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Deloitte 2019 CPO Survey — Insights Needed on Procurement Mastery in Action

05/13/2019 By


Deloitte has opened up the 2019 version of its annual CPO survey for participants to share their insights. It’s important to participate because the survey’s depth, rigor and relevance produce influential findings that have set the gold standard for procurement studies.

And this year’s edition is very exciting, especially for me. I’ve been doing procurement research and benchmarking for 20 years, and I was thrilled to not only be given a sneak peek into this year’s study design but to be made me an honorary member of Deloitte’s extended research team to provide input. So, my challenge became how to make a great product even better.

But you can participate too. CPOs and their direct reports are needed — and participants will get an intelligence briefing about the study’s results. At the end of this article, I’ll get more specific about the ROI of participating in this year’s study.

In thinking about what CPOs face these days, the first word that came to my mind was “COMPLEXITY.” People in procurement are dealing with massive (and increasing) complexity in the markets. Tariffs alone are wreaking havoc in so many supply chains (the latest ISM numbers show a project cost increase of almost 7% for those who said they were being affected). And obviously complexity is ramping up at the speed of the big data getting generated. But perhaps the biggest complexity drag comes from within: complexity from legacy operating models, antiquated business systems and fragmented toxic data. Procurement organizations must master this complexity, especially in the supply chain and in their internal value chains!

Ironically enough, the best supply chain research study that I think I’ve ever read was actually done by Deloitte around 15 years ago and it focused on the topic of supply chain complexity. It found that firms that were the “complexity masters” had profit margins 73% greater than others with even less complex environments. The study noted that “as globalization of manufacturing and innovation continue to accelerate, we believe that (complexity mastery) will no longer be an option but rather a requirement for survival and success.” Those words have never been truer than today! And Deloitte was talking about the idea of “mastery” long before its competitors.

OK, so let’s hone in on procurement and bring this discussion specifically to the CPO where the ability to master complexity is critical, especially since there is also an important concept of the “good complexity” that comes with adding more procurement value via more strategic procurement services, which are becoming increasingly digital. This digital transformation is, however, a double-edged sword because these new tools can create a very messy toolbox!

So, how do we measure this complexity mastery in procurement?

Well, one approach is to use some type of “Procurement ROI” type metric and analyze the capabilities and practices that drive that metric. Trust me, I know more about this topic than almost anyone else on the planet. The problem is that it not only is it a one-size-fits-all KPI (even though benchmarks/targets can be tailored by peer group), but it almost always comes down to savings, or any “hard” metric that is easily measurable. But that’s part of the problem. Mastery isn’t just about optimizing one particular skill like that of a master archer or even one particular metric (Sal Kahn did a good TED talk on this topic here in a different context). Rather, it’s about the critical capabilities that provide maximum option value to respond to succeed in the face of multiple types of complexity. Think of mastery as the targeted capabilities that create “performance resiliency” in the face of the unique complexity challenges that you face. This is the focus of the latest Deloitte study: assessing your capabilities relative to the complexity drivers and being able to drive value via new types of transformation (including digital transformation, of course).

I’ll follow up this post with more about the detailed contents of the study, but for now, there are some key differentiators in this study that I’ll highlight to CPOs and their direct reports who might be interested in this:

  • The study is very comprehensive, of course, and will offer deep and timely insights — as you’d expect.
  • The insights will be generally “complexity-adjusted” to allow tailoring of the outputs by industry (and potentially other complexity drivers depending on what the data says). Only study participants will get a one-on-one review of the survey results.
  • The study has many embedded questions that are part of other Deloitte studies that go beyond core Procurement: HR/Talent, Digital, Tax, Supply Chain, etc.
  • Obviously there’ll be a strong focus on digital. I’m very excited about this part of the study. It should hopefully have some eye-opening insights.
  • The study won’t be just a “metric dump” of infographics. I’ve been working with the team on formulating a ton of insights to explore and hypotheses to test. (And I apologize in advance to the Deloitte analytics team who’ll want to kill me.)
  • Although complexity is threaded through various parts of the study, it will also have a specific section dedicated to direct spend with lots of goodies in it. If you’re a manufacturer, it’s worth your while to participate, especially because participants will get a one-on-one review of the survey results.

One final quick note: For solution providers, of whom nearly all of you use the insights from this report, please forward this study participation link (and/or this article) to your CPO contacts (or anyone reporting to the CPO) so that we can get maximum sample size and maximum insights. Stay tuned for more on this study.