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Leadership: Driving innovation and delivering impact The Deloitte Global Chief Procurement Officer Survey 2018 Consulting
Leadership:
Leadership: Driving
Driving innovation
innovation and
and delivering
delivering impact
impact|| The
The Deloitte
Deloitte Global
Global Chief
Chief Procurement
Procurement Offi cer Survey
Officer Survey 2018
2018
Introduction Introduction
Executive summary
Welcome to the annual Deloitte Global Chief Procurement
Officer (CPO) survey. For the past seven years, our survey
Market outlook
has provided a global benchmark of the sentiment of
procurement leaders and an insight into the key themes and
Value and collaboration
challenges facing procurement, including market dynamics,
Talent and leadership
value and collaboration, talent and leadership, and digital
procurement.
Digital procurement
The survey was conducted in association with Odgers Berndtson. Five hundred and four
procurement leaders from 39 countries took part, representing organizations with a combined
annual turnover of $5.5 trillion.
Action starts here
Whether you are a member of the C-suite, a procurement leader, business partner,
Industry and regional overviews procurement practitioner or supplier, we hope that you will find this report valuable
for further developing your ambition, strategies, and performance.
About the participants We would like to thank the many executives who have contributed their time and insights
for this survey. We look forward to continuing the journey with you.
Acknowledgements
Regional and country contacts
Further insights
Brian Umbenhauer Lance Younger
Global Head of Sourcing & Procurement EMEA Head of Sourcing & Procurement
Endnotes Principal Partner
Deloitte Consulting LLP Deloitte Consulting MCS
Watch Brian and Lance talk about the survey findings
1
01
Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Introduction Survey findings at a glance
Executive summary 1 5
78% 58% 54% 73% of procurement believe they have the support of their organization's leadership
Market outlook
Value and collaboration
Cost reduction New products/market Managing risks
development
Talent and leadership
Remain the top business strategies for procurement leaders
2 6
Digital procurement 4
61% of procurement leaders delivered better year-over-year
Overall supply chain transparency is poor with
savings performance than in 2017 Only one in four
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Action starts here 23.5% procurement leaders
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believe they are
Worse than last year
excellent business
Industry and regional overviews 9% partners contributing of procurement leaders
The same as last year significant strategic
Better than last year having limited or no
value visibility beyond their
About the participants 6.5%
Tier 1 suppliers ...
No formal
performance tracking
Acknowledgements
3
Regional and country contacts Procurement leaders are primarily focused on specific procurement levers to deliver value over the next 12 months
Further insights
Endnotes Consolidating Reducing total life Increasing Specification Reducing total
spend cycle/ownership costs competition improvement ownership costs
2 02
Leadership: Driving innovation and delivering impact
impact | The Deloitte Global Chief Procurement Officer
Officer Survey 2018
Introduction
Executive summary 7 8 The most common leadership traits in procurement are ...
rganization's leadership
51% of procurement leaders believe their teams
Acting as a role model Collaborating internally and externally to deliver value Delivering results
do not have sufficient capabilities to deliver on their
Market outlook 23% 20% 14%
procurement strategy
2017
Value and collaboration
60% 40%
Talent and leadership
2018
Digital procurement 51% 49%
6%
ly chain transparency is poor with
5%
Leading Innovation 8%
9 Pages from print document
Conversely, to be inserted,
strategic leadershipand traitscentred
such as... here at 100% Positive scale... digital transformation
Action starts here
(297x210mm) disruption ...are not widely evident
33% of procurement leaders believe that their digital
10
procurement strategy will enable them to deliver on their
Industry and regional overviews
ent leaders objectives and value 010101010000111001001011001000010110101010100001110010010110010000101101010101000011100100101100100001011010101010000111001001011010100001110010010110010000101101010101000011100100101100100001011
d or no
ond their
ers ... About the participants
Acknowledgements 010101010000111001001011001000010110101010100001110010010110010000101101010101000011100100101100100001011010101010000111001001011010100001110010010110010000101101010101000011100100101100100001011
... is expected to have the most impact on procurement in the next two
Regional and country contacts 11
Modern technology usage is low,
Further insights with only one-third of procurement
leaders using technologies such
as predictive analytics and
cificationEndnotes Reducing total collaboration networks
rovement ownership costs
03
3
Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Introduction Executive summary
Executive summary
A clear shift in procurement focus toward High performance
capabilities
innovation and value requires an acceleration Executive Leadership
Market outlook advocacy
in the pace of change especially in leadership,
Value and collaboration
talent, and digital procurement.
Procurement has continued to successfully deliver short-term savings
Talent and leadership and manage risk to support growth during a period of uncertainty.
As national and global economies improve, procurement has a pivotal
role to play in increasing supply chain transparency, accessing supplier
Digital procurement innovation, and delivering enterprise wide cost reduction. Exceptional Balanced Strategic
procurement supplier, business, and digital leadership will differentiate scorecard decision
those organizations that deliver an impact that matters. making
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Action starts here
(297x210mm)
Our research on high-performing procurement leaders shows that there
are seven key capabilities where high performers out performed other 100 75 50 25 25 50 75 100
Industry and regional overviews procurement leaders:
• Executive advocacy
About the participants
• Leadership – supplier and procurement
• Strategic decision making
Acknowledgements
• Talent capability Supply Talent
chain capability
Regional and country contacts transparency
• Digital procurement
• Supply chain transparency
Further insights
• Balanced scorecard
In comparison to last year, high-performing procurement leaders continue High performers are defined as those
Endnotes to focus on executive advocacy, strategic decision making, talent capability,
Overall average
procurement leaders who delivered
and digital procurement. Three new capabilities that differentiate high better savings than last year and are
High performer
performance from the average have also emerged this year: leadership, more effective at business partnering.
