What Tactics do CPOs Think Drive the Most Value?

The consultants at Deloitte are just out with their 10th annual global survey of chief procurement officers, based on input from 350 CPO respondents.

Supply Chain Digest Says... Survey respondents were asked to cite their company’s biggest barriers to procurement improvement. Topping the CPO list was “conflicting priorities,” cited by 41% of CPOs What do you say? Click here to send us your comments   Click here to see reader feedback

The key areas of focus in 2023 for leading procurement organizations are as follows, according to Deloitte: creative operating model setup, talent management (recruitment, development, and retention) and digitization.

It uses the term “orchestrators of value” (OOV) to describe procurement performance leaders (top quartile), which it says s have a 25% performance advantage over their peers.

“Top CPOs are learning to serve as excellent “conductors”: recruiting the best talent, maintaining alignment, and inspiring top performance by communicating a clear and consistent vision,” according to the report.

Procurement organizations are being asked to do a lot, with eight enterprise procurement priorities being cited as important by 65% or more of CPOs, led by “driving operational efficiency” (74%), “enhancing ESG/CSR” (72%) and “digital transformation” (also at 72%), but all the eight priorities were closely bunched.

In terms of strategies the CPOs believe will drive the most value, perhaps surprisingly it was led by “supplier collaboration,” (cited by 62% of respondents), then a big drop off to 42% for “investing in digital transformation,” and number 3 “enhancing demand management” at 37%, as shown in the graphic from the report shown below:

In terms of core cost reduction through procurement, the report interestingly notes that this year there was 22% relative drop in CPOs’ “performance-to-plan” on cost savings. Only 30% achieved their targets (versus 50% from the last study), and nearly 20% had to reduce savings targets.

“Any CPO who thinks cost competitiveness can be parked while they ride the new wave of exciting priorities is in for a shock,” Deloitte says, adding that “It’s less a case of “or” and more a case of “in addition to” as uncertain markets lumber along in the general path of stagnation. For what remains of 2023, and likely deep into 2024, there will be a significant body of work to complete around clawing back increases seen over the past 12+ months, resetting contracts as commodity prices drop back down, and collaborating with suppliers.”

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The report’s has some interesting finding with regard to digitation. Specifically, “followers” said their first choice on how they would use a larger budget would be hiring more FTEs, but the Orchestrators, having already implemented a lot of process automation (with more than half having deployed or currently scaling robotic process automation (RPA) and other next-gen technologies), said they would invest in analytics first and external intelligence second. FTE hiring and improving data quality tied for third place.

However, the report says, there is still lack of clarity on what digitization of procurement really means.

“Many CPOs we speak with either cite confusion and paralysis about where and how to get started, or worse still, they have tried and failed to yield the benefits of the promised land that digitization offers,” Deloitte says.

Finally, survey respondents were asked to cite their company’s biggest barriers to procurement improvement. Topping the CPO list was “conflicting priorities,” cited by 41% of CPOs, the same percentage as “inadequate technology.” The third highest rated barrier was “talent capacity” cited by 36%.

The full report is available from Deloitte here: 2023 Global Chief Procurement Officer (CPO) Survey

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