Key takeaways
- The chief procurement officer (CPO) is playing an increasingly complex, integrated and strategic role in the C-suite in light of the coronavirus pandemic and corresponding supply chain disruptions.
- CPOs identified “driving operational efficiency” as their top priority for the first time in the survey’s 10-year history, narrowly unseating “reducing costs” as the front runner.
- Procurement “agility masters” outperform their peers on all the major performance metrics. These high performers are capitalizing on new technologies and flexible operating models to adapt to the turbulent marketplace and thrive in the next normal.
Why this matters
Since 2011, the Deloitte Global Chief Procurement Officer Survey has been providing exclusive insights into the key challenges and opportunities shaping the course of procurement, serving as a global benchmark of sentiment about the function. Over the years, these insights have helped members of the C-suite, procurement leaders, business partners, suppliers and supporting technology providers further their ambition, strategies and performance. This year’s 10th survey underscored how disruptive 2020 was to all aspects of the supply chain function. The Deloitte Global CPO Survey found that organizations looking to thrive in the marketplace as we emerge from the pandemic are turning to their CPOs to drive innovation and profitable growth.
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Expanding priorities
CPOs have indicated that their priorities are growing in both size and importance, and for the first time in the survey’s 10-year history, respondents did not name “reducing costs” (traditional spend reduction) as their top priority. Instead, a new entrant, “driving operational efficiency,” claimed the top spot with a weighted score of 78.0. Digital transformation ranked a close third place with a score of 76.1.
- Digital transformation, which retained the No. 3 spot, has grown significantly in importance, increasing 20% since 2019, the second largest priority increase since 2019. This year, 48% of CPOs consider digital transformation a strong priority.
- Corporate social responsibility (CSR) saw the largest increase of any priority (22% increase versus 2019) and is 75% more likely to be formally measured by high performers. CSR, a topic now regularly discussed at the board level, is a recognition that spend, if managed well, can do societal good.
- Innovation landed the No. 4 spot with a weighted score of 72.9, reflecting the need to up-level internal operations and improve supply chain transparency and supplier collaboration more broadly. The survey found that high performing organizations are generating the greatest supply network visibility, thanks to “next gen” technologies like AI and cognitive.
Key quote
“CPOs are uniquely positioned to help their organizations navigate such a historically disruptive time and build the agility required to thrive amidst external forces like the COVID-19 pandemic that pose significant challenges for the global economy. The time for CPOs to stand up and help create change is now.”
–Â Â Ryan Flynn, principal, Deloitte Consulting LLP
“This year has demonstrated the importance of bringing CPOs into higher level C-suite conversations. They bring significant value to the table — whether it’s in navigating risk, helping realize digital transformation, or furthering corporate responsibility initiatives.”
–Â Â Jennifer Brown, principal, Deloitte Consulting LLP
Managing risk
A large majority of respondents (70%) indicated that risk has increased over the last year. Fifty-six percent said that key suppliers have gone bankrupt or been severely hampered, and 41% have had to expedite shipping to keep supply lines flowing. Seventy percent of CPOs believed that they had good visibility into the risks that exist in their direct (tier 1) suppliers, yet only 15% had visibility into lower tiers. Only twenty-six percent were formally tracking the risk in their supply base. The COVID-19 crisis highlighted the need to better understand the end-to-end supplier network and the risks that exist beyond direct suppliers.
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Agile procurement
This year’s survey studied agility through specific capabilities and through an “agility index.” Findings reveal that agility strongly correlates with higher overall performance and other procurement capabilities. The survey found that high-performing procurement organizations display key agile characteristics, including:
- Twice as likely to leverage hybrid managed service support models to access knowledge, capabilities and experience not available in-house.
- Ten times more likely to have fully deployed RPA solutions.
- Eighteen times more likely to have fully deployed AI / cognitive capabilities.
In addition, CPOs have been transcending their traditional roles, moving toward roles as transformational catalysts and intelligent strategists. High performing-CPOs spend almost 15% more of their time as strategists and target more than 50% of their time to be spent on strategic activities. Procurement has emerged as a key driver of competitiveness in modern business across a wide range of priorities — and CPOs must respond accordingly.
