Accenture Study: How Procurement Provides New Business Value
Chief Procurement Officers (CPO) have always known the importance of supply chains in the procurement process to keep the global economy moving. Now, everyday people are starting to take notice. The pandemic, international political tensions, and climate-related natural disasters have put supply chains at the forefront of everyone’s minds.
That’s why modern procurement plays a much bigger role than just cost savings. It’s used to address the biggest challenges facing modern supply chain networks — including unethical labor practices, achieving net-zero emissions, or helping to create a unique customer experience.
The future business value of procurement
To better understand procurement’s role of delivering new business value beyond cost efficiency, Accenture surveyed 500 senior procurement executives and 500 non-procurement C-level executives across 12 industries in 15 countries.
The "The New Value of Procurement" research shows procurement leaders will continue to focus on traditional priorities, but place more significant value on addressing:
- Traceability and transparency
- Ecosystem orchestration
- Workforce inclusion and diversity
To address the factors above, the need to move to future-ready procurement is critical. Below, we’ll dive deeper into what challenges CPOs face becoming future-ready, along with insights from a selection of Coupa customer CPOs and Chief Information Officers (CIO) from a recent meeting of the Customer Executive Board (CEB).
Closing the gap between future plans and current performance
While 26% of procurement leaders want to build “future-ready” operations in the next three years, only 2% believe their operations are future-ready today.
What’s causing this gap between future plans and current performance?
A major reason, according to the Accenture research, is that many procurement organizations lack the right IT tools and platforms to deliver on these new priorities. And when they do focus on new areas, it’s often done in an ad-hoc way with unsophisticated capabilities and approaches — resulting in slow progress and missed opportunities.
Eric Tan, Coupa’s CIO, agrees. He believes his peers need to interact more frequently with their CFO and CPO colleagues to determine a few key digital transformation projects that get the backing of the entire business.
This is particularly important in the area of Environmental, Social, and Corporate Governance (ESG) reporting, noted a customer CPO. As customers and shareholders demand greater transparency across the supply chain, the right technology will be required to make that happen.
The power of data-driven procurement
As always, harnessing data is a common thread for future-ready procurement. Not surprisingly, therefore, data visibility and advanced analytics remain top of the agenda for both traditional and non-traditional procurement priority areas — yet the Accenture survey shows many organizations still rely on outdated methods.
For example, an alarming 62% of respondents say their procurement department still pulls manual reports from the enterprise resource planning (ERP) system on an as-needed basis to understand third-party spend.
In response, one of our CEB members remarked that no CIO is cutting back on data analytics. The accelerating adoption of emerging technologies like artificial intelligence, machine learning, and blockchain is increasing visibility across the supply chain and delivering new levels of predictive accuracy.
And as another customer CPO commented, broader supplier network intelligence is also important for controlling risk, ensuring ESG compliance, and building greater supply chain resilience by providing optionality and agility to serve customers better. The future of procurement is a data-driven one.
Moving to future-ready procurement
In today’s uncertain and dynamic world, procurement needs to drive innovation, sustainability, and ecosystem orchestration to increase resilience and agility, and deliver new and measurable business value. At its core, procurement must move to an intelligent, data-driven operating model to create future-ready procurement operations.
As the Accenture survey report points out, the stakes — and rewards — are high:
“A supply chain free of forced or child labor. An up to 40% corporate CO2 emissions reduction. A procurement workforce with new tools, skills, and insights to work more effectively, leading to $222 million captured in seven years. These are real, measurable business outcomes that have one thing in common. They were achieved by procurement.“