Digital procurement
balanced scorecards, and supply chain transparency.
4 04
impact| The Deloitte Global Chief Procurement Offi
Leadership: Driving innovation and delivering impact Officer
cer Survey 2018
Introduction
Executive summary
Market outlook
Value and collaboration Value and collaboration Talent and leadership Digital procurement
Procurement alignment to executive and business priorities, Over half our survey respondents believe their teams do not The proliferation of digital tools and applications will likely
measured through mutually agreed performance metrics, will have the necessary skills to deliver their procurement strategy, continue to grow in importance and impact for procurement
Talent and leadership likely continue to enhance the effectiveness of procurement and the recruitment market is becoming more challenging; leaders. In order to stay relevant within the business,
as a strategic business partner. However, the continuing fall in yet there is less spent on training and deployment of talent procurement needs to wake up to the reality that now confronts
use of supplier collaboration as a lever for delivering value is a development strategies. Planned training on “softer skills” such it. Progress and adoption has been slow over the past year and
Digital procurement concern, especially given the increased focus on the contribution as business partnering and emotional intelligence, as well as on the survey findings show that procurement leaders remain
of procurement to product/market development and innovation. digital skills, points to a reduced focus on training in 2018. hesitant about investigating new digital tools and technologies
Furthermore, our findings show that many organizations arePages from print document to be inserted, and centred here at 100% scale... such as artificial intelligence, robotics, and blockchain. Digital
Action starts here leaving themselves exposed to potential supply chain disruption What is clear is that there (297x210mm)
is a direct correlation between supply networks are evolving, connecting all parts of the
and margin erosion by having limited visibility of their supply stronger leadership capabilities, higher spend on training, supply chain, and insight-driven organizations are applying
chains beyond the first tier. Improved transparency of pricing, and enhanced performance. This is also true of leadership at advanced analytical capabilities to enhance performance. Digital
Industry and regional overviews supplier locations, and critical dependencies can help suppliers. So, the question must be asked why procurement transformation is inevitable and high-performing organizations
procurement functions deliver greater value while avoiding leaders are not focusing more on talent and leadership capability are leading the way on adoption.
potentially significant regulatory, reputational, and development.
About the participants operational risks.
Digital transformation is
There is a direct correlation
Acknowledgements
Improved transparency of inevitable and high-performing
between stronger leadership
pricing, supplier locations, organizations are leading the
Regional and country contacts
capabilities, higher spend
and critical dependencies can way on adoption.
on training, and enhanced
Further insights
help procurement functions
performance.
Endnotes deliver greater value.
05
5
Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018
Introduction
Executive summary
Market outlook
Market outlook
Value and collaboration
Talent and leadership
Digital procurement
Action starts here
Industry and regional overviews
About the participants
Acknowledgements
Regional and country contacts
Further insights
Endnotes
06
Leadership: Driving innovation and delivering impact
impact | The Deloitte Global Chief Procurement Officer
Officer Survey 2018
Introduction
Executive summary
The world economy enters 2018 with good momentum. Japan and the EU are Chief financial officers (CFOs)1 recently surveyed by Deloitte
indicated that with global inflation pressures easing in most
in better shape than for many years. Unemployment has fallen across the world. regions, their focus is shifting toward the longer term as
Market outlook
Financial markets have been in ebullient form, with equities hitting new highs. revenue growth improves. Growth is gaining priority for CFOs,
whether organically, or through acquisitions, introducing new
products/services, or moving into new markets.
Value and collaboration Prioritization of business strategies over the next 12 months
78% 58% 54% The views of CFOs are in alignment with those of procurement
leaders – especially new product/market development – with
Talent and leadership
58 percent identifying that as a priority, an increase for the
second year in a row.
Digital procurement
Cost reduction continues to be the
Action starts here
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(297x210mm)
Reducing costs New product/market development Managing risks
leaders, with 78 percent of respondents
Industry and regional overviews 48% 40% 34% in our survey identifying reducing cost
as their top priority strategy. Year-over-
About the participants year savings performance has improved
from 58 percent of procurement
Acknowledgements functions in 2017 to 61 percent in 2018.
Expanding organically Increasing cash flow Managing corporate social responsibility
The slight improvement in economic sentiment has not altered
Regional and country contacts the overall willingness of businesses to take on additional risk.
22% 20% 9% As ever, risks remain, from Brexit in Europe, to protectionism
and the perils of asset and credit bubbles. UK growth has
Further insights Strong priority
conspicuously slowed, particularly in comparison to many other
Somewhat priority countries that are enjoying the global upturn.
Endnotes Not a priority
Increased capital expenditure Expanding by acquisition Disposing of assets
07
7
Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Introduction
Executive summary
Procurement risk levels, while still Respondents reporting a significant resurfacing of procurement risk
high, appear to be being managed.
Market outlook
The overall global macroeconomic
Value and collaboration
risk ratings from procurement leaders
has fallen, with lower risk ratings for
Talent and leadership
a China slowdown, credit conditions,
49%
%
the Eurozone economy, and
33
45%
worldwide terrorism.
