74% of CPOs look to cut costs as fears of economic downturn loom

In BICSI Bytes, Newsby info@bicsi.com.au

Chief Procurement Officers (CPOs) – business leaders charged with managing spending from the corporate coffers – see a potential economic downturn as the number one risk in the coming year, according to the latest the Deloitte Global Chief Procurement Officer (CPO) survey. And 74% of respondents in the Asia Pacific region identified cost-reduction as their top priority over the next 12 months, as a way to potentially manage that risk.

Commenting on the survey, John O’Connor, Deloitte Asia Pacific Sourcing and Procurement Leader said: “CPOs are facing a challenging global business landscape and reacting accordingly. Yet many do not feel prepared to tackle these challenges head-on. The survey found a growing trend toward safeguarding against external risks, as well as managing internal challenges, as the current economic environment presents a number of emerging issues from every corner of the globe. From trade wars, to climate change, talent shortages and regulation: CPOs are expected to manage complexity on multiple fronts.”

The survey highlights varying degrees of maturity and success amongst CPOs around the world in dealing with internal and external complexity, addressing talent challenges and mastering procurement technology and digital transformation opportunities.

Faced with an unprecedented amount of uncertainty, today’s CPOs are pressured to form contingency plans and enlist the help of the larger C-suite in becoming masters of complexity who can weather these risks.

“While many CPOs may feel like they’re ready to drown in a sea of complexity, they can still find ways to stay afloat by changing their lens on improving core value chains and organisational resources, tap into transformational digital capabilities to revolutionise procurement processes, and turn apparent risks into opportunities to create new value,” continued O’Connor.

While 55% of respondents in the Asia Pacific region feel that the level of procurement related risk in their organisation has increased over the past 12 months, this is below the global average of 61%.

APAC CPOs are slightly more focused than their global peers on reducing costs (74% versus 70% globally), and less focused on introducing new products or services. They believe supplier collaboration, restructuring supplier relationships, and reducing total life cycle costs will deliver the most value.

66% of respondents in the Asia Pacific region identified analytics as the area within technology that will have the most impact on their business within the next two years. Yet in order to develop digital capabilities, APAC respondents said they were more likely to focus on data visualisation and RPA development than predictive analytics. The biggest reported barriers to digital implementation are quality of data and lack of internal IT resources/support.

CPOs are also concerned about professional development and resourcing, with 90% of Asia Pacific respondents not confident that procurement professionals in their organisation possess the necessary capabilities to maximise the use of digital technologies.

In the 2019 survey, 481 procurement leaders from 35 countries took part, including 62 from the Asia Pacific region, representing organisations with a combined annual turnover of US$5 trillion.