CFO – CPO Procurement Perspective Survey

The survey provides insight into the thinking of finance and procurement leaders, explores top of mind procurement issues and opportunities for companies today.

Procurement reset: reimagine the possible

The Covid-19 pandemic delivered unprecedented challenges and in many cases worsened issues that existed pre-pandemic. The impact of Covid-19 showed us that companies are vulnerable due to lack of transparency and increased complexity. Procurement leaders cite the coming year as a year of reinvention and a reset for procurement to reimagine the possible.

We surveyed finance and procurement leaders about their current collaboration, procurement challenges and priorities towards a successful and a more sustainable future.

The CFO - CPO Procurement Perspective Survey shows that the procurement and finance leaders have aligned envisioned paths for procurement and see the added value of a strong collaboration, but do not yet make use of the full potential.

Furthermore, the results showed that there is enormous potential to increase the effectiveness of the procurement function, as the majority of the finance and procurement leaders would like to see an ambitious (maturity) development of the function in the next two years. Tackling the five key underlying findings will help procurement leaders in improving their performance and enable them to make the difference.

Two out of three companies do not have (fully) aligned goals between procurement and finance, despite the potential and added value of close collaboration is recognized
The majority of procurement departments are seen as a “technical beginner”, significant need to improve in the next two years with a clear digital strategy as a starting point
30% of procurement leaders consider their procurement team as not future proof. Investment in talent and “upskilling” is expected to enhance value delivery in the long run
Clear focus shift from cost reduction to joint innovation and partnerships
Environmental, social and governance (ESG) initiatives will play a significant role in driving innovation, investment could result in a big head start on competitors

Providing flexibility through an agile operating model

The world is getting more complex, and competition more dynamic. Technology is making things possible that couldn’t be done before. The Covid-19 pandemic forced a new way of working where flexibility is key.

Procurement functions are expected to keep up with the organisational changes and support them as much as possible. A majority of procurement leaders cite that a more agile future-ready operating model will be part of their procurement reset, where traditional structures make place for a more agile way of working, e.g flexible talent pools with a mix of capabilities.

The increased agility will require procurement leaders to continuously align internally to ensure that the objectives and priorities are the same. Our research showed that 64% of our respondents indicated that procurement and finance are not fully aligned, but as the importance of collaboration is recognized, a shared agenda to influence company-wide activities should be a next step towards an impactful partnership.

Alignment needs to take place across the company, because the boundaries between various operational fields such as finance, marketing, sales, and HR will steadily disappear. Instead of thinking in terms of sub-departments, organisations will need to increasingly think in terms of customer processes as their base for decision-making and often also for offering improved products. Here finance leaders foresee an important role for procurement as it is uniquely positioned to not only bring innovation outside in, but also to identify the opportunities across the departments instead of within the departments.

Contact us to find out more about our Agile Operating Model design, where we support our clients in defining and implementing a future proof operating model for procurement enabled by the right capabilities and the right technology.

Digitalisation offers an enormous potential to increase the effectiveness of procurement

The rapid acceleration of many companies’ digital transformation efforts is not slowing down. Procurement leaders see an enormous potential to increase the effectiveness of the procurement function via digital and analytical solutions. Nevertheless procurement processes are still experienced as complex, where systems hinder excellence instead of enabling it.

Almost half of the procurement leaders and 70% of the finance leaders assess the procurement function as a “technical beginner”. 40% of the procurement leaders state that they do not have a comprehensive digital roadmap for the coming years. This is a great concern as the gap between procurement technology leaders and laggards, but also between departments across the organisation and the procurement department is getting bigger.

Procurement leaders set the ambition towards data driven procurement, but clearly struggle with how to continue. There is no playbook for acquiring these new procurement solutions and architecture. Procurement leaders could start by assessing their current and required analytical and digital capabilities, understanding where procurement adds value and can make a difference. Based on prioritization the procurement leader can then design the roadmap to their procurement function of the future.

Contact us to develop your roadmap towards data driven procurement. What are the best fit for the future solutions for your company, enabling components and capabilities to deliver next level performance?

Reskilling team members, recruiting new talent and retaining high performers are needed to succeed in the digital area

When asked to prioritise the procurement initiatives seen as most important to enhance value delivery in the long run, procurement leaders put the creation of a skilled, educated and adaptable workforce at the top of the list.

The impact of technology is not only seen in the design of the procurement organisation, but also in the procurement professional. Advanced automation and digitalisation are already having an impact on the type of work within the procurement organisation and this will only increase. To become successful, the profile and required skills of the procurement professional will have to change fundamentally. Purchasing knowledge will always be a prerequisite but is no longer seen as sufficient. Leaders list competencies such as flexibility, creativity, collaborative and adaptive skills as differentiators that add value in a world of extensive automation and digitisation.

Procurement acknowledges that more focus on and investment in (the skills of) their team is needed in the short term to become successful. Determining the required core competencies and identifying the gap to the dream team is a first step.

Contact us to find out more about our Strategic Workforce Planning approach which enables procurement functions to realise the dream team by facilitating a data-driven foundation for short- and long-term strategic choices, in line with the best mix of competences, age structure, experience and diversity while taking into account personnel costs.

Making the difference as procurement by unlocking new opportunities

Almost all finance and procurement leaders taking part in our survey emphasize the value of innovation for their companies, with most seeing it as either a priority or a primary focus. A focus on innovation is seen as critical to companies’ recovery and to rebuild or enhance revenue streams.

For driving innovation, procurement is perfectly positioned to identify opportunities and to improve performance through innovation. Internally, procurement understands the needs and complexities and externally procurement is aware of the strengths and weaknesses of suppliers. This position is unique and will become only more important in the future.

90% of the finance and procurement leaders believe in procurement as a driver of innovation. The more advanced procurement functions already understand - beyond a main focus on cost reduction - how to make the difference by investing in partnerships and joint innovation. However, this is a challenge for the majority of procurement functions as 80% of the departments are still heavily involved on solely an operational / tactical level. Finance leaders emphasize the importance to further develop the function and start joint innovation programmes with suppliers to drive growth and competitiveness.

Contact us to find out more about our digital Category Strategy Creation approach which enables your team to accelerate and realize short term results in co-creation with the business. Supported by our Supplier Management & Collaboration approach to realize sustainable relationships and innovation.

Start with creating a sustainable competitive advantage

Corporate social responsibility, climate change, reputation management: these are concepts to which companies, their customers and stakeholders are increasingly attaching more value to and where leaders see an important role for procurement to play. A role where procurement understands the wider impact on the environment and society, ensuring the supply chain is cost-effective and responsible. Making the organisation more resilient, transparent, agile and sustainable.

Finance and procurement leaders share the opinion that investing is essential to show the value procurement can offer and to have a big head start on the competitors. Finance leaders also see procurement potential by realising a closer collaboration with commerce and sales, as the demand to make more conscious choices and to supply sustainable products and services is made directly by customers and stakeholders.

To realise and remain successful in a sustainable future, procurement leaders make use of and incorporate Environment, Social and Governance (ESG) factors into decision making, strategy, transformation and reporting to protect their reputation and achieve value growth.

Contact us to get a better understanding of your ESG maturity via PwC’s ESG procurement maturity assessment. Our digital enabled ESG procurement program helps you make more sustainable, transparent, and integrated decisions to maximize added value for your business and stakeholders.