Cost cutting and cost containment are always going to be a key part of the procurement discussion. However, in recent years, procurement function has emerged as a strategic tool as well. Now, technology trends are creating a new tipping point for procurement, in addition to offering new ways for the function to prove its worth.
The Deloitte Global CPO Survey 2016, polled 324 senior procurement professionals, found that three out of four rank cost reduction as a top priority. Weak supply markets, paired with financial instability, increased outsourcing, and increased demand from outsourced market are behind the trend. “As a consequence, a position of aggressive cost control wrapped in risk protection dominated most procurement strategies,” the report said.
Unfortunately, they are also less confident in their capabilities to deliver results than before. In fact, 62% of CPOs fear that their teams do not have the capabilities or skills to deliver on their procurement strategy. Two years ago, that figure was only 48%.
This concern is due in part to the lack of available skilled workers. This shaky outlook may also be in part related increasing pressures on organizations to cut cycle times, and make operations more agile, transparent, and efficient. The emergence of technologies including robotics and automation are becoming available to support these demands. CPOs report that they are investing in cloud-based computing, mobile technologies, and social media to support procurement activities.
“It might be that soon the differentiation of leading procurement practice might be defined less by the war for talent and more by the war for technology,” the report said.
In the manufacturing sector, several clear differentiating features stood out:
- These CPOs are more uncertain about economic conditions than those in other sectors.
- They are focusing more on supplier collaboration than last year.
- They are twice as likely to sit at board level than those in other sectors.
- They are more likely to have a very good relationship with the company's CEO.
- They tend to take a more active role in decision-making and are more often notified of changing business requirements.
- They are less likely to invest in digital technology over the next twelve months.
Take a look at the infographic below to see more of the survey results. Then, let us know what's going on in your organization. Do you think we are behind on the technology curve? What topics are keeping you up at night?
— Hailey Lynne McKeefry, Editor in Chief, EBN