KPMG: Procurement Facing a ‘Critical Year’

KPMG: Procurement Facing a ‘Critical Year’

Principal, Procurement & Outsourcing Advisory Leader at KPMG

Chris McCarney, Principal, Procurement & Outsourcing Advisory Leader at KPMG, explains the essential challenges facing the sector

The KPMG Global Procurement Survey 2023 explores the views of 400 C-suite and SVP/VP-level executives from a mix of public and private organisations around the world. 

The latest edition has found how procurement leaders are facing a series of complex risks, challenges and opportunities that will need a focus on strategic sourcing, sustainability goal-setting and embracing technology.

Why does the survey say procurement is facing a ‘critical’ year?

We seem to be facing an identity crisis. The year ahead represents an opportunity to define ourselves as procurement professionals, and the role of our respective functions within an enterprise. Myriad competing priorities and an expanding set of risks seems to have dampened our focus. Coupled with the ever-growing expectations to do more, with less, it’s difficult to keep internal and external stakeholders happy. 

For example, only a quarter of respondents believe that their stakeholders would rate procurement service as “exceptional.” It feels like we are ‘on the back foot’.

What was your key takeaway from the report?

That tensions are growing. Not only between procurement and stakeholders, but also between rocurement and technology. Technology and data initiatives have not completely fulfilled the promise of increasing automation and efficiency. The maturity of key capabilities remains a work-in-progress. On the other hand, 71% see generative AI as the top emerging technology, and say it will have the biggest impact on procurement in the next three to five years. Frustrations aside, procurement leaders are still betting big on technology. We see this everyday with our clients.

Hw crucial are soft skills, such as building supplier relationships?

Procurement leaders are reporting a shift in headcount from more tactical activities like operations and accounts payable to strategic activities such as supplier relationship management. Leaders predict a reduction of resources dedicated to operational activities of 34% while most belive headcount will remain flat (this requires technology delivering on promises). 

Fulfilling these priorities will require the right focus and expertise. Traditional competencies will be critical, but they need to be part of an expanded set. Procurement professionals need to be more ‘athletic’ than ever before.

How can business harness the potential of technology?

The survey tells us that procurement leaders expect technology to help them reach their prime objectives of cost savings and avoidance (91%), process efficiencies (79%), and enhanced risk management and supply assurance (73%). 

It also shows that technology enablement  a key element across a variety of areas. However, the survey does not tell us the resources required to achieve results. Organisations that dedicate time, treasure, and talent to harnessing the potential of technology will maximise outcomes.

How can procurement and supply chain functions maintain a balance between current challenges and longer term planning?

Tough question. Procurement professionals are ‘firefighters’ by nature. The day-to-day, last minute, need-this-done-now nature of the function will never go away. But there’s hope. As rocurement leaders embrace technology, automation and self-service will grow. In turn, leaders and their teams should create capacity for longer-term planning. The survey tells us the majority of procurement professionals (84%) have put together roadmaps for the developments of their procurement function in the next one to three years, while 51% have thought through their procurement development strategy for the next three to five years. These roadmaps are key to building identity and prioritising activities and investments required to fulfil a vision, aligning with stakeholders, and chartering a team to execute. Client experience suggests that roadmaps also require a regular refresh. Revisiting provides an opportunity to re-prioritize, assess progress, and strategically course correct as needed.

Why are surveys such as this so valuable for the industry?

Procurement is dynamic. We constantly face shifting demands and business priorities. We believe the survey data and insights provide crucial information for procurement and supply chain leaders as they carve a path forward and define that identity. Finally, we want to make sure KPMG is investing in the solutions and services to best serve our clients.

Make sure you check out the latest edition of Procurement Magazine and also sign up to our global conference series - Procurement & Supply Chain LIVE 2024

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