Digital procurement 50% 47%
Procurement leaders continue to keep a close watch on global 2018 2017 2015 2014
Action starts here macroeconomic risks, with the top three being:
Most significant market risks
• uncertainty and outcomes of trade negotiations, e.g. Brexit,
Industry and regional overviews NAFTA
Uncertainty and outcomes of trade 33%
negotiations, e.g. Brexit, NAFTA 33%
• weakness and/or volatility in emerging markets and rising
Weakness and/or volatility in emerging 29%
About the participants geopolitical risks in the Middle East/Asia markets and rising geopolitical risks in
39%
the Middle East/Asia
• spillover effects of a slowdown of China. The spillover effects of a slowdown in China
28%
Acknowledgements 37%
In conclusion, the optimistic market sentiment presents Increasing scale and impact of 26%
natural disasters
procurement leaders with an opportunity to achieve greater
Regional and country contacts value through growth-focused innovation, while continuing to Tighter credit conditions and falling 26%
deliver cost reduction and manage risk. levels of credit availability 31%
A bubble in house prices and/or other real and 25%
Further insights financial assets and the risk of higher inflation 33%
Deflation and economic weakness in 25%
the Eurozone 37%
Endnotes
Increased threat of worldwide terrorism 23%
5 31%
0 10 15 20 25 30 35 40
2018 2017
8 08
impact| The Deloitte Global Chief Procurement Offi
Leadership: Driving innovation and delivering impact Officer
cer Survey 2018
Introduction ...and finally
Executive summary
“CFOs enter 2018 more focused on controlling costs than at any time in the last
Market outlook eight years. Despite this, they are more optimistic today than they have been
in the last two years and perceptions of uncertainty are far lower than during
Value and collaboration
the euro crisis and following the EU referendum.”
Talent and leadership
Ian Stewart
Chief Economist, Deloitte LLP
Digital procurement
Action starts here
Industry and regional overviews
About the participants
Acknowledgements
Regional and country contacts
Further insights
Endnotes
09
9Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Introduction
Executive summary Value and collaboration
Market outlook
Value and collaboration
Talent and leadership
Digital procurement
Action starts here
Industry and regional overviews
About the participants
Acknowledgements
Regional and country contacts
Further insights
Endnotes
10Leadership: Driving innovation and delivering impact
impact | The Deloitte Global Chief Procurement Officer
Officer Survey 2018
Introduction
Executive summary
Procurement leaders are continuing to expand the role of procurement in the wider supply chain. This is being achieved
Market outlook
through better alignment between procurement and business strategies and priorities, adopting a closed loop and holistic
approach to performance measurement for procurement, and proactive involvement in key decision making. However, the
Value and collaboration
same cannot be said about supplier collaboration, which continues to remain an under-utilized lever for delivering value.
Procurement strategies used to deliver value over the next 12 months
The survey shows:
Talent and leadership 45%
40% 39%
• Consolidating spend (37 percent), reducing total life 37%
cycle/ownership costs (32 percent) and increasing 35%
35%
Digital procurement competition (31 percent) are the key procurement
32% 31%
30% 28%
strategies used to deliver value. 26% 26%
25% 24% 23% 23%
22% 22% 21%
Action starts here 20% 19%20%
• Fewer procurement leaders (23 percent) consider 18%
16%
supplier collaboration as a strategy to drive value over 15% 13% 13%
11% 11% 12%
the next 12 months, as compared to 26 percent in 2017. 10%
Industry and regional overviews 10%
5%
• Only one in four procurement leaders believe they are
excellent business partners contributing significant 0%
About the participants Consolidating Increasing Increasing level of Restructuring Reducing Managing
strategic value. spend competition supplier collaboration existing supplier transaction costs commodity price
relationships volatility
Acknowledgements • Seventy-three percent of procurement leaders believe
they have the support of their organization’s leadership; Reducing Specification Business Restructuring Reducing Outsourcing of
however the number of respondents who feel “very total lifecycle/ improvement partnering the supply base demand non-core
ownership costs sourcing and
Regional and country contacts supportive” has fallen from 43 percent to 31 percent.
procurement
activities
2018 2017
• Overall supply chain transparency is poor, with
Further insights 65 percent of procurement leaders having limited
or no visibility beyond their tier 1 suppliers.
Endnotes
11Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Introduction
Executive summary
Procurement value drivers Current effectiveness of the procurement function as a business partner, in comparison to where procurement aspires to be
To deliver the procurement strategy priorities of cost reduction,
Market outlook
new products/market development, and managing risk,
70% 86%
procurement leaders have continued to show a preference
for deploying traditional levers such as consolidating spend
Current Future
and increasing competition to deliver value. Reducing total life
Value and collaboration
cycle/ownership costs has become a more prominent strategy, 24% 12%
indicating a broadening in the agenda for procurement within
Talent and leadership organizations. This can be enabled through specification
6% 2%
improvement and demand management, although the use
of both these strategies fell this year.
Excellent – procurement is highly regarded internally and seen as a key business partner which contributes significant strategic value
Digital procurement
Fair – procurement has mixed influence internally with stronger relationships with some functions than others
Surprisingly, compared to last year, there
Poor – procurement operates in silos from the rest of the business and struggles to collaborate with other functions
Action starts here has been less use of closer collaboration
with suppliers to deliver value, indicating
Measures forming part of organization’s balanced scorecard for procurement
Industry and regional overviews a continued focus on more tactical
levers to support the achievement of OPEX savings 74%
About the participants procurement strategies. CAPEX savings 63%
Cost avoidance 61%
Collaboration with business
Acknowledgements Last year, 86 percent of procurement leaders aspired to being Supplier performance 59%
“excellent” as a strategic business partner in the future. In 2018,
Operating efficiency 56%
only 24 percent consider themselves as excellent: although this is
Regional and country contacts a slight improvement from 2017, it highlights the need for further Internal customer satisfaction 50%
improvement in business partnering by procurement teams.
