent in 2017.
Additionally, 17 percent of procurement leaders do not have a digital procurement strategy at all, and - of those that do - less than one-third believe their strategy will improve enterprise value.
"With today's global supply chains, risk exists across geopolitical and economic disruptions," said Umbenhauer. "There are demonstrated techniques to help drive value, reduce risk and meet goals - from digital transformation to increasing visibility and properly training teams - but CPOs right now are struggling to make the most of them. Major benefits and competitive advantage await those who do."
Conducted in association with Odgers Berndtson, the Global CPO Survey is an annual survey of chief procurement officers around the world. Five hundred and four procurement leaders from 39 countries took part in this year's survey, representing organizations with a combined annual turnover of $US 5.5 trillion. Access Deloitte's full 2018 CPO Survey report.