Executive Briefings

Talent, Technology, Risk Are Top Concerns of Heads of Procurement Units

A lack of talent, technology issues and geopolitical risks are amongst procurement leaders’ main business concerns, according to Deloitte's fourth annual global chief procurement officer (CPO) survey.

Almost six in 10 (57 percent) CPOs currently believe their existing teams do not have the necessary skills to deliver their organisation’s procurement strategies. Skills most lacking include leadership, influence, communication and relationship building.

Yet amid rising demand for speed, greater efficiencies and new skills sets, 49 percent of respondents feel the market for talent has become further constrained in the past year. In particular, there is now a resource requirement for talent to support a drive towards greater innovation, such as the use of analytics.

Over half of CPOs (53 percent) are concerned that existing procurement systems are difficult for the business to use, potentially causing intense frustration. This increases to 62 percent for the largest organisations (more than $50bn in turnover).

James Gregson, UK head of sourcing and procurement at Deloitte, explains: “With 81 percent citing improved financial prospects for their businesses, CPOs are now turning their attention towards corporate growth. It is clear that a new approach to recruiting talent and developing skills is needed, supported by advancements in procurement technology. This will allow organisations to better manage scale and complexity.”

It is clear that CPO’s perception towards risk is shifting, with 25 percent now concerned about geopolitical risk, over triple that perceived in 2013.

Ian Stewart, chief economist at Deloitte, says: “The survey results show CPOs see growing geopolitical risk. This echoes the sentiment of other c-level executives.”

As a consequence, supply chain risk has undoubtedly increased for most procurement leaders (43 percent), from retailers who cannot ship product to stores in previously benign locations, to energy firms grappling with sanctions.

In the UK specifically, CPOs are particularly worried about risks relating to information security, with 40 percent expressing concern, compared to the 28 percent international average.

On a more positive note, almost one-third of procurement leaders perceive themselves as highly regarded strategic business partners to the rest of the organisation (28 percent).

These procurement leaders and their teams are being invited to participate in key growth activities such as new product development, M&A activity and securing innovation from suppliers.

With these factors combined, 30 percent of CPOs are looking to increase levels of outsourcing in operational and transactional activity in the next 12 months.

Gregson says, “This move to shared services, whether in-house or outsourced, might provide one part of the multi-speed gear box required to deliver efficiency. It could also fund the skills and technology needed to develop the requirements expected of procurement in the years ahead.

“These results reflect the improving global business environment’s impact on traditional models of procurement. As we enter 2015, companies will be looking for innovation to support this growth. Although there are still challenges to address, procurement functions are likely to become ever more fundamental to their organisation’s development.”

The full survey is available, click here.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited.

Source: Deloitte LLP

Almost six in 10 (57 percent) CPOs currently believe their existing teams do not have the necessary skills to deliver their organisation’s procurement strategies. Skills most lacking include leadership, influence, communication and relationship building.

Yet amid rising demand for speed, greater efficiencies and new skills sets, 49 percent of respondents feel the market for talent has become further constrained in the past year. In particular, there is now a resource requirement for talent to support a drive towards greater innovation, such as the use of analytics.

Over half of CPOs (53 percent) are concerned that existing procurement systems are difficult for the business to use, potentially causing intense frustration. This increases to 62 percent for the largest organisations (more than $50bn in turnover).

James Gregson, UK head of sourcing and procurement at Deloitte, explains: “With 81 percent citing improved financial prospects for their businesses, CPOs are now turning their attention towards corporate growth. It is clear that a new approach to recruiting talent and developing skills is needed, supported by advancements in procurement technology. This will allow organisations to better manage scale and complexity.”

It is clear that CPO’s perception towards risk is shifting, with 25 percent now concerned about geopolitical risk, over triple that perceived in 2013.

Ian Stewart, chief economist at Deloitte, says: “The survey results show CPOs see growing geopolitical risk. This echoes the sentiment of other c-level executives.”

As a consequence, supply chain risk has undoubtedly increased for most procurement leaders (43 percent), from retailers who cannot ship product to stores in previously benign locations, to energy firms grappling with sanctions.

In the UK specifically, CPOs are particularly worried about risks relating to information security, with 40 percent expressing concern, compared to the 28 percent international average.

On a more positive note, almost one-third of procurement leaders perceive themselves as highly regarded strategic business partners to the rest of the organisation (28 percent).

These procurement leaders and their teams are being invited to participate in key growth activities such as new product development, M&A activity and securing innovation from suppliers.

With these factors combined, 30 percent of CPOs are looking to increase levels of outsourcing in operational and transactional activity in the next 12 months.

Gregson says, “This move to shared services, whether in-house or outsourced, might provide one part of the multi-speed gear box required to deliver efficiency. It could also fund the skills and technology needed to develop the requirements expected of procurement in the years ahead.

“These results reflect the improving global business environment’s impact on traditional models of procurement. As we enter 2015, companies will be looking for innovation to support this growth. Although there are still challenges to address, procurement functions are likely to become ever more fundamental to their organisation’s development.”

The full survey is available, click here.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited.

Source: Deloitte LLP