Deloitte’s 2020 Chief Procurement Officer Flash Survey explores the challenges faced by CPOs and procurement leaders to provide insights on the profession’s future and guidance on how to best navigate these unprecedented times to ensure continued success.
The survey highlights 10 key trends procurement leaders should watch for in the coming months.
1. Cost management will become a top priority
The survey found that managing cost was the number one focus for CPOs. Procurement leaders are spending up to eight times more of their working day focussed on cost with two-thirds of organisations actively looking into cost reduction strategies.
2. Procurement teams will re-evaluate their supply base
COVID-19 has exposed supply chain risk like never before. As a result, procurement leaders will look to identify weak points within their supply chains and re-evaluate their supply base. Almost 50% of survey respondents plan to expand their supply base, which might include re-shoring, near-shoring or on-shoring operations, or finding suppliers in new geographies Meanwhile, 25% of organisations plan to consolidate their supply base in a drive to improve visibility and develop meaningful supplier relationships.
3. Leaders will prepare for a major economic downturn
Just 28% of those surveyed believe a speedy return to pre-pandemic economics can be achieved. Many experts predict a significant downturn, which could extend well into 2021.
4. Organisations will better consider employee wellbeing
The year 2020 has had major ramifications for employee wellbeing. The impact of restrictions, lockdowns, and border closures has taken its toll on the mental health of many people. As many as 80% of employers cited employee wellbeing as a top priority in the coming months.
5. Managing supply chain disruption will demand a level of short-termism
Supply chain disruptions in 2020, which featured shipping delays, shifting customer demand, and factory closures, saw many organisation struggling to ensure continuity of supply.
To mitigate further disruption, many organisations employed (and will continue to employ) short-term tactical measures such as increasing inventory, activating alternate sources, or investing capital into the supply chain.
6. Procurement priorities will change
The past year has forced procurement teams to focus their efforts on disaster recovery strategies. How do manage remote or significantly depleted teams? What to do when a critical supplier is forced to shut their factory doors? This has seen key success factors, including data quality and digitization, move further down the list of CPO priorities.
7. Supplier visibility will become a key focus for procurement leaders
It has never been more crucial for procurement teams to develop trusting and transparent relationships with their critical suppliers, and yet just 50% of leaders surveyed claimed to have good visibility into their tier-one supplies.
CPOs and procurement leaders must focus on better understanding supplier risk to enable the implementation of robust contingency plans.
8. Successful procurement teams will focus on three key factors
A “thriving” organisation is defined by Deloitte by three key factors.
- High visibility into tier one and tier two suppliers.
- Prioritising digitisation.
- Looking to expand
A third of survey respondents expect to be “thriving” within three to six months.
9. CPOs will invest in new technologies
To improve and enhance business operations, many CPOs will invest in advanced technology to improve supply chain visibility and mitigate risk.
Get informed about procurement technology by joining us at PASA’s upcoming Tech-focused (virtual) events:
- IT Day 3rd March
- PASA ProcureTECH 24th and 24th March 2021
Download our 2021 event schedule here: https://procurementandsupply.com/wp-content/uploads/2020/11/PASA-2021-Conference-Schedule-v4.pdf
10. Reflecting on the past year’s mistakes will set procurement up for success in 2021
Deloitte’s survey report highlights the value in reflecting on past mistakes. For example, 18% of respondents expressed their regret at not digitising quickly enough. For procurement to secure a seat at the table, they must implement better risk mitigation strategies, improve visibility, and upgrade outdated systems.
Deloitte’s 2020 CPO Flash Survey is available to download here.