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Supply chain, supplier innovation and cost reduction: 500 CPOs share their recipes for success

logistic and innovation
April 19th, 2018
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The latest Deloitte survey of 500 procurement leaders draws up a general inventory of players’ impressions and offers action-oriented insights on four themes: procurement policy, supplier relations, skills improvement and digital transformation.

 

With the return to growth, a new ambition for procurement departments

Overall, the Deloitte 2018 study shows that while procurement has contributed to performance in tough times thanks to risk and cost control, the challenge now that the economy is doing better is to optimise the supply chain, to better integrate supplier innovation and to reduce costs at the scale of the entire company. The most significant levers for this are Class C purchases, supplier relations, market intelligence and digital transformation.

In detail, respondents identified cost reduction, new products/market development and risk management as priorities. In particular, 61% of CPOs say they are able to continuously reduce costs. Another positive point is support from top management, which 73% of respondents say they have secured.

persistent

The supply chain: the poor relation of the procurement function

However, 65% of CPOs note with regret the lingering weakness of the supply chain, feeling that they have little or no visibility from their main suppliers. Half of them also point to the need to increase the skills of their teams. Only a third of CPOs feel that they have a fully validated digital strategy. And the same proportion—barely a third—say that they use the most modern tools, such as predictive analysis or network collaboration.

The most consensual key success factor is collaborative working, both internal and external. The best results are obtained through commitment, i.e. the resolute defence of one’s own interests, the ability to influence suppliers and, of course, the ability to decide. In operational terms, success is built on the upskilling of teams, the digitisation of procurement, the visibility of the supply chain, and the use of relevant metrics.

 

Four sources of performance

The best thing about the study is that it is not limited to observation but includes a set of recommendations to enable companies to successfully transform their procurement practices.

The four sources of performance identified by Deloitte are improved market knowledge, the identification of the best solutions, the ability to secure supplier commitment, and digital transformation.

The winning strategies are based on three levers:

-      Developing market intelligence, the ability to assert one’s own interests and to build long-term relationships;

-      Developing control of the procurement process, improving internal skills, team management and digitisation;

-      Developing the supplier relationship, based on closer cooperation and greater transparency in terms of logistics costs and risk management.

 

At the end of the survey, a series of action recommendations

Insisting that action must be resolute and targeted to have any chance of significantly improving procurement performance, the Deloitte report outlines a list of specific recommendations to help accelerate progress along the lines already identified, and to sketch out new ideas for tomorrow.

A must read for anyone looking to benefit from the winning strategies of the world's best…

 

Download The Deloitte Global CPO Survey 2018:

https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/operations/deloitte-uk-cpo-survey-report-2018.pdf

 

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