Why it matters to business leaders
Make no mistake: CPOs are facing a challenging global business landscape and reacting accordingly — yet many do not feel prepared to tackle these challenges head-on. The “Deloitte Global CPO Survey 2019 ” found a growing trend toward safeguarding against external risks as the current economic environment presents a number of emerging issues from every corner of the globe. From goods to services, to equipment and more, external supply markets were already complex. However, when coupled with digital transformation and expanding geopolitical risks, procurement has become more complex than ever before, and ever more important to organizations at large.
What’s more, only 39% of respondents feel prepared “to a large extent” to combat and navigate these risks, while only 5% feel “completely” prepared. Faced with an unprecedented amount of uncertainty, today’s CPOs are pressured to form contingency plans and enlist the help of the larger C-suite in becoming masters of complexity who can weather these risks. In fact, the CPO may be seen internally as a leading expert on uncertainty, raising the stakes for the role as it becomes increasingly strategic and higher profile to executive leadership.
Planning for an economic downturn — at home and abroad
An economic downturn was the No. 1 risk cited by survey respondents, with 46% identifying it as a top risk impacting procurement. In considering a possible downturn, the majority of respondents plan to cut costs as a means of ensuring long-term success. In fact, cutting costs remains a primary business strategy across sectors — 70% of respondents indicated they are very likely to cut costs over the next year.
Also top of mind are several geopolitical issues with the potential to wreak havoc on the global economy. Respondents cited Brexit as the top such issue, alongside weakness and/or volatility in emerging markets and the Middle East, plus spillover effects from the slowdown in China. These are considerations that are only growing in attention from CPOs — no matter where they’re based, and they continue to underscore the increasingly global nature of the modern CPO role.