eng
About   |   Newsletter
Demand & Supply Chain Management Evolution




30 Oct 2019
Deloitte Global Chief Procurement Officer Survey 2019: Faced With Economic and Trade Threats, CPOs Pressured to Cut Costs

Deloitte
Deloitte

Key takeaways

  • The complex role of the chief procurement officer (CPO) now faces emerging economic and political risks in every direction they turn — and they feel pressured to cut costs along the way.
  • This year’s survey saw a spike in responses not previously top of mind: a potential economic downturn and the “trade war.” External risks are gaining the attention of CPOs, even more so than continually pressing internal risks, like digital transformation.
  • Thinking digitally, CPOs are focused on analytics, while AI and blockchain — technologies driving the Fourth Industrial Revolution — are of little focus and are not being utilized at scale.

 

Why it matters to business leaders

Make no mistake: CPOs are facing a challenging global business landscape and reacting accordingly — yet many do not feel prepared to tackle these challenges head-on. The “Deloitte Global CPO Survey 2019 ” found a growing trend toward safeguarding against external risks as the current economic environment presents a number of emerging issues from every corner of the globe. From goods to services, to equipment and more, external supply markets were already complex. However, when coupled with digital transformation and expanding geopolitical risks, procurement has become more complex than ever before, and ever more important to organizations at large.

What’s more, only 39% of respondents feel prepared “to a large extent” to combat and navigate these risks, while only 5% feel “completely” prepared. 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. In fact, the CPO may be seen internally as a leading expert on uncertainty, raising the stakes for the role as it becomes increasingly strategic and higher profile to executive leadership.

 

Planning for an economic downturn — at home and abroad

An economic downturn was the No. 1 risk cited by survey respondents, with 46% identifying it as a top risk impacting procurement. In considering a possible downturn, the majority of respondents plan to cut costs as a means of ensuring long-term success. In fact, cutting costs remains a primary business strategy across sectors — 70% of respondents indicated they are very likely to cut costs over the next year.

Also top of mind are several geopolitical issues with the potential to wreak havoc on the global economy. Respondents cited Brexit as the top such issue, alongside weakness and/or volatility in emerging markets and the Middle East, plus spillover effects from the slowdown in China. These are considerations that are only growing in attention from CPOs — no matter where they’re based, and they continue to underscore the increasingly global nature of the modern CPO role.

 

Safeguarding against trade uncertainty

The “trade war” was also identified as a top risk by 34% of respondents — the No. 4 risk cited, and further evidence that geopolitical concerns and global business are deeply intertwined. Rather than acting on their trade woes, procurement leaders actually are practicing patience as these issues play out in the larger political landscape. Trade disputes, for example, are not prompting CPOs to pursue a redesign of their supply chains. Instead, the majority of organizations are proactively planning for every possibility, likely making small adjustments along the way with other mitigation tactics, making sure not to over-correct.

 

Anticipating and capitalizing on industry trends

While macroeconomic risks loom, the second, third, and fifth risks cited by respondents reflect internally on organizational structure, talent models and digital capabilities. Thinking digital, CPOs are focused on analytics, viewing it as the technology that will have the most impact on their business moving forward, further demonstrating the desire to take a proactive and predictive stance. Meanwhile, AI and blockchain — technologies driving the Fourth Industrial Revolution — are of little focus and are not being fully utilized.

 

Key quotes

In the current environment, every CPO should consider doing three things: make an honest assessment of your operational and financial risk exposure; ‘amp up’ proactive internal and external collaboration to be able to better identify and mitigate emerging risks; and develop and execute a playbook to navigate through both internal and external risks — ASAP.

Brian Umbenhauer, principal, Deloitte Consulting LLP and global service offering leader for sourcing and procurement

CPOs have more technology tools at their disposal than ever before — they just need to make sure they use these tools properly and plan for the risks associated with them. Still, the potential of these technologies to cut costs and weather uncertainty is tremendous. My best advice? Go digital.

–Lee Barter, partner, Deloitte Canada, Americas sourcing and procurement leader

 

To see additional results from Deloitte’s Global CPO Survey click here.

 

 


About the Survey
Since 2011, the Deloitte Global Chief Procurement Officer (CPO) 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. These insights have, over the years, helped members of the C-suite, procurement leaders, business partners, suppliers, and supporting technology providers in furthering their ambition, strategies, and performance.

The 2019 survey was conducted in association with procurement market intelligence firm Spend Matters and Odgers Berndston. In this year’s survey, 481 procurement leaders from 35 countries took part, representing organizations with a combined annual turnover of US$5 trillion.

About Deloitte
Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world’s most admired brands, including nearly 90% of the Fortune 500® and more than 5,000 private and middle market companies. Our people work across the industry sectors that drive and shape today’s marketplace — delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthy society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Our network of member firms spans more than 150 countries and territories. Learn how Deloitte’s more than 312,000 people worldwide make an impact that matters at www.deloitte.com.

 

 

 

 









 
           Circular Economy     Industry 4.0     Blockchain 

     Internet of Things     Omni Channel 


Join us on


News & Trends
 

Last update 5 Nov 2019
Global manufacturing downturn eases at start of final quarter
   Source: J.P.Morgan Global Manufacturing PMI   -  IHS Markit



Chemicals & Pharmaceuticals

Maximum safety and reliability and reducing the costs for our customers at the same time: we are able to offer the chemical industry an extensive range of chemical logistics services that hardly any other logistics specialist can match. It is our goal to harmonise our services with your specifications in s...


7 Supply Chain Predictions: Looking Ahead with 2020 Vision

The year 2020 approaches with promise amidst a backdrop of innovation and transformation occurring at a speed never witnessed before. We’re experiencing a digital revolution that is changing the way we live, wor...

   

Education
 

Local & Regional Agenda
 


Resources
 
FLORIM CERAMICHE SPA: On the road to Industry 4.0: advanced planning & finite capacity scheduling

Florim Ceramiche SpA has been worldly recognised as a leader in ceramics industry for more than 50 years, thanks to its committment to research, innovation and social responsibility. Florim business style can be summa...

Investigating Sales Management Role in Commercial Returns: Enhancing the changes of cusomer needs

The business-to-business competitive environment is dramatically changing, and firms need to learn how to keep up. Manufacturers must attempt to deliver incremental value to enhance business relationships and to do this ...


International Agenda