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We are now well in to 2012, and given a turbulent 2011, many are wondering what might be ahead of them.
The PIU addresses some of these uncertainties in the CPO Strategy 2012 report that was recently published.
This annual survey, now in its third cycle, asks CPOs and other senior procurement executives about their goals and challenges, and identifies procurement trends and high-interest topics. We collected 250 responses from as many as 40 countries and across industries.
So what is on the procurement horizon for 2012?
One thing is for sure: the deepening economic crisis and its effects remain a major concern for the procurement function. In fact, CPOs indicated that the top two threats impacting their supply chains are commodity inflation and the economic downturn, both of which, they predicted, will continue plaguing them in five year’s time, and with even higher intensity than today. But given the nature of occurrences in 2011, perhaps the bigger challenge for procurement leaders lies in knowing how to monitor and react to those supply chain interruptions that they have not seen before.
Linked to this sentiment of uncertainty, the survey suggested a growing appetite for shorter supply chains. In fact, some 75% of respondents stated the intention to source from either more direct or local sources this year, predominantly with the aim of improving agility. Ironically however, reversing the effects of our globalised economy is not as easy as some may find given the sheer lack of local sources.
Over the previous years, we have seen that procurement’s priorities have shifted only subtly, and it could be argued that a state of “crisis as usual” has now been reached. But is that an excuse for procurement to keep operating the way it has been, or is there ever a turning point in sight to fundamentally change its modus operandi? To get to the bottom of this, we used the survey as an opportunity to examine how procurement’s role could evolve over the course of the next five years.
Perhaps to no great surprise, there will be no change in the importance of cost management, confirming that it will remain the function’s backbone. But one the fastest growing elements of the function’s role will is capturing innovation, which, as deeper analysis revealed, is also seen as the only route to greater savings in the current inflationary period.
Further highlights of CPO Strategy 2012 include a look into the function’s adoption of social media. While it is reassuring to see that the function has been embracing social media tools such as LinkedIn to a certain extent, and its benefits are conceptually understood, critical mass in terms of usage is yet to be reached.
Members can access the full report here.