Each month i review all the procurement research reports and articles and summarise the best of them, drawing out the key points.
World Commerce & Contracting – CCM Benchmarking
In this
report, (756 responses) sponsored by Icertis, World CC looks at the differences that’s happened over contract management over the last couple of years and there are some interesting takeaways.
- Increase in both Agile (25% and relational (14%) contract types. Reflecting the changing shape of the world economy
- On average contract data sits in 24 different systems in typical organisations, which will present a “challenge” to ensure that you have a complete picture.
- The top 5 most measured areas are:
- Cost reduction achieved (rather than just identified)
- Compliance to contract
- Cycle times
- Contribution to revenue
- Customer (external) satisfaction
- Post signature monitoring of compliance to terms is the top area of interest (also grown by 15%) in technology (mirrors earlier Economist Impact report), followed by obligation extraction.
- Contract repository is the top deployed technology at 62% of respondents.
- Visibility into (76%) and finding contracts and data (70%) are the top drivers of new technology.
An interesting nougat that appeared was linked to the spread of contract management being no longer siloed in procurement (if in fact it ever really was). The survey tells us that on average 29% of the workforce is in some way involved in the contracting process.
MIT State of Supply Chain Sustainability
The fourth instalment (2300 responses) shows that commitment to supply chain sustainability appears to be resilient to certain types of crises, but vulnerable to others. Large-scale network disruptions, like those precipitated by the Covid-19 crisis and Russia’s invasion of Ukraine in 2022 are shown to result in increased commitment to supply chain sustainability among many firms. On the other hand, in 2023 many firms’ sustainability efforts appear to have been especially sensitive to this year’s negative economic forecasts.
The gap is narrowing between the goals that are being set, and the investment needed to achieve those goals (though investment is not at the level where the set goals will be achieved). What is interesting is that each year there is a differing priority of importance. Diversity for example appears to be in ascendancy over the last few years whereas circularity has stayed stagnant.
When looking at the current actual practices, Supplier codes of conduct (80%) supplier audits, supply chain mapping and company codes of conduct lead the way and the report calls these table stakes for global sustainability programs.
This year’s report had a section devoted to Net Zero goals and almost half of the respondents who had net-zero goals report that their firm will not begin measuring or reducing Scope 3 emissions for five years or more. At the same time, roughly half of responses show net-zero deadlines of 2040 or earlier. Scope 3 reporting appears to be especially vexing, and how to collect reliable data across firm boundaries is still tricky.
Gartner Incentives Suppliers for Sustainability
On the subject of sustainability,
Gartner released a paper looking at the actions that can be taken to incentivise suppliers to achieve sustainability goals, and at the top of the list (linking nicely to the world cc and MIT reports are to include sustainability goals in contracts, and to ensure those goals are measured in performance scorecards.
The list is largely as you’d expect, (linking business to performance etc, but an area I thought was very low was the access to better payment terms for improved sustainability performance (65). Not clear if this is linked to organisations ability to offer those terms, but it does seem like an opportunity missed.
In a nod to the MIT Study earlier, only 16% of organizations are actively reducing Scope 3 greenhouse gas (GHG) emissions, and another 27% state that conflicting priorities hinder suppliers from prioritizing efforts to reduce their emissions.
CIPS Professional Challenges
A couple of interesting articles from the revamped CIPS communication platform this month. First Dr John Glen
discusses the forces shaping procurement and supply in 2024, including:
- Geopolitical Flashpoints (Mid East, Taiwan, Russia/Ukraine
- Supply Chain Changes – Logistics falling, reshoring increasing.
- Inflation & Interest rates
- Slow growth
In the
second article, a survey of the CIPS member base identified the challenges keeping procurement up at night. Apart from the above there was also
- AI
- Sustainability
- Workload
- SRM & Contract Management
Procurement Leaders Compass 2024
My read of the month for this month.
This report looks ahead to the challenges and opportunities procurement could encounter not just next year, but over the next five years and beyond. It’s a little bit of a future focussed report that poses several what if questions…
What if Gen AI becomes as used as spreadsheets are – Report suggests that Gen AI market value could be $36Bn by 2028 and that market intelligence is recognised as having the biggest impact from AI
What if regulators clamp down on AI – See the recent issues surrounding open AI!
What if globalisation goes in reverse (ie will reshoring/nearshoring/regionalisation continue the current trends). Global trade has basically plateaued (and in fact shown a decline) since 2008. The biggest barrier to the reshaping of supply chains is cost (45%) but as other reports have noted (Deloitte reshoring article last month) these cost prohibitors are shrinking to almost nothing.
