CPO sur­vey finds cost re­duc­tion is key

The Star Late Edition - - BUSINESS NEWS - Ka­belo Khu­malo

UP TO 79 per­cent of chief pro­cure­ment of­fi­cers said they would fo­cus on cost re­duc­tion and risk man­age­ment as their busi­ness pri­or­ity this year as a means of mit­i­gat­ing against eco­nomic un­cer­tainty and to re­alise their growth am­bi­tions, with their pri­or­ity be­ing on lev­er­ag­ing dig­i­tal plat­forms.

This is ac­cord­ing to pro­fes­sional ser­vices firm, Deloitte’s an­nual Chief Pro­cure­ment Of­fi­cer (CPO) Sur­vey.

The as­so­ciate di­rec­tor of in­te­grated op­er­a­tions de­liv­ery at Deloitte, Khutso Sek­gota, said those CPOs who ac­cel­er­ated the adop­tion of pre­dic­tive and cog­ni­tive an­a­lyt­ics would en­able end-to-end sup­ply chain vis­i­bil­ity and start us­ing their data to drive de­ci­sion-mak­ing.

“Most CPOs are al­ready think­ing about how to aug­ment their ex­ist­ing tools by lev­er­ag­ing the cloud, an­a­lyt­ics and robotics. The chal­lenge for them will be en­sur­ing that their in­vest­ments are well spent,” Sek­gota said.

The sur­vey was con­ducted in 79 coun­tries, in­clud­ing South Africa. It found that com­pa­nies were par­tic­u­larly in­ter­ested in adopt­ing pre­dic­tive and cog­ni­tive an­a­lyt­ics, such as lev­er­ag­ing cloud, an­a­lyt­ics, and ro­botic soft­ware to drive de­ci­sion-mak­ing pro­cesses.

In to­tal, 60 per­cent of chief fi­nan­cial of­fi­cers agreed that this digi­tised process should sus­tain cost re­duc­tion in par­al­lel to a greater fo­cus on risk.

It is im­por­tant for com­pa­nies to fine-tune their cost-re­lated strate­gies.

Three-quar­ters of CPOs be­lieve that pro­cure­ment’s role in de­liv­er­ing dig­i­tal strat­egy will in­crease in the fu­ture, with more than 65 per­cent say­ing that an­a­lyt­ics will have the most in­flu­ence. The im­pact of au­to­ma­tion and robotics on their func­tion will steadily in­crease from 50 per­cent to­day to 88 per­cent in five years’ time, and up to 93 per­cent by 2025.

How­ever, 62 per­cent of the re­spon­dents claimed that there was still a large to mod­er­ate skills gap across an­a­lyt­i­cal abil­i­ties. The act­ing chief pro­cure­ment of­fi­cer at the Na­tional Trea­sury, Schalk Hu­man, said it was im­por­tant for com­pa­nies to fine-tune their cost-re­lated strate­gies in times of weak eco­nomic growth.

“In a low-growth eco­nomic en­vi­ron­ment, com­pa­nies need to im­ple­ment cost-re­lated strate­gies, in­clud­ing within South Africa, which re­quires cost-re­lated strate­gies that are key to drive cost re­duc­tion, cost avoid­ance, cost con­tain­ment and ag­gre­ga­tion in or­der to lower unit costs and de­fer costs or even can­cel con­tracts,” Hu­man said.

In to­tal, 75 per­cent of CPOs say that they had ex­ec­u­tive sup­port, but most CPOs also be­lieved that they could im­prove their ef­fec­tive­ness of busi­ness part­ner­ing. Most rate their cur­rent ef­fec­tive­ness of busi­ness part­ner­ing at less than 70 per­cent, and are tar­get­ing fu­ture ef­fec­tive­ness of more than 90 per­cent.

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