OREANDA-NEWS. While leveraging digitized operations is identified as a big upcoming challenge in procurement, generating and measuring savings remains the key issue for Chief Procurement Officers (CPOs) across industries. Nevertheless, ensuring delivery ability, safeguarding quality, and contributing to innovation management by proactively involving suppliers are already important areas of responsibility for CPOs and will only increase in relevance over the next three to five years. These are some of the findings of an international study conducted by Roland Berger, entitled "CPO Agenda 2016". Based on the top industry trends and their implications for procurement, the study identified necessary levers for the CPOs of seven major industries: automotive, chemicals, consumer goods, engineered products and high tech, healthcare/medtech/pharma, transportation and utilities. For their research, the Roland Berger experts analyzed feedback from 200 managers around the globe with responsibility for procurement.

"Procurement can make a significant contribution to the creation of strategic advantage. Thus, expectations on the CPO are continuously rising," explained Roland Berger Partner Oliver Knapp. "Compared with the 2014 edition of the report the number of challenges perceived as important or very important by CPOs has increased. Though trends in procurement differ by industry, the executives in charge share a growing number of challenges they have to face."

Leveraging digitized operations – the upcoming challenge in procurement

Only 30% of all CPOs surveyed regard digitized operations as important today. At the same time the executives do not consider themselves well prepared to meet this challenge. However, 71% expect digitized operations to gain in importance tremendously in the next three to five years. In industries such as engineered products and high tech (90%) or automotive (84%) this trend is regarded as even more disruptive. "Innovations and digitization are gaining more and more importance in procurement and are essential to enable future success," said Oliver Knapp. CPOs regard the need to increase the degree of automation in procurement by methods such as autonomous ordering (81%) and the build-up of end-to-end digital data flows across functions (78%) as the most important levers to meet the digitization challenge. Convincing and enabling suppliers to improve data connectivity (75%) as well as creating market transparency for Industry 4.0 solutions (72%) are also identified as major factors.

The chemicals and automotive sector perform best, but need to tackle the digital challenge

When comparing the different industries, chemicals, automotive and healthcare/medtech/pharma are leading when it comes to current procurement challenges. These include: Generating and measuring savings, ensuring delivery availability, safeguarding quality, enhancing product value, managing volatility and risk, optimizing working capital, securing innovation, and supplier partnerships 2.0. CPOs in the consumer goods industry ranked their average maturity worst by comparison. "Basic CPO challenges such as generating and measuring savings were important in our 2014 report and will remain so in the future. At the same time, the level of maturity when it comes to meeting these challenges is quite high already," said Knapp. "Looking at the digital challenge, maturity is still low across all industries. Fast and decisive action in this area could be a competitive differentiator."

Even in the chemicals sector, the most mature industry according to the study, the Roland Berger experts view the results of the research as a call to action with regard to the digital challenge: "Deeply integrated and already highly automated value chains in chemicals are increasingly digitized. We expect this to occur at a fast pace, creating the need for procurement to understand the arising transparency and levers end-to-end along the value chain," explained Knapp. The situation in the automotive industry is similar. "Leveraging digitized operations is the most pressing challenge on the automotive CPO agenda 2016," stated Knapp. Procurement needs to reap the benefits in terms of savings, but also in agility, efficiency and innovation. In addition, digitization bears a huge potential to add new value to internal business partners, thus potentially increasing the acceptance and credibility of procurement in the automotive industry.