Supplier compliance 45%
Further insights Many of the metrics which form the balanced scorecard for Innovation 40%
procurement have increased in their use, and much greater
importance is placed on operating efficiency, supplier Supplier satisfaction 12%
Endnotes compliance and innovation compared to last year. No procurement balanced
12%
scorecard in place
0 10 20 30 40 50 60 70
12 12impact| The Deloitte Global Chief Procurement Offi
Leadership: Driving innovation and delivering impact Officer
cer Survey 2018
Introduction
Executive summary
Executive advocacy Extent to which procurement plays an active role in strategic decision making
Executive support and sponsorship is a critical success factor in
delivering on a procurement leader’s vision and strategy.
Market outlook
Seventy-three percent of procurement
Value and collaboration Shaping/changing
leaders believe that they have the New product
development Make vs Buy M&A Corp risk planning the way services
27% 27% are delivered
support of their executives. 61%
Talent and leadership 49%
62% 44% 53%
54%
However, the level of support has dropped with only 31 percent 43% 49%
feeling “highly supported” as compared to 43 percent last year.
Digital procurement This presents a challenge for procurement leadership to develop
2018 2017
strategies closer to the business priorities and deliver results to
maintain high levels of executive support.
Action starts here Approaches employed to understand stakeholder requirements
Procurement’s involvement in new product development
decision making has increased, while involvement in corporate Procurement team members embedded in 76%
Industry and regional overviews cross-functional teams 77%
risk planning has fallen. Involvement in M&A remains low,
possibly due to lower M&A activity in general. Procurement targets jointly owned with 53%
internal stakeholders 62%
About the participants
High-performing procurement organizations have both greater Procurement measures performance against a 47%
levels of involvement in decision making and in deployment balanced scorecard aligned to functional requirements 44%
of balanced scorecards, demonstrating the need to maintain Procurement physically co-located within
Acknowledgements business functions
45%
focus in these areas. Despite better collaboration between 46%
procurement and the rest of the business, we have seen a Customer satisfaction surveys (to understand 37%
Regional and country contacts downward trend in both procurement targets being jointly business needs of procurement) 45%
owned with internal stakeholders and also in the use
11%
of customer satisfaction surveys to better understand Other
10%
Further insights business needs. 0
10 20 30 40 50 60 70 80
2018 2017
Endnotes
13Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Introduction
Executive summary
Savings performance improvement year over year has been Comparing savings performance to business partnering across industries
linked to improvements in business partnering in most sectors,
in particular in consumer business. Conversely, in energy and 40%
Market outlook
resources and manufacturing, where business partnering
dropped, so did savings performance.
35%
Value and collaboration
Collaboration with suppliers
Supplier collaboration is key to innovation, but over the last few
30%
Talent and leadership years, fewer procurement leaders seem to have used supplier
collaboration as a procurement strategy for delivering greater
Excellent business partnering
value. Only 23 percent of procurement leaders in 2018 plan to
25%
Digital procurement increase the level of supplier collaboration as a lever to deliver
value, a decrease from 26 percent last year and 39 percent
in 2016.
20%
Action starts here
Despite this, procurement leaders globally have indicated
a desire to focus on collaboration and building partnerships 15%
Industry and regional overviews with key suppliers to achieve improved innovation within their
organizations, with two-thirds of respondents identifying
“generate win-win situations and trust” as a key approach 10%
About the participants for doing so.
5%
Acknowledgements
0%
Regional and country contacts 40% 45% 50% 55% 60% 65% 70% 75% 80%
Better savings performance than last year
Further insights
Business & professional services Government & public sector Consumer business Manufacturing
Financial services & insurance Technology, media, and telecommunications Healthcare & life sciences Energy & resource
Endnotes
Industry position in 2017 Indication of industry movement from 2017 to 2018
14 14Leadership: Driving innovation and delivering impact
impact | The Deloitte Global Chief Procurement Officer
Officer Survey 2018
Introduction
Executive summary
A surprising and somewhat worrying Main approaches adopted to improve innovation levels and partnering with key / strategic suppliers
finding from this year’s survey is that Generate win-win situation and trust
Market outlook 65%
65 percent of procurement leaders say
Define your strategic/innovation partners 64%
Value and collaboration
they have limited or no visibility beyond
Specify collabororation relationships level
their tier 1 suppliers. with strategic/innovation partners
60%
Execute regular “innovation awards” for
14%
Talent and leadership This has major implications for organizations across all select key suppliers/innovations
industries, particularly for meeting regulatory and corporate Other 5%
social responsibility requirements and for the identification and
Digital procurement mitigation of supply chain risks. In addition, greater visibility lends 0% 10% 20% 30% 40% 50% 60% 70%
itself to greater innovation and improved total cost of ownership.
High performers are two-and-a-half times more likely than their Current level of supply chain transparency
Action starts here peers to have full supply chain transparency.
We anticipate that the challenges for organizations will be Not applicable 1% Full transparency of entire supply chain
Industry and regional overviews increased in future by the rise of Digital Supply Networks,
changing industry dynamics, and the race for talent.
Virtually no visibility below tier 1 11% 6%
Procurement functions will be required to improve their
About the participants capabilities, not just to achieve cost reduction, but also to
manage risk and support product and market innovation.
27% Good transparency below tier 1
Acknowledgements
Regional and country contacts
Limited visibility below tier 1 54%
Further insights
Endnotes
15Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Introduction
Executive summary
In Deloitte’s view, joint strategic planning (JSP)3 is crucial for Joint strategic planning approach
unlocking value and innovation in businesses and suppliers.
