Deloitte recently released the results of their annual Global Chief Procurement Officer (CPO) Survey. The findings paint a picture of the struggles and successes of industry leaders during the new phase of post-pandemic recovery. With results from a sample of 400 respondents from over 40 countries, the statistics provide a global perspective on how CPOs are expected to shift their procurement strategy focus from operational efficiency to agility. This shift may be the key to adapting and adjusting in the face of adverse and unexpected economic fluctuations.
Key Trends in Procurement
The survey responses outline seven key takeaways from businesses facing hardships and businesses highly performing during post-pandemic recovery.
Stakeholder and Customer Management
High-performing businesses are transitioning from a linear sourcing approach to third-party contingent workforce management solutions preferred by stakeholders. By outsourcing the management of service providers, businesses are taking a consumer-centric approach to fulfillment.
Risk Assessment and Management
According to the survey, more than fifty percent of respondents had experienced key suppliers going bankrupt over the past 12 months. To a smaller extent, 32% had lost revenue and 11% had realized reputational damage due to supplier issues. Though many of these issues may be related to the increased market volatility of the past year, it has also reaffirmed the importance of risk and vendor management in business continuity planning.
Flexible Resource & Workforce Models
Many CPOs are adapting to new hybrid service models and re-skilling workers to make the most of their internal resources. This approach helps save companies time and money as they eliminate the need to hire and train new full-time employees.
Less Manual Processes
Highly performing businesses reported spending 15 percent less time on these tasks, freeing the schedule to focus on more time-efficient activities. Due to the accelerated adoption of new technologies and automation, decreasing time spent on manual processes will remain key to maintaining competitiveness.
Technology enables companies to improve data visibility and facilitate better collaboration with suppliers via operational transparency. High-achieving companies are 10 times more likely to implement automated workflows and are 18 times more likely to take advantage of AI capabilities to offload manual tasks.
Supply Chain Vulnerabilities
Businesses will need to adapt to supply chain fluctuations. 56 percent of those surveyed reported that their key suppliers had become bankrupt or had their operations hindered. 36 percent also reported that their suppliers failed to conform to new requirements.
Focus on CSR Initiatives
The survey found a 22 percent increase of CPOs indicating corporate social responsibility (CSR) as a top priority from 2019 to 2021. CSR efforts are proven to help businesses attract and retain top talent and create positive work environments.
Going Forward: Adaptability & Agility
The Global CPO Survey findings suggest that future procurement strategies must shift to focus on adaptability and agility. This can be accomplished in a number of ways. The first is to increase sourcing cycle frequency. CPOs can decrease the cost and time spent on procurement, decreasing the hours spent fulfilling an order. By increasing the frequency of this cycle, orders are completed faster, and efficiency is optimized.
Another way to remain agile is to readjust priorities to parallel those of key stakeholders. This can be accomplished by focusing on CSR initiatives such as donating, giving back to the community, sourcing ethically produced materials, etc. The key is to identify what is important to stakeholders and integrate the value into your procurement strategy.
Finally, one should design a long-term strategy to deliver value to the business. The long-term strategy should involve investment in technology to leverage RPA and AI. The initial investment will yield positive returns later in the procurement process. The strategy can also involve developing a “playbook” for certain operations in response to scenarios or unexpected events.
Re-skilling workers to apply their talents to other areas is another method for delivering value to a business through building an agile workforce. A long-term strategy should also involve hiring a third-party or partner supply chain management solution. Transitioning from a linear sourcing approach to a holistic supply management approach will allow you to shift focus to more valuable aspects of the business.
More Efficient Vendor Management
Hiring a Managed Services Provider (MSP) for contingent, non-employee workers can ease the burden of managing supply chain fluctuations. With over 50 percent of suppliers going bankrupt, CPOs have to inefficiently spend time procuring new suppliers. Leveraging an expert third party, such as HCMWorks, can provide the agility needed in a new procurement strategy. To learn more about how our MSP services can benefit your company, contact our team of experts.
Your blog post content here…