Delving into the Future of Procurement: Insights from the 2023 Global CPO Survey
Discover how the role of procurement is evolving in the face of global challenges and opportunities. This article delves into the 2023 Global CPO Survey, revealing how procurement leaders are becoming Orchestrators of Value, driving cost savings, managing risks, and contributing to sustainability and diversity initiatives.
The 2023 Global Chief Procurement Officer (CPO) Survey, titled “Orchestrators of Value,” provides a comprehensive analysis of the current state and future trends of the procurement sector. The survey, conducted by Deloitte, gathered responses from nearly 350 senior procurement leaders across more than 40 countries. This article aims to summarize the key findings of the survey and provide insights into how procurement is evolving to meet the demands of a rapidly changing global market.
The survey reveals that procurement has become a key player in addressing the top risks and issues faced by businesses. With the global economy still reeling from the impacts of the COVID-19 pandemic, procurement-related risks and supply chain disruptions have increased significantly. In fact, more than 70% of the survey respondents indicated that these risks have increased in the past 12 months. This trend is expected to continue, with 43% of CPOs citing an overall increase in procurement risk in the 2023 study, compared to 20% in the 2021 study.
One of the key challenges identified by the survey is the issue of cost savings. The study showed a slight de-prioritization of enterprise margin improvement via cost reduction as a top issue compared to the last study. However, it was the most cited “strong priority” (43% of firms), reflecting a response to the number one organizational risk by far: inflation. This headwind contributed to a 22% relative drop in CPOs’ “performance-to-plan” on cost savings. Only 30% achieved their targets, and nearly 20% had to reduce savings targets.
The survey also highlights the importance of environmental, social, and governance (ESG) initiatives in procurement. One key focus has been supplier diversity, equity, and inclusion (DEI). Regulatory and geopolitical compliance is the top CPO-cited area to which procurement is contributing in the broader ESG topic. However, regulations around DEI and supplier diversity vary across nations, leading to different focuses and challenges in different regions.
The survey introduces the concept of “Orchestrators of Value,” referring to top-quartile orchestrators who deliver top-quartile performance. These Orchestrators of Value have a 25% performance advantage over their peers. They are characterized by their focus on operating model design, talent strategy, and digitization maturity. These areas allow them to successfully deliver on their commitments while addressing challenges and constraints.
In conclusion, the 2023 Global CPO Survey reveals a procurement sector that is evolving to meet the demands of a rapidly changing global market. Procurement leaders are becoming Orchestrators of Value, driving cost savings, managing risks, and contributing to sustainability and diversity initiatives. However, challenges remain, particularly in the areas of cost savings and ESG initiatives.
As the role of procurement continues to evolve, what strategies are your organization implementing to stay ahead? How are you addressing the challenges of cost savings and ESG initiatives? We invite you to share your thoughts and experiences in the comments below.