Build foundation for joint strategic planning Define action and intended business impacts
Market outlook
JSP builds on the foundation of existing supplier collaboration
Define collaborative Segment Define collaboration Develop
programs to enable procurement to provide strategic, innovative,
vision vendors process capabilities
Value and collaboration and end-to-end capabilities for the organization. It is based on
the concepts of increased transparency, reduced friction, deeper,
increased leadership engagement, and adoption of new risk-
Talent and leadership reward arrangements.
Assessment Structure
Joint strategic planning helps enable
Digital procurement
procurement leaders to shift the
Action starts here
conversation from tactical to strategic, Sustainment Deployment
from transactional to collaborative, and
Industry and regional overviews
from reactive to proactive.
Track Establish governance Refine collaboration Roll out
In an era where businesses are looking at long-term strategies, performance model processes program
relationship-powered approaches such as JSP, that have a
About the participants
track record of contributing to sales growth, increased profits, Set up governance processes to manage Execute joint strategy plan
investment generation, and innovation, need to be given greater
Acknowledgements prominence and form part of the levers used by procurement
leaders to unlock value.
Regional and country contacts
Further insights
Endnotes
16 16Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Introduction ...and finally
Executive summary
“The most satisfying part of my role is aligning well and listening to my customer and
Market outlook internal stakeholders around objectives and expectations, because it is not always
a good idea to lead a conversation with “look how much money I can save you.”
Value and collaboration
Working with business stakeholders to define a usable taxonomy and segment
Talent and leadership suppliers help build a framework for supplier relationship management to help
determine the size of the procurement team and prioritization of our efforts.”
Digital procurement
David Bondi
SVP-Chief Procurement Officer, Revlon
Action starts here
Industry and regional overviews “Trends shaping the business environment continue to evolve and elevate the
procurement function to new levels. The competitive advantage that we can provide
About the participants
has never been more evident. But with this opportunity, we are also challenged to
Acknowledgements
elevate our game. We must cement success in areas such as talent management,
category management and customer relationships; and then allow ourselves to
Regional and country contacts evolve to newer strategies such as digitization and advanced supplier management.
I believe that the next three to five years will shape this new agenda for the
Further insights
procurement profession.”
Endnotes
Bill Dempsey
Chief Procurement Officer, MolsonCoors
17Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Introduction
Executive summary Talent and leadership
Market outlook
Value and collaboration
Talent and leadership
Digital procurement
Action starts here
Industry and regional overviews
About the participants
Acknowledgements
Regional and country contacts
Further insights
Endnotes
18Leadership: Driving innovation and delivering impact
impact| The Deloitte Global Chief Procurement Officer
Officer Survey 2018
Introduction
Executive summary
A clear imperative for procurement leaders at high performing organizations is to lead the procurement, business, supplier
and digital agenda. However, 51 percent of procurement leaders do not believe that they have the capability in their teams
Market outlook
to deliver their procurement strategy. They see a need to shift the traditional talent models and practices in procurement
and at suppliers, and fill leadership capability gaps that exist in innovation, positive disruption, and digital transformation.
Value and collaboration
Procurement leadership
The survey shows:
Talent and leadership Across all organizations, the capabilities of procurement leadership are strongest in the three areas of collaboration, acting as a
role mode, and delivering results. This has a positive impact on development of stronger business and supplier partnerships, and
• Most common leadership traits in procurement are the associated results. Savings delivery performance continues to improve, as does the view among procurement leaders that
Digital procurement collaborating, acting as a role model and delivering procurement is an effective business partner, and that they are achieving success with their day-to-day priorities.
results, and weakest traits are innovation, positive
disruption and digital transformation.
Key leadership traits of procurement leaders
Action starts here
• Fifty-two percent of procurement leaders are confident 2%
Collaborating internally and externally to deliver value 20% 51% 21% 6%
that their key suppliers are equipped to support
3%
Industry and regional overviews their organization’s growth plans. High performing Acting as a role model for your organizational values 23% 43% 25% 6%
organizations are twice as likely to believe their 3%
organizations are fully equipped to succeed. Delivering results including stopping ineffective activities 14% 48% 29% 6%
About the participants 2%
• Fifty-one percent of procurement leaders believe Shaping and influencing future successful strategies 11% 46% 30% 11%
2%
that their current teams do not have sufficient levels Creating alignment across the organization to enable the
11% 45% 32% 10%
Acknowledgements of skills and capabilities to deliver on their procurement best allocation of resources and return on investments
3%
strategy. Pioneering change and inspiring others 12% 41% 34% 10%
3%
Identifying talent and optimize their current performance
Regional and country contacts • Seventy-two percent of procurement leaders are while developing their future capability
9% 42% 33% 13%
spending less than 2 percent of their budgets on Investing in innovation that delivers competitive
8% 33% 37% 18% 4%
training, an increase from 66 percent in 2017. advantage
Further insights Disrupting the execution of business plans or projects
5% 28% 40% 20% 7%
to drive more value from resources and/or investments
• Nearly three-quarters of procurement leaders have
said that their procurement teams possess little or Leading digital and analytical transformation 6% 21% 39% 26% 8%
Endnotes no capability to maximise the use of current and future 10%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
digital technologies, but only 16 percent of procurement Fully enabling Enabling Somewhat enabling Not very enabling Not at all enabling
leaders are focusing on enhancing the digital skills
of their teams.
19Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Introduction
Executive summary
However leadership is weak with regard Extent to which procurement leaders are enabling their organizations or suppliers
to investing in innovation, leading digital Fully enabling 22%
Market outlook 12%
transformation, and positive disruption.
