Coupa: Digital Transformation in Procurement and IT
In its third consecutive year of benchmarking the relationship between IT and procurement leadership, ProcureCon IT continues to document how technology is catalysing an increase in shared goals and a need for greater communication between the CIO and CPO. While procurement and IT haven’t adopted shared KPIs due to the differences in their core missions, a necessity to select the right solutions and enable digital transformations, as well as the possibilities that features including AI adoption and wider use of automation means that they must be closely aligned.
The key findings of the report included:
- The responsibility for IT procurement still lies within a joint process for the majority of respondents. That stated, the impact of new technologies on both departments continues to grow.
- Digital transformations are continuing. Respondents indicate similar levels of advancement on digital transformations as in 2018, suggesting that digital transformation can be seen as a “new normal” rather than a single process to be definitively completed.
- CIOs and CPOs are working together more closely in comparison to last year, with patterns of communication settling around patterns of sourcing responsibility.
Since the previous year, the number of respondents who report that their technology sourcing is a joint effort between procurement and IT remains almost unchanged. This suggests that within the majority of cases, responsibility for sourcing is now shared, while another quarter of respondents actually have final authority to approve technology spending within their procurement groups.
Despite many respondents not sharing final authority to authorise spend between IT and procurement, the majority believe that the responsibility for executing on technology sourcing projects should be shared. With this in mind, the proportion of those who now believe that solely procurement should own responsibility for technology sourcing has risen by 4% year over year. This may be a response to hiring trends that have seen many procurement organisations brings new talent with technology expertise into their ranks, allowing them to more confidently handle conversations with internal businesses, IT and solutions providers in turn.
Elsewhere in the report, Coupa asked respondents the current level of coordination between the CPO and CIO. With half of respondents reporting that the leaders of their IT and procurement organisations will work together in response to the demands of their technology strategies as they are executed. Another near quarter of respondents will collaborate closely on an ongoing basis, deepening the ability to understand the needs of each department as well as how their strengths can be best utilised to serve the company on a larger scale.
Over the past few years, IT and procurement have become more reliant on the other as well as more collaborative. Embedded procurement teams may work on a regular basis with their technology peers and then report to a CIO or CPO, while executives meet at preset intervals to update each other on strategy and define goals for the future.
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”