CPOs lack faith in their staff, survey finds

If you're in procurement, you're probably not looking forward to your annual performance review. Or so suggest some of the findings highlighted in the recently released "Deloitte Global CPO Survey 2016."

The survey found that 62 percent of chief procurement officers (CPOs) do not believe that their teams have the skills and capabilities needed to execute on their procurement strategy. The survey, now in its fifth year, was conducted last year over 324 CPOs from 33 countries by the global consulting firm Deloitte and the executive search firm Odgers Berndtson.

According to the report, CPOs' lack of faith in their teams has steadily increased over the past two years. In 2013, 48 percent of the surveyed CPOs said that their teams did not have the necessary skills to implement the company's procurement strategy, and in 2014, that number was 57 percent.

In spite of this concern, companies have not responded by focusing on training and recruitment. In 2015, nearly 30 percent of CPOs said they were spending 1 percent or less of their overall operating budget on training. This is a sharp increase from 2012, when a little over 3 percent of respondents said the same. Additionally, in 2015 more than one-third of respondents reported that their recruitment budget had been cut. While the authors of the report, Deloitte's James Gregson and Brian Umbenhauer, believe that training and recruitment budgets should be increased, they also suggest that CPOs can respond to their talent crisis by looking to new tools and ways of working.

Indeed, the survey shows a marked increase in CPOs investing in digital solutions. According to the survey, 70 percent of the respondents are investing in self-service portals, which would allow business-line managers to handle their own transactions. The survey also found that 22 percent of respondents are reducing their investments in traditional technologies such as software solutions for managing sourcing, contract management, and the entire requisition-to-pay (or procure-to-pay) process. Meanwhile, there is increased spending on newer technologies. Forty-five percent are investing in cloud computing, 42 percent in mobile technologies, and 16 percent on social media feeds. (According to Umbenhauer, social media such as Twitter is being used as feeds into supplier advanced analytics.)

Emerging technologies are also being used to help improve the efficiency and accuracy of the more strategic aspects of procurement. Cognitive analytics, crowdsourcing, and digital reporting can all help improve decision making, while artificial intelligence and machine learning can improve transaction processing, data manipulation, and communication, according to the report.

In fact, the report's authors seem to suggest that some procurement roles are ripe for being replaced by automation. They point to a recent Deloitte survey of 183 global business services users, which found that respondents believed that 56 percent of roles in a typical finance function—including procurement managers—could be automated. "This digital revolution will either reinvigorate or replace procurement's value proposition," says Gregson, who is Deloitte's Europe, Middle East, and Africa (EMEA) sourcing and procurement lead. In addition to talent and emerging technologies, the report also looked at the respondents' top priorities and provided a market outlook. The report itself (as well as infographics and an excellent breakdown of the results by geographic region and industry sector) can be found here.