Global Procurement Survey 2019 – What will the future of procurement look like?

New survey with 466 respondents reveals companies see need and high impact of digital transformation, but are still not adapting technology to automate and use machine intelligence

During the past two decades, procurement is consistently evolving from a clerical back office function to a strategic business function. Procurement organizations are largely globalized to engage with the global supply base. The source-to-pay process is highly integrated in centralized IT and ERP systems. Mature technologies, like cloud, central master data base, or an integrated IT landscape are widely adapted. Emerging technologies, like Artificial Intelligence, Machine Learning, Chatbots or Blockchain are only at a small number of procurement organizations implemented.

Overall procurement organizations are taking a wait and see approach before they implement new and emerging technologies. According to chief procurement officers globally, digitization, digitalization and digital transformation in procurement will accelerate in 2019. According to the results of a new global CPO survey – conducted a large-scale survey with 466 procurement and operational leaders globally.by Prof. Dr. Christoph Bode and PhD student Jan Gruenen at the University of Mannheim in collaboration with Dr. Marcell Vollmer, chief digital officer at SAP Ariba in early 2019 – the speed of digital transformation in procurement organizations is set to happen faster in the year ahead.

Digitalization is on every CPO’s agenda, but apparently there is a lack of clarity of how to realize the full potential of digitized procurement solutions.

Key findings of the empirical study include:

• 83.9% of the respondents consider digitalization important to improve procurement performance. A plus of 2% compared to last years survey.
• Top three priorities to drive digital transformation are

1. Automate processes
2. Improve data quality
3. Achieve cost savings

• 28% of participants rated their digital maturity as similar or better than a competitor
• More than 80% of participants are generally not risk averse and highly entrepreneurial
• The adoption of emerging technologies is low. Less than 15% of respondents are leveraging Artificial Intelligence, Machine Learning, 3D-Printing or Prescriptive Analytic solutions
• Budget restrictions, data insights and talent shortage are the largest roadblocks for procurement function Performance

Despite the roadblocks – budget restrictions, lack of data insights and talent shortage – procurement leaders understand the urgency and importance to define and execute the digital transformation now.

It will be important for procurement to continue to look for ways to bring intelligence to spend management by evaluating emerging technologies and embracing innovations to elevate procurement’s role in driving revenue beyond cost savings. The future procurement organization will orchestrate global supply networks, drive supplier innovations, mitigate risks and align the supply chain with companies’ ethical and social values.

Despite the fact that 55% of the respondents see themselves as highly entrepreneurial, the inhibitors for digital transformation are consistent compared to the surveys from 2018 and 2017.

Interestingly the number one reason: budget restrictions seems to be an interesting argument as digitalization with higher automation and integrated processes provides cost savings as well as using more machine intelligence can drive higher savings. Better data insights allow to manage risks and mitigate risks as well as support sustainability goals.

The internal talent shortage is the third reason mentioned in row of inhibitors. Here a deeper assessment of the potential to upskill, reskill or even rotate talents within an organization might be an area to further research.

The digital maturity of their own procurement function see 28% of the respondents as better or much better compared to their competitors

The journey of elevating procurement to the next level by moving from digitization to digitalization and finally to digital transformation continues.

A deeper assessment of the reasons and the business case for the digital transformation might be the next logical step. Procurement will transform by automation and machine intelligence. When operational, tactical and even some strategic tasks are automated, the core strategic and value generating activities remain. The future procurement organization will be powered by data but driven by people. It’s time to define the digital transformation strategy and execute it to continue the evolution for a value driven procurement organization. Will chief procurement still the title best describing the value contribution? It might be that the CPO also evolves to a chief collaboration or chief value officer.

Key Elements of Digital Innovation Success

The study covered all major industries and included blue chip enterprises and mid-market companies alike and found that:

If you want to get the full survey insights please have a look below where you find all details.

Professor Christoph Bode, University Mannheim & Jan Grünen, PhD student University Mannheim together with Marcell Vollmer

Big thanks also to all respondents and to Kay Ree Lee and Derrick Steiner for their work to finalize the results

Full slide deck - screens below:

Key Findings - summary

Demographics

Impact of Digital Transformation for Procurement function

Risk sympathy of procurement

How entrepreneurial are procurement professionals?

Industry overview of technology adaption

Key elements of digital innovation success

Tags: #procurement #CPO #survey #CPOSurvey #SupplyChain #AI #ML #DigitalTransformation #ArtificialIntelligence #MachineLearning #purchasing #Einkauf