What if Economic turbulence erodes enthusiasm for ESG – As discussed in the MIT report earlier, the one area that did slow down the ESG impetus was the Economic realities of 2023.
All in all, a great report one that asks some great questions, and gets you thinking about future strategies and the impacts on procurement.
State of Flux Annual Survey 2023
This is the 14
th iteration of the
Supplier Relationship Management (SRM) study, and it paints an interesting picture. The report starts of by stating that many organisations haven’t progressed in the maturity of their SRM programs (if in fact they have them) which is an issue as according to the report 50% of their workforce isn’t employed by them, but by their suppliers.
There’s lots of good case studies and thought leadership in the report, and for those wanting to know more the first half of the paper is dedicated to those studies and thought leadership.
“Feedback received during and immediately after the COVID-19 pandemic revealed that many organisations who believed they were a customer of choice found out they were mistaken.”
The second half looks at the actual data from the study, segmented into the 6 pillars of SRM. Headline stats include:
Value: 87% believe improved risk management is a key deliverable from SRM programs with 75% reporting measurable (non-financial) benefits. 42% have seen measurable financial benefits of cost reduction programs through SRM.
Engagement¨55% of organisations gather supplier feedback by ad hoc conversations.
Governance: 22% of companies use 3
rd party supplier due diligence services. 89% segment their suppliers on business criticality.
People: 69% of leaders have a dedicated supplier management role and 83% of leaders have developed specific competencies for supplier management. 52% identified that SRM sits in centralised procurement functions.
Technology: 80% of leaders have dedicated contract management system. 76% identified improved supplier performance as a benefit from using technology with 62% identify the centralise supplier information as a key problem they are looking for technology to solve.
Collaboration: 92% of leaders use 360 collaboration assessments, and 72% of leaders report improved levels of trust from collaborative relationships.
SSON Accounts Payable
This
report which echoes in many stats the findings from the ardent partners state of AP report from last month, in detailing the opportunity for greater efficiency from AP. The lens is slightly different with a shared services context but shares a similar output that the automation and maturity within many could be improved.
59% do not have a designated owner for end to end P2P
78% identified increased speed of processing and cycle time reduction as a top benefit of automation and 56% cited exception handling as the biggest barrier from AP delivering on their brief. (This was also identified as the activity that will be prioritising in terms of automation next).
Suppliers identified PDF as preferred method of invoice submission (though how automated this allows the process to be is interesting and the report makes the point that this will be due to the low levels of automation.
40% identified E invoicing as a technology planned to be implemented in the next 2 years, with budget (56% and competing priorities (54%) being the biggest barrier.
Amazon State of Procurement 2024
A pretty comprehensive
study. Pulling out some interesting stats:
- 95% stated that their org has to outsource procurement activities to third parties. With 72% stating that strategic activities are the ones they outsource
- 53% state their procurement budgets will increase in 2024.
- Top internal challenge is complexity in process/systems and external is costs.
- 86% cite retaining and developing talent is a top priority with 84% stating attracting new talent.
- 36% want to invest in tools or tech to increase efficiency.
Beroe – Digital Procurement Survey
Beroe conducted a survey on the digital procurement landscape within its community of members.
53% identified that the demand for cost reduction and greater efficiency is the main driver of innovation in procurement, with technology being 2
nd at 22%, which is supported by recent technological innovations in the procurement sector are perceived to have most significantly improved the efficiency of processes, as reported by 44% of respondents.
28% expressing concerns about the integration of new technologies with existing systems and training and change management pose challenges for 24% of respondents, highlighting the importance of addressing the human factor in technology adoption.
The survey reveals diverse interests within the procurement community regarding the exploration of new digital solutions., AI-enabled Market/Supplier/Commodity Intelligence, Supplier Relationship Management (SRM), and Spend Analysis each garnered the interest of 10% of respondents. AI-driven insights and data-driven decision-making are evidently key areas of focus.
Additionally, Tendering/RFP and Contracting attract 9% and 7%, respectively, showcasing the importance placed on optimizing procurement processes.
PWC CEO Survey
In this the 26
th (wow!) annual global
CEO Survey, over 4000 respondents identified some top areas for organisations to consider.
Surprising no one, Inflation and macro uncertainty is the biggest threat over next 12 months but recedes over next 5 years (40/31 to 29/28)
Cost cutting is the order of the day with 52% stating cutting operating costs, but only 16% stating reducing workforce.
48% identified increasing investments in cyber security and 46% identified adjusting supply chains (reshoring/nearshoring) in response to global conflicts.
76% investing in automation of processes and systems, 69% deploying cloud and AI and other advanced tech.
As always reach out to discuss more, links to the reports are included and always happy to hear your thoughts!
