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Challenges facing CPOs in Asia today

Faisal Rafi, Managing Director, Xchanging Singapore | July 3, 2014
Based on our findings, here are the top five challenges that CPOs face today

A key challenge for any company in Asia is to establish a supplier base that is capable of delivering consistent service across various countries, ranging from developed economies such as Australia and Japan to developing nations such as India and Vietnam. As service standards are often lacking in less developed nations, many companies have placed substantial effort and investment in developing their own network of suppliers.

A best-in-class sourcing operation entails the effective management of suppliers to drive performance improvement. It is imperative to manage supplier risk in mission-critical areas through quarterly performance reviews against key performance indicators (KPIs) and service level agreements (SLAs), so as to ensure that business continuity is not affected by poor supplier performance. 

Insufficiently skilled resources

While a CPO may have good strategic vision pertaining to the direction of their operations, they often inherit teams that are lacking the relevant industry expertise necessary to execute that vision. Inadequate skill levels within the organisation can hinder the evolution of the sourcing and procurement function to the next level of maturity.

Based on a global salary survey, the need for skilled resources in Singapore is seen to be in continued demand, and professionals in areas such as indirect spend procurement will be sourced locally, regionally and globally. Last year, the supply chain and procurement industry saw a strong demand for supply chain specialists across all sectors.

Leveraging technology effectively

Technology, appreciated by most CPOs, is crucial to best practices in sourcing and procurement. With tools such as spend analytics, eSourcing, contract management software, savings tracking, budget planning and more; sourcing methodologies have improved in the last decade.

Collectively, these tools allow for greater efficiency, improved processes, better visibility and more accurate tracking and measurement of savings. However, the challenge here is attaining up-front capital required to invest in these technologies and more importantly, justifying the increased cost to better enable cost reduction. Business decision makers such as CEOs and CFOs often presume that IT expenditure costs the firm more than it actually does. This misinformation contributes to the ongoing distrust between decision makers and those who advocate investments in IT.

With access to technology and an expert resource working collaboratively alongside a company's procurement function, a business can achieve risk-free sourcing and procurement transformation from what initially was a cost-center to a value generator.  



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