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Dr. Jan Joachim Herrmann
Partner at PwC Germany
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Strategic priorities in purchasing are cost reduction, risk management and further digitalisation
In times of supply bottlenecks, rising commodity prices and growing inflation, procurement departments around the globe are focusing on the essentials: Reducing costs and managing risks.
As the pandemic subsides, however, the digitalisation of procurement is once again coming into focus. Companies are willing to invest a lot of money to make the idea of digital procurement a reality. The planned investments are to flow primarily into digital source-to-contract (S2C) and procure-to-pay (P2P) solutions.
In contrast, the hype around innovative technologies in procurement – such as blockchain and artificial intelligence – has faded. CO2 trackers are becoming increasingly relevant.
During the pandemic, sourcing and supply chain risks were more palpable than ever. Many companies found it difficult to ensure the continuity of their business. As a result, companies are now focusing more on improving their risk management in purchasing.
Overview of the study
A global insight into the Procurement professionals' world
With over 800 participating companies from more than 60 countries, the 4th edition of the Digital Procurement Survey reveals interesting insights for the digital transformation in procurement.
The strategic priorities of procurement professionals in the DACH region
The procurement professionals in Germany, Austria and Switzerland place their strategic focus on risk and crisis management: for 31 per cent, this topic currently has the highest priority; globally, only twelve per cent of the companies surveyed mention risk and crisis management.
In contrast, cost savings are more relevant in most countries compared to the DACH region: 37 per cent of respondents worldwide want to focus on saving costs in strategic procurement. In the DACH region, only 19 per cent of procurement managers name cost reduction as a strategic priority. At 21 per cent, procurement managers in the DACH region consider digital transformation to be slightly more important than procurement managers worldwide (18 per cent).
An overview of the results
- Digitalisation
- Technology
- CO2 trackers
Digitalisation
Ambitious goals for digitization
The digital transformation in procurement has gained momentum again: The digitization rate is expected to reach an average of 72 percent by 2025. To achieve this, companies around the world want to invest money accordingly. They plan to invest an average of 1.28 million euros per year by 2025. That is a third more than in 2020, when the average investment was 965,000 euros.
Technology
The hype around innovative technologies is dying down
In terms of technology, companies are focusing their investments on digital solutions that cover the entire process from the procurement of raw materials, products or services to ordering and invoice payment. 90 per cent of the respondents already have such a source-to-contract or procure-to-pay solution in place.
The hype surrounding innovative technologies such as artificial intelligence and blockchain in procurement, on the other hand, is accompanied by a certain amount of disillusionment. For example, the proportion of companies investing in artificial intelligence has fallen sharply, from 64 per cent in 2019 to 30 per cent in the current survey. Dwindling interest can also be observed when it comes to blockchain: Only 13 percent still want to invest in blockchain solutions for procurement, compared to 36 percent in 2019. The reason why the respondents do not/ no longer use or test blockchain technologies in procurement: there is a lack of use cases (45 percent).
CO2 trackers
Over a quarter already use CO2 trackers
One innovative application that is currently gaining great relevance for procurement departments worldwide is the tracking of suppliers' CO2 emissions. 27 per cent of companies already track their suppliers' emissions or are testing out relevant solutions. Another third have CO2 emission trackers for the supply chain on their radar, but have not yet found a suitable offer on the market.
Procurement can take a leading role in tracking CO2 emissions within the company by collecting CO2 data from suppliers, integrating this information into sourcing decisions and tracking emissions in the supply chain.
Methodology
These are the findings of the PwC Global Digital Procurement Survey 2022. For the study, PwC surveyed more than 800 companies from 64 countries, including 52 companies from Germany, Austria and Switzerland (DACH).
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