CPO Survey Insights: Gaining Value While Focusing on Cost Reduction

We recently launched Deloitte Consulting’s annual Global CPO Survey. Last year’s edition included feedback from more than 180 procurement leaders across 17 countries, and we’re excited to provide an even broader perspective this year. Our findings from last year (click here to review the 2013 survey summary) focused on the evolving theme of procurement executives learning how to lead in an expansionary – if still cautious – economic environment after years of leading through a tight focus on cost savings.

Given the long-running emphasis on cost reduction, I found a few of the themes from last year pretty surprising:

  • CPOs are seeking new ways to deliver value to the organization in this new environment. Nearly two-thirds of CPOs feel they were only somewhat effective at delivering value to their stakeholders. Many highlighted innovative solutions for their procurement organizations to bridge this gap, such as prioritizing new product or market development (85%) and investing in analytics to identify incremental value (68%).
  • There is an increased emphasis on creating competitive advantage through supplier relationships. While cost reduction continues to be a priority to fund growth, expansion is also creating opportunities for businesses to lean on their supply chains for competitive advantage – often through identifying new suppliers and/or utilizing innovative supplier incentive models. In fact, CPOs named stronger supplier collaboration as one of the top procurement levers they plan to adopt moving forward.
  • With increased focus on supporting the top line, procurement is getting more involved in risk management. As strategies have shifted from a pure cost-reduction focus to include supporting top line growth, and as regulatory scrutiny increases, there is a growing awareness among CPOs (62%) that they need to become more engaged in risk management to mitigate the expanding risks in their often global supply base. Still, only around 40% of CPOs are heavily engaged in risk management, signaling that there is much more to do in this area.
  • CPOs view more effective business partnering as critical to their success.  Finding incremental value from deeper supplier relationships and enhanced risk management requires close collaboration with the business. As noted above, most CPOs don’t feel they are effective in delivering value to the business, so it seems likely that a lack of true integration between procurement and broader business objectives is hampering effectiveness.

I’m also extremely curious to see how this year’s results compare, particularly whether CPOs are making any progress in pivoting toward new strategies to reflect the changing economic environment.

If you are a procurement executive (typically VP-level or higher), you can take part in this year's Global CPO Survey, which is open through Sept. 26. Click here to participate. And, for your time, you’ll be one of the first to receive the summary report (published later this year). We can also review a tailored version of the findings with you.

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