The State of the Chief Procurement Officer
In 2019, the procurement profession still has momentum and is more critical to business operations and results than ever before. But, a decade of Ardent Partners research shows that the profession is also approaching a performance plateau. The truth is that the average procurement department has already picked the low-hanging fruit and most of its easy work has been done. The teams that continue to do the same things over and over again will actually get different results (as in increasingly worse). In this context, procurement’s new definition of insanity is for a CPO to stay the course and make no changes.
Breaking plateaus and launching into a new performance trajectory demands new and innovative ideas and approaches. It also requires a broad, multi-faceted approach since no single ingredient can alter the overall procurement recipe. To avoid a frustrating and momentum-killing plateau, CPOs must work to elevate their organization’s capabilities and gain improvement across a host of areas in a deliberate attempt to rethink what is possible. They will also need catalysts to ignite a new sense of urgency and new sources of value so that their departments can work smarter, expand their mastery, and raise their commitment. Identifying these new catalysts and sources and framing the different ways that CPOs can leverage them is the focus of this CPO Rising 2019: #ValueExpansion report.
This fourteenth annual CPO-themed report is part of an ongoing dialogue that Ardent Partners’ analysts have had with CPOs and other procurement leaders for more than a decade. The report examines the general competencies and capabilities of procurement organizations today and highlights the management strategies and tactics that leading CPOs leverage to get the most from their teams. It also presents a comprehensive, industry-wide view into what is happening in the world of procurement and captures the experience, performance, perspective, and intentions of 308 CPOs and other procurement executives. The report includes benchmark statistics, analysis, and recommendations that procurement teams can use to better understand the state of procurement today, gain insight into best practices, benchmark their performance against the Best-in-Class, and ultimately improve their operations and performance.
The State of the Chief Procurement Officer
In 2019, the procurement function, as a whole, and CPOs, in particular, have become bellwethers for their businesses and in many ways, for the overall state of the global economy. After all, when an enterprise’s fortunes and opportunities rise, the CPO’s team is focused on helping businesses accelerate agility, find and harvest supply chain innovation, and enable better returns on investment. Likewise, when the business falls or contracts, executives rely on procurement to bail out an overleveraged or under-performing operation by driving cash to the bottom line. But, no matter which way the economic winds blow, an experienced CPO can be an invaluable resource, possessing a unique perspective that can only come from leading a team that operates at the intersection of critical business decisions, operations, and results.
High performing CPOs utilize the following:
A trust-centric operating model with pre-delegated authority: Leading CPOs hire smart, trusted people and empower them to make informed decisions without mandating manager approval. They value agility, efficiency, and independence, and they trust their staff to exercise good judgment and discretion – specifically with regard to sourcing and purchasing decisions.
Big Data and predictive analytics: Resourceful and innovative CPOs have adopted a data-driven approach to making sourcing, buying, and risk management decisions. They have adopted “Moneyball”-type analyses as well as automated, more predictive purchasing tools. Although not all of these methods have been completely borne out, some of them have and continue to deliver enhanced value to their users.
Augmented intelligence/cognitive computing: Many organizations today, including procurement organizations, use some form of augmented intelligence to automate their processes and systems in a more intelligent manner and reduce human interfacing. While artificial intelligence (“AI”) is still some years away, augmented intelligence (aka AI-light) is here; and it is taking over tactical, scalable, and repeatable work and enabling business users to focus on more strategic, value-adding efforts.
Augmented talent/Future of Work: Procurement leaders are striving to create an “agile” operation that enables direct responses to changes in a volatile market and overall pivots in business and procurement strategy. In 2019 leading CPOs are more inclined to rely on augmented talent and tap into unique pools of non-permanent talent and execute on any technology-, process-, or talent-led strategy in a dynamic manner.
By Ardent Partners and Canon Business Process Services
Published in CPO Rising 2019: #ValueExpansion, April 2019
Reprinted with permission.