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Just 6% of procurement leaders have full transparency of supply chain

Lack of supply chain visibility, a dearth of digital skills and Brexit/NAFTA uncertainty are some of the challenges facing procurement leaders. The findings of the Global Chief Procurement Officer Survey 2018 by Deloitte show that managing risk, along with cost reduction and new product/market development, are the top three priorities for chief procurement officers (CPOs).

Supply chain myopia

But one of the main challenges is a limited view of the supply chain, with 65 per cent of procurement leaders saying they have limited or no visibility beyond their tier one suppliers. And only 6 per cent of CPOs say they have full transparency of their entire supply chain. This is a huge challenge, as visibility of the supply chain is crucial for a number of reasons, including ensuring compliance with regulations and risk planning.

Deloitte's Brian Umbenhauer commented: “It’s both a worrying and opportunistic finding that two in three procurement leaders have limited visibility beyond their tier one suppliers. This has major implications for organisations across all industries, particularly for meeting regulatory and corporate social responsibility requirements and for the identification and mitigation of supply chain risks.”

To address potential regulatory, reputational and operational risks derived from poor visibility of the supply network, companies should seek greater data on pricing, supplier locations and critical dependencies.

Procurement trends

The survey also found that, although procurement leaders perceive a decrease in global macroeconomic risk, the uncertain outcomes of Brexit and NAFTA remain a significant risk factor for a third of the survey's respondents. Other findings from the survey include:

  • 51 per cent of procurement leaders don’t believe that their teams have the capabilities to deliver their procurement strategy;
  • 58 per cent say introducing new products/services or expanding into new markets is a priority in 2018; and
  • 20 per cent are looking to expand by acquisition.

Digital revision needed for procurement

While most procurement teams surveyed do have a digital procurement strategy, a minority of them view the digital strategy as being integral to achieving procurement goals. The survey found that only 17 per cent of respondents don't have a digital procurement strategy – but fewer than a third of those that do think the digital strategy will enable procurement to deliver significantly on its objectives and improve enterprise value. Skills and training will be crucial to creating successful digital procurement strategies. Just over half (51 per cent) don't think their current teams have sufficient levels of skills and capabilities to deliver on their procurement strategy and just three per cent of procurement leaders believe their staff possess all the skills required to maximise use of digital capabilities. Deloitte's Lance Younger comments: “In order to see the real impact of digital transformation and benefit from it, procurement leaders need to review and refine their digital vision and strategy to make it more action-oriented, agile and scalable. Leadership is a key success factor, leaders must be more disruptive, innovative and digital.”

This item appears in the following sections:
Working Capital Management
Procure-to-Pay Cycle in WCM
Total Working Capital

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