Tackling Procurement Complexity With Digital

Ryan Flynn

If there’s one word to describe the current procurement landscape, it’s “complex.” From goods and services to equipment and talent, globalized supply networks are already incredibly intricate. Coupled with geopolitical uncertainty and digital transformation, however, procurement today has become more complex than ever before.

Deloitte’s 2019 Global Chief Procurement Officer (CPO) Survey found that only 39% of respondents feel prepared “to a large extent” to combat and navigate these complexities, while only 5% feel “completely” prepared. Following interviews with nearly 500 procurement leaders across 38 countries, Deloitte identified four distinct areas of focus: external complexity, internal complexity, talent complexity, and digital complexity.

Mastering the digital landscape can not only help leaders navigate global uncertainty, but also drive significant business value. Through pointed investments in the right emerging and automation technologies, CPOs can focus their efforts on larger strategic efforts and become critical C-suite partners.

Navigating widespread complexity

Beyond traditional procurement concerns, emerging issues in the global economy are demanding the attention of CPOs. For example, the survey found a significant spike in responses not previously top of mind: a potential economic downturn and the “trade war.” With an increased focus on safeguarding against growing external risks, organizations can better anticipate and understand larger business and economic trends thanks to tools like artificial intelligence that are powering predictive analytics.

Today’s CPOs have more technology tools at their disposal than ever before. The potential of these tools to help cut costs and weather uncertainty is tremendous if they are deployed in collaboration with other C-suite partners. CPOs, for example, must work alongside their CIOs to align on technological priorities and investment. This collaboration will also help boost data quality, standardization, and governance—cited by 60% of respondents as the most pressing digital challenge today. By helping to ensure good governance, CPOs can anticipate that the insights gleaned from predictive analytics will be more on-point and actionable.

In a world that’s only going to grow in complexity—from external risks to internal and talent shifts—the best course of action to consider is to double down on digital and align all processes and strategies to promote and help ensure efficiency and effectiveness.

Unlocking business value

Given these developments, it’s not surprising that we found leaders who are largely focused on analytics, viewing it as the technology that will most impact their business moving forward. Cited as the No. 1 answer by 59% of respondents, this demonstrates the desire to take a proactive and predictive stance to business. Similarly, CPOs are mainly working to improve and automate procurement processes with modern technological applications, in efforts to safeguard and strengthen existing capabilities.

CPOs can move beyond this mindset, however, to unlock new, innovative outcomes and revenue streams. These leaders can—and should—play a major role in helping to realize digital transformation organization-wide. When partnered with their CIOs, digitalization and externalization work together to support more strategic digital capabilities and drive larger business value.

However, this year’s survey found that artificial intelligence and cognitive computing—technologies driving the Fourth Industrial Revolution—are not seeing widespread adoption in procurement organizations. CPOs cannot consider themselves true masters of complexity without embracing disruptive technologies to provide greater internal and external visibility and automation.

To do this, CPOs need to define a bold digital vision that is aligned with their organization’s broader digital strategy and begin to invest in next-generation digital solutions. Without a true digital strategy, CPOs risk becoming overwhelmed by complexity and unable to take on “good” complexity that comes from expanding their role beyond traditional cost reduction.

As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure. Certain services may not be available to attest clients under the rules and regulations of public accounting. This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services.

Ryan Flynn

About Ryan Flynn

Ryan Flynn is a principal with Deloitte Consulting LLP. Ryan has more than 14 years of experience helping global companies improve their sourcing and procurement efficiency and effectiveness. He specializes in leading complex strategic sourcing engagements and has helped his clients save over $350M. Ryan brings broad, cross-industry experience across the source-to-pay cycle, including strategic sourcing, supplier risk management, policy/process design, master data management, system design, implementation, and governance and organizational design.