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The Hackett Group’s global CPO survey reveals cost is back

The Hackett Group Global CPO Report

PASA content partner, The Hackett Group, a global procurement and finance consulting group, recently conducted a prestigious annual CPO study, with the results offering a keen insight into global trends in procurement.

Over the last two years, PASA has encouraged participation locally throughout the ANZ region. 

In return, The Hackett Group has kindly split ANZ responses in their data analysis and shared these region-specific results with our PASA CPO community through the PASA Connect CPO Roundtable (15th March) and annual CPO Exchange (22nd-23rd August).

This year’s survey did not disappoint, with improving spend cost reduction taking over the top priority spot for CPOs in 2024, as concerns over ability to continue revenue growth kick in, alongside high interest rates, fears of recession, and the potential for labour and skill shortages. 

The results reveal that procurement leaders are also taking an active approach to Generative AI (GenAI), evaluating its function in improving both efficiency and effectiveness.

Ensuring supply continuity – last year’s greatest concern – fell to second place in this year’s top list of global priorities, while combating inflationary price increases sits at third place, followed by acting as a strategic advisor which made a return to the top five.

Transforming the procurement operating model (fifth) makes its debut in the top priorities this year as executives consider the impact of evolving technology, including GenAI.

Additional highlights include:

  • Procurement is once again anticipating an efficiency gap in 2024 as workload is expected to increase by 8 percent, while budgets are expected to rise by only 1.6 percent
  • Technology is likely to be spared from potential cuts, with an anticipated spending increase of 4.6 percent, as procurement organisations use technology to bridge the gap
  • Data analytics and reporting topped the list of planned improvement initiatives for 2024, followed by talent management
  • Procurement organisations have a high level of adoption for end-to-end core procurement technologies, with projected double-digit growth in 2024 to support continued digital transformation efforts
  • 28 percent of procurement organisations have already added GenAI to their portfolio of procurement technology solutions

Commenting on the survey’s findings, The Hackett Group’s Principal and Global Procurement Advisory Practice Leader Chris Sawchuk said spend cost reduction is perennially a high priority for procurement, but economic concerns have propelled it back into the top spot this year. 

“In addition to the array of global economic challenges, companies are concerned about their ability to grow revenue, so cost focus and margin expansion are key. Many companies are even hoping to claw back some of the inflationary cost increases to support margin growth,” he added.

“Procurement teams are projecting higher levels of savings in 2024 for both purchase cost reduction and cost avoidance. But most procurement organisations have a significant opportunity to drive improved value on lean procurement cost structures.”

Meanwhile, Amy Hillcox, The Hackett Group’s Senior Research Director of Procurement and Purchase-to-Pay Advisory said that supply chain disruption risk remains top of mind for many procurement teams due to ongoing geopolitical conflicts. 

“Managing supply disruption is critical to protecting revenue and profitability, and several capabilities key to supply continuity – including supplier relationship management and third-party risk management – were identified as critical development areas in our research,” she added. 

“Procurement must continue to enhance its capabilities in these areas, engaging in upfront risk monitoring across a broader set of risk domains, and continuing to monitor and mitigate risks using real-time data and insights through the full supplier life cycle. 

“Teams also must stay abreast of the developments in digital tools – such as AI and Generative AI – to maximise visibility throughout the supply chain, while leveraging market intelligence data from multiple internal and external sources.”

Download The Hackett Group’s 2024 Procurement Key Issues research, “The CPO Agenda” here.

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