CSCMP's Supply Chain Quarterly
February 22, 2020
Forward Thinking

CPO Survey: Economic, political risks top agenda

Chief procurement officers say they will cut costs to fight slowing economy and trade threats, Deloitte study shows.

Chief procurement officers say they will continue to focus on cost-cutting strategies to deal with economic and trade threats heading into 2020, according to a recently published survey from Deloitte.

Bar chart: Economic downturn and deflation emerged as biggest risk

The consulting firm's Global Chief Procurement Officer Survey 2019 shows that CPOs are bracing for an economic slowdown at home and abroad and that trade uncertainties rank high on their list of top business risks. The survey also found that less than half of CPOs feel adequately prepared to deal with the risks facing their business: 39% of survey respondents said they are prepared "to a large extent" and 5% said they feel "completely prepared" to meet the risks ahead. 

The survey results represent a departure from past responses, according to Deloitte.

"This year's survey saw a spike in responses not previously top of mind: a potential economic downturn and the 'trade war.' External risks are gaining the attention of CPOs, even more so than continually pressing internal risks, like digital transformation," the authors said. 

Survey respondents listed an economic downturn as the number one risk affecting procurement and cited cost-cutting measures as a way to combat the problem, with 70% of respondents saying they are likely to cut costs over the next year. Respondents also said they are concerned about geopolitical risks, citing Brexit as a top concern along with weakness and volatility in the Middle East combined with "spillover effects" from the economic slowdown in China.

"These are considerations that are only growing in attention from CPOs—no matter where they're based, and they continue to underscore the increasingly global nature of the modern CPO role," the survey's authors said.

A third of respondents listed the trade war as a top risk to procurement, and researchers said most are taking small steps to address the issue. Rather than redesign their supply chains, most companies reported that they are "proactively planning for every possibility" by making small adjustments in the supply chain along the way.

Other key procurement risk factors identified in the survey were: internal complexities within their larger organization, managing risk with suppliers, and managing digital fragmentation within their organization and with their supply base.

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