Deloitte CPO Survey: “Is procurement now at a digital tipping point?”

Rising risk levels and a skills shortage are among procurement leaders’ main concerns at present. That’s according to Deloitte’s Global Chief Procurement Officer (CPO) Survey.

No less than 45% of CPOs questioned for the study report a rise in procurement-related risk as a direct result of volatility in emerging markets as well as geopolitical uncertainty affecting their supply chains. In parallel, 55% report an increase in external financial and economic uncertainty.

Of all the industries surveyed, consumer business respondents are the most concerned given procurement’s role to ensure product availability in locations that are now affected by uncertainty, instability and security risk.

Deloitte’s research also shows that resourcing continues to be a challenge. 62% of CPOs state that their team doesn’t have the skills and capabilities to deliver their procurement strategy, yet just under half of CPOs report that attracting talent in the last 12 months has been difficult. One third report that their training budgets are now less than 1% of total operating budgets (one quarter of what might be considered Best Practice).

James Gregson, EMEA head of sourcing and procurement at Deloitte, commented: “Risk and the widening skills gap are clearly a concern for CPOs. Weaknesses in global economic metrics and heightened levels of geopolitical uncertainty are two of the major themes for CPOs this year. On the talent side, we’re seeing training budgets being cut and a push towards outsourcing as a means of plugging the skills gap. This trend is most prevalent in the largest organisations*, where 40% are expected to pursue outsourcing for some element of their function.”

Time for a digital transformation

Despite these challenges, Deloitte’s research shows an increase in digital technology spend, perhaps suggesting that CPOs are looking at innovative solutions to address their business issues.

Gregson added: “Digital technology spend is on the rise, with 70% investing in self-service solutions. That’s up by more than one third in a year. Investment in mobile, cloud and social media is also increasing. These statistics would seem to suggest a shift towards digital, but careful work needs to be done first as 60% of CPOs admit they don’t have a clear digital strategy.”

He continued: “The key will be to make sure this strategy is in place first, such that the right technology is being used in the right way. Done correctly, a digital strategy can improve accuracy, speed and outcomes. Potentially, at least, this is a double-edged sword. Digital can either reinvigorate or replace procurement’s role. It’s up to the CPO in situ to set the strategy and lead the change, or otherwise risk being left behind.”

Specific UK statistics**

Levels of risk

Reported levels of risk are largely unchanged from last year, from 32% to 31%

40% of CPOs reported an increase in external financial and economic uncertainty

Talent and skills

65% of CPOs don’t believe their team has the skills and capabilities necessary to deliver their procurement strategy

Training budgets for 20% of respondents are now less than 1% of total operating budgets

8% of UK CPOs have found it significantly more difficult to attract talent in the past 12 months

Digital technology

77% of UK CPOs are investing in self-service portals, 54% in cloud-based computing and 33% in social media

Only 13% of UK CPOs report that procurement has a clear digital strategy aligned with the needs of the wider organisation

Conducted in association with Odgers Berndtson, the Global CPO Survey comprises a benchmark indicator of sentiment in the procurement function. The report is based on data received between 2011 and 2015. This edition contains responses from 324 of the most senior procurement leaders from 33 countries. The organisations for whom they work have a combined annual turnover of $4.4 trillion.

*The ‘largest’ organisations have an annual turnover in excess of US$50 billion
**The UK sample is based on 48 respondents with combined annual turnovers of £415 billion (US$596 billion)

Access copies of the full survey online at: www.deloitte.co.uk/cposurvey2016

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014 and as Editor of The Paper (Pro-Activ Publications' dedicated business newspaper for security professionals) in September 2015. Brian was appointed Editor of Risk Xtra at Pro-Activ Publications in May 2018.

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