Practitioners in procurement and supply chain jobs with companies operating global supply networks are being steered by their CPOs to respond to today’s intensified economic and trade-related challenges with renewed cost reduction efforts and supply risk management strategies, a new study from business consultancy Deloitte has revealed.
The ‘Deloitte Global Chief Procurement Officer Survey 2019’ probed the views of 481 procurement executives from 35 countries working for firms with a collective annual turnover of US$5tn.
The executives polled were under intensified pressure to direct their teams to cut costs as well as manage new external geopolitical and trade-related risks to supply chains, plus new internal risks occasioned by digital transformation efforts (analytics rather than blockchain and AI).
39% of respondents considered new internal complexities associated with M&A, persisting organisational silos and non-standard processes as their highest concern, while 37% cited managing complexities and risks with mega-suppliers.
33% were most concerned about trade wars, 29% with managing digital fragmentation within their organisations, and 10% with the risk of economic downturn and deflation.
Brexit uncertainties and the economic slowdown in China also featured prominently.
Noting that procurement challenges for firms with global supply networks had “increased exponentially” over the last two years, Deloitte spokesman Ryan Flynn said that these were now being exacerbated by new uncertainties such as trade wars and tariffs, with China and Brexit being focal points.
He added: “This complexity shows no clear signs of abating because of that uncertainty and while some companies are probably a little better in terms of being aggressive about taking other sources of supply because of tariffs, over all, it is that external supply chain complexity that is really making things more difficult and challenging for CPOs.”
Since the survey began in 2011, the procurement function has undergone significant evolution, with permanent practitioners and supply chain and procurement interims alike focusing much more on internal and external collaboration, Flynn noted, as CPOs seek more value and reduced costs.