Enabling 44%
Value and collaboration
This will have implications for future 40%
performance unless addressed with Somewhat enabling 25%
32%
Talent and leadership
new leaders or through accelerated Not very enabling
7%
capability development, and there is a 13%
2%
Digital procurement risk of the procurement function being Not at all enabling
4%
“left behind.” 0% 10% 20% 30% 40% 50%
High performers Average
Action starts here Leaders in high-performing organizations score considerably
better across the leadership traits than their peers in other
organizations. This emphasizes the importance of having strong Perceived level of ability within current teams to deliver procurement strategies
Industry and regional overviews functional leaders in procurement to drive higher performance,
both internally and with suppliers. 48% 2013 52%
About the participants Talent development
57% 2014 43%
Only 49 percent of procurement leaders believe that their
current teams have sufficient levels of skills and capabilities
Acknowledgements
to deliver their procurement strategy. Remarkably, this is the 62% 2015 38%
highest level of confidence shown by procurement leaders in
their teams since 2013, but it is still very low.
Regional and country contacts 60% 2017 40%
51% 2018 49%
Further insights
Not able Able
Endnotes
20 20Leadership: Driving innovation and delivering impact
impact| The Deloitte Global Chief Procurement Officer
Officer Survey 2018
Introduction
Executive summary
Spending on talent development Percentage spend on training procurement
has also fallen, with 72 percent of
Market outlook 2011 8% 30% 58% 4%
procurement leaders spending less than
Value and collaboration
two percent of their operating budgets 2012 9% 20% 68% 3%
on training and development programs 2015 11% 23% 37% 29%
Talent and leadership
for their teams, compared to 66 percent 8% 26% 41% 25%
2017
last year.
2018 8% 20% 38% 34%
Digital procurement Survey results for recruiting and training talent also paint a less
0% 20% 40% 60% 80% 100%
optimistic picture. While sources of talent recruitment remained
broadly unchanged since last year, 47 percent of procurement More than 4% 2-4% 1-2% Less than 1%
Action starts here leaders found it more difficult to attract talent in the last
12 months. Percentage of budget spent on training procurement talent – high performers vs average
Industry and regional overviews Again, analysis shows that organizations performing at a higher
40%
level tend to spend more on training for their procurement 38%
teams than their peers in other organizations, with almost 34%
About the participants twice as many spending more than 4 percent of their
overall budgets. 26%
20% 21%
Acknowledgements 14%
Regional and country contacts
$
8%
Further insights
$
Less than 1% 1% to 2% 2% to 4% More than 4%
Endnotes
High performers Average
21Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Introduction
Executive summary
Only 16 percent of procurement leaders are focusing on Area of training focus planned for 2018
developing digital skills within their teams, despite the fact that
72 percent indicated that procurement staff possess only some
Market outlook
or no capability to maximize use of digital technologies.
Value and collaboration Another disappointing finding is the lack 36% 16%
of a clear talent development strategy, 41%
Talent and leadership with a significant reduction year
over year in the use of procurement 7%
Digital procurement academies and/or a procurement
training curriculum, and lower levels of Technical procurement skills (e.g. negotiation
training, strategic sourcing training)
Soft skills (e.g. conflict management,
emotional intelligence, business
Digital skills (e.g. big data
synthesis,
No formal training
is planned
Action starts here engagement in placements within the partnering/relationship management, predictive analytics)
collaboration skills, etc.)
rest of the business.
Industry and regional overviews Talent development strategies
Levels of procurement outsourcing have dropped to 10 percent,
which is the lowest level we have seen over the last five years.
About the participants
Overall, these findings raise the question of whether global
2018
procurement leaders are investing adequately in their people
Acknowledgements and in the right development areas. The survey responses
53% 45% 32% 26% 14% 10%
indicate that is not the case and that a positive shift may
be required.
We encourage the We have developed a We engage in placements We have accelerated We have developed Other
Regional and country contacts procurement team to take part in procurement academy and/or within the rest of pathways a school leavers
non-procurement training, a procurement the business program
for example with finance training curriculum
Further insights
59% 43% 28% 12% 0%
54%
Endnotes 2017
22 22Leadership: Driving innovation and delivering impact
impact | The Deloitte Global Chief Procurement Officer
Officer Survey 2018
Introduction
Executive summary
Supplier leadership Extent to which leaders at key suppliers are equipped to help the organization succeed
Only 52 percent of our respondents believe that leaders at their
key/strategic suppliers are equipped to help the procurement 12%
Fully equipped
Market outlook 6%
leaders organization succeed.
49%
Equipped
46%
Value and collaboration High-performing organization are twice 38%
Somewhat equipped
as likely to believe their suppliers are 44%
Talent and leadership fully equipped to succeed. Not very equipped 0%
4%
This positive correlation reinforces the necessity for procurement 0% High performers
10% Average 20% 30% 40% 50% 60%
Digital procurement to focus on the development of leadership at suppliers as a
priority to achieve improved performance.
Action starts here Without strong leadership at suppliers, it is clear that target
supplier performance levels become more difficult to achieve.
Industry and regional overviews
A Deloitte study on digitally maturing organizations shows that
to become “talent magnets,” and develop and retain talent,
leaders of digitally maturing organizations are focusing on
About the participants
the creation of an environment in which employees are eager
to learn and develop continuously by gaining and embracing
digital experiences. An increasing number of organizations
Acknowledgements
are encouraging employees to participate in platforms and
communities where they can share ideas and learn new skills
Regional and country contacts from experts in other organizations. From a procurement
perspective, these platforms and communities include key
strategic suppliers to help drive innovation and joint strategic
Further insights partnerships.
