Ardent Partners recently published our annual CPO Rising report (entitled CPO Rising 2014: Convergence) and of all the reports we publish this year, the focus of this report is exactly geared towards our regular readers (CPOs and those who aspire to the role). The report presents a comprehensive, industry-wide view into what is happening in the world of procurement and captures the experience, performance, perspective, and intentions of 273 Chief Procurement Officers and other procurement executives. As we do every year, we interview many Chief Procurement Officers (24 procurement leaders in total) to add context to this research effort. The report is available (with registration) from several sponsor sites including here, here, here, here, here, or here.
Top CPO Priorities: 2014 – 2017
CPO Priority # 1: Increase Savings
As the economy has continued to improve, the average Chief Procurement Officer is facing less pressure to deliver savings than in the recent past. Nonetheless, increasing savings remains the top priority (for the next three years) for more CPOs than any other focus. This comes as no surprise since savings, for better or worse (often for worse), remains the primary metric that executives use to measure and evaluate procurement’s value to the larger enterprise. Procurement will never separate itself from savings, nor should it, savings is a critical metric; but it is good to see more CPOs prioritizing other initiatives
CPO Priority # 2: Improve Process Efficiencies and Effectiveness
As I noted in an earlier article, a new CPO strategy has begun to emerge in 2014: “Do Better With Same.” Of the many CPOs who have adopted this new mantra, 36% of them are focused on improving their process efficiencies and effectiveness over the next three years. As procurement’s influence expands and as it continues to converge with (and often take over responsibility for) other business process areas CPOs must work deliberately to ensure their departments are able to scale up. Improving processes is one clear way to do better with same.
CPO Priority # 3: Improve and Enforce Compliance Levels (to contracts, policies/process, and regulations)
As CPO priorities shift, driving greater compliance has emerged as one of the fastest rising priorities for CPOs around the world. Ardent Partners’ research suggests that procurement teams are already making strides towards improving contract compliance, as average contract compliance rates have continued to inch higher over the past few years. Ensuring legal or regulