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Innovation and Value in Digital Procurement 


According to The Deloitte Global Chief Procurement Officer Survey 2018 (504 procurement leaders from 39 countries took part, representing organisations with a combined annual turnover of $USD5.5 trillion.) a clear shift in procurement focus towards innovation and value requires an acceleration in the pace of change especially in leadership, talent and digital procurement. 

The top business strategies for procurement leaders are:
• New products/market development 58%  
• Managing risks 54%  
• Cost reduction 78%
However, 51% of procurement leaders believe their teams do not currently have sufficient capabilities to deliver on their procurement strategy.
Procurement leaders are primarily focused on specific procurement levers to deliver value over the next 12 months:
Consolidating spend 37% 
Reducing total life cycle/ownership costs 32% 
Increasing competition 31% 

The Markit IT purchasing solution delivers these values (and more) for thousands of international clients in 33 countries – including 20+% of the Global Forbes 2000 companies. 

Despite recognising digital technologies, their impact and imminent uses, few organisations appear to be progressing at the rate that their c-suite executives consider necessary for achieving overall goals. Indeed, in the majority of areas, the level of impact has declined, and the forecast application of new technologies is low. 

In summary, procurement (leaders) have continued to successfully deliver short-term savings and manage risk to support growth during a period of uncertainty. As national and global economies improve, procurement have a pivotal role to play in increasing supply chain transparency, accessing supplier innovation and delivering enterprise wide cost reduction. Exceptional procurement, supplier, business and digital leadership will differentiate those organisations that deliver an impact that matters. 
Deloitte’s research on high-performing procurement leaders shows that there are seven key capabilities where high performers out performed other procurement leaders: 
• Executive advocacy  
• Leadership – supplier and procurement  
• Strategic decision making  
• Talent capability  
• Digital procurement  
• Supply chain transparency  
• Balanced scorecard  

In comparison to last year’s survey results, high-performing procurement leaders continue to focus on executive advocacy, strategic decision making, talent capability and digital procurement. Three new capabilities that differentiate high performance from the average have also emerged this year: leadership, balanced scorecards and supply chain transparency (Overall supply chain transparency is poor with 65% of procurement leaders having limited or no visibility beyond their Tier 1 suppliers.). 

The survey also shows:  
• 17% of procurement leaders do not have a digital procurement strategy, and of those that do, less than one third believe that their strategy will enable procurement to deliver significantly on its objectives and improve enterprise value.  
• The rate of digital technology adoption amongst organisations is highest in the transactional Purchase to Pay (P2P) process, followed by sourcing and tactical buying.  
• Analytics will have the most impact on procurement in the next two years.  
• Analytics are being used for cost optimisation (50%), process improvement (48%) and management reporting (45%).  
• Only three per cent of procurement leaders believe their staff possess all the skills required to maximise use of digital capabilities. 
Source: The Deloitte Global Chief Procurement Officer Survey 2018