Endnotes
23Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018
Introduction
Executive summary Lucy Harding: Odgers Berndston point of view
Market outlook The war for talent is ongoing. The survey results show that demand for forward-thinking, innovative, and
business-minded procurement experts at all levels continues to outstrip supply, and this situation will not
Value and collaboration change in the foreseeable future.
Clearly, the market for talent is extremely competitive and only those organizations with a compelling, strategic and business-centric procurement story to tell
Talent and leadership
will attract and retain the best procurement minds. Likewise, people work for people; and strong leadership and a commitment to developing talent and growing
individual careers creates loyalty and is key to attracting talent. It is encouraging that the 2018 survey shows that procurement leaders’ confidence in their teams
to deliver their objectives continues to improve. The low levels of investment in training and declining participation in talent development strategies remain
Digital procurement
a concern, suggesting that this optimism may not be sustainable in the future.
From a digital perspective, the emerging technologies are exciting and if deployed successfully can bring huge advantages to procurement. However, technology
Action starts here
is an enabler, and is not the panacea for all the challenges faced by the function: leaders still need to invest heavily in people. They need to understand not only
the technology but also how to deploy it, draw conclusions from the data, and implement new strategies for the tangible benefit of the organization. It remains
Industry and regional overviews a critical requirement to develop leadership skills and strategic thinking, and also an ability to engage with broader business leaders and teams, and inspire
suppliers to work with you. We must not lose sight of this as the “rise of the robots” progresses.
Lucy Harding
About the participants It is increasingly important, to attract talent, for organizations to be seen to move in the digital space. If a business is investing in the latest technologies, Partner and Global Head of
this indicates that it is up to date with the latest thinking. This attracts people who consider that their career will benefit if they are exposed to innovations Practice, Procurement and
in technology. Top talent, especially those in the millennial generation, will not choose to work in an organization that is significantly behind the latest trends Supply Chain,
Acknowledgements and technologies. Odgers Berndston
In summary, talent remains a concern for many organizations and should be a critical focus for procurement leadership as the demands of businesses continue
Regional and country contacts to grow and the bar is continuously raised.
Further insights
Focus on investing in your teams and in technology, and spend time to build trust with your suppliers
to harness their talent, too – since we don’t have enough to go round.
Endnotes
24Leadership: Driving innovation and delivering impact
impact | The Deloitte Global Chief Procurement Officer
Officer Survey 2018
Introduction ...and finally
Executive summary
“In any transformation or leadership of procurement led change I have learned
Market outlook that I always need to understand the 3 Ps; people, processes, and how to develop
a program of change. The latter two always appear the most difficult to achieve
Value and collaboration
yet it is the people that will make the difference. Select well, technical skills can be
Talent and leadership learned but above all build a resilient team with diverse personalities and have fun
along the way.”
Digital procurement
Patrick Dunne
Director of Group Procurement & Cost Base Transformation, Sainsbury’s
Pages from print document to be inserted, and centred here at 100% scale...
Action starts here
(297x210mm)
Industry and regional overviews
About the participants
Acknowledgements
Regional and country contacts
Further insights
Endnotes
25Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018
Introduction
Executive summary Digital procurement
Market outlook
Value and collaboration
Talent and leadership
Digital procurement
Action starts here
Industry and regional overviews
About the participants
Acknowledgements
Regional and country contacts
Further insights
Endnotes
26Leadership: Driving innovation and delivering impact
impact | The Deloitte Global Chief Procurement Officer
Officer Survey 2018
Introduction
Executive summary
Despite recognizing digital technologies, their impact and imminent uses, few organizations appear to be progressing at the
rate that their C-suite executives consider necessary for achieving overall goals. Indeed, in the majority of areas, the level of
Market outlook
impact has declined and the forecast application of new technologies is low.
Value and collaboration Digitalization
The survey shows: The level and speed of digitalization across procurement functions is lower than expected and needed. Only 4 percent of
procurement leaders believe that procurement has a big influence in delivering their organization’s overall digital strategy and only 6
Talent and leadership • Seventeen percent of procurement leaders do not have percent of the procurement leaders in the survey believe that their digital procurement strategy will help them to fully deliver on their
a digital procurement strategy, and of those that do, objectives and improve enterprise value. Only 18 percent of procurement leaders have a digital procurement strategy supported by a
less than one-third believe that their strategy will enable complete business case.
Digital procurement procurement to deliver significantly on its objectives and
improve enterprise value.
Enterprise digital impact Digital procurement strategy impact Business case completed
Action starts here • The rate of digital technology adoption among
1%
organizations is highest in the transactional purchase 4% 5% 6%
13%
4%
4%
to pay (P2P) process, followed by sourcing and tactical 18%
10%
Industry and regional overviews buying. 4%
20%
26% 27%
• Analytics will have the most impact on procurement in the
About the participants next two years.
19%
25%
• Analytics are being used for cost optimization (50 percent),
Acknowledgements process improvement (48 percent) and management 39%
reporting (45 percent).
Regional and country contacts • Only 3 percent of procurement leaders believe their staff
44% 31%
possess all the skills required to maximize use of digital
capabilities. Completely To a large extent To some extent To a small extent Not at all Not applicable
Further insights
Endnotes
27Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Introduction
Executive summary
The impact of a digital procurement Extent to which key objectives are incorporated in digital strategy
strategy can be measured by the Efficiency 13%
Market outlook 11% 39%
extent to which the key objectives of
Value and collaboration
efficiency, effectiveness, engagement, Effectiveness 9% 35% 16%
and experience are incorporated in the
Talent and leadership
digital procurement strategy, and the Engagement 8% 27% 21%
level of success in implementing them.
Digital procurement Impact of digital strategy Experience 7% 30% 19%
Responses to our survey suggest that overall the level of
incorporation of these objectives in the digital strategy is low and
Action starts here achievement is unsatisfactory. This may suggest that in order to Completely To a large extent To some extent
see the real impact of digital transformation and benefit from
it, procurement leaders need to review and refine their digital Level of success in implementing key objectives
Industry and regional overviews vision and strategy, to make it more action-oriented, agile, and
saleable. In addition, procurement leaders should increase the Efficiency 5% 30% 29%
focus on engagement and experience.
About the participants
Effectiveness 3% 25% 34%
Acknowledgements
Engagement 2% 21% 37%
Regional and country contacts
Experience 4% 20% 22%
Further insights
Completely To large extent To some extent
Endnotes
28 28Leadership: Driving innovation and delivering impact
impact | The Deloitte Global Chief Procurement Officer
Officer Survey 2018
Introduction
Executive summary
Digital technology adoption Impact of digital technologies
With rapid advancements in digital technologies, many
Source to contract Purchase to pay Supplier management
organizations are shifting their focus towards understanding
Market outlook becomes predictive becomes automated becomes proactive
current and future digital innovations and their application in
their own businesses. Imagine... Imagine... Imagine...
. Managing spend in real time . Automatically sensing material . Monitoring risk in real time
Value and collaboration . Predicting demand with demand and requisitioning delivery . Conducting supplier visits utilizing
Deloitte’s view is that applying digital artificial intelligence . Eliminating repetitive processing augumented reality
technologies to the procurement . Knowing total cost for commodities . Triggering payments in real time . Performing supplier audits through
Talent and leadership . Predicting sources of future supply . Exchanging goods through crowd sourcing
function will enable strategic sourcing to decentralized ledgers . Monitoring sustainability using
automated reporting/vizualization
Digital procurement become more predictive, transactional
procurement to become more Procurement operations become intelligent
automated, supplier management
Social media platforms are leveraged Procurement platforms, ecosystems and Supplier and workforce requirements are
Action starts here to connect employees and suppliers networks are created analyzed to ensure workforce is optimally utilized
to become more proactive, and
The degree to which digital technologies are being used to enable processes
Industry and regional overviews procurement operations to become
Business partnering and strategy development 11% 23% 38% 22% 6%
more intelligent.
About the participants Category management 11% 23% 38% 23% 5%
Procurement leaders globally have embarked on the digital
transformation journey, with nearly one-quarter starting with
Sourcing and operational buying 6% 19% 32% 32% 11%
the payment and requisitioning/ordering processes. Supplier
Acknowledgements
risk management and supplier management are the least
digitized processes. Contracting 11% 21% 37% 23% 8%
Regional and country contacts
Requisition/ordering 6% 14% 24% 34% 22%
Further insights Payment (including financing) 6% 11% 26% 34% 23%
Supplier management (including performance,
13% 30% 37% 16% 4%
relationship and innovation)
Endnotes
Supplier risk management 19% 32% 32% 13% 4%
Not at all To a small extent To some extent To a large extent Completely
29Leadership: Driving innovation and delivering impact | The Deloitte Global Chief Procurement Officer Survey 2018Leadership: Driving innovation and delivering impact| The Deloitte Global Chief Procurement Officer Survey 2018
Introduction
Executive summary
Sixty-six percent of procurement leaders predict that supplier Aspects of the procurement process expected to be most significantly impacted by technology in the next 5 years
management (including performance, risk, relationship, and Business planning; strategy development (including spend
-18% 24%
innovation), sourcing and operational buying, and business
Market outlook analytics and research)
planning and strategy development (including spend analytics
Sourcing and operational buying -5% 22%
and research) will undergo the biggest changes due to digital
Supplier management (including performance, risk,
Value and collaboration technology over the next five years. Having said that, 18 percent -9% 20%
relationship and innovation)
of procurement leaders also indicated that business planning
Requisition/ordering -14% 16%
and strategy development (including spend analytics and
Talent and leadership research) is the least likely to change. Category management -17% 8%
As in 2017, analytics, renewal of strategic procurement tools Payment (including financing) -18% 6%
Least likely
Digital procurement (e.g. sourcing and supplier management) and renewal of
Contracting -19% 4% Most likely
operational procurement tools (e.g. requisition/ordering and
payment) will have the highest impact on business over the next -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25%
Action starts here two years.
Technology areas with most impact on business in the next two years
Industry and regional overviews
There has been a reduction in the level
of impact across all areas except for the Analytics
54%
64%
About the participants perceived impact of robotic process Renewal of strategic procurement tools 43%
(e.g. sourcing, supplier management) 56%
automation (RPA) which has nearly Renewal of operational procurement 43%
Acknowledgements doubled. This increased focus on RPA tools (e-procurement) 48%
33%
is likely to be linked to ROI and scaling ERP platform renewal
39%
Regional and country contacts of RPA application. Digital (mobile, social media, web)
26%
38%
25%
Cloud computing
37%
Further insights 24% 2018
Robotics process automation (RPA)
13%
2017
18%
Cybersecurity/data privacy
Endnotes 25%
Emerging technology (e.g. 3D printing, internet of 14%
things, augmented reality, cognitive computing) 20%
0% 10% 20% 30% 40% 50% 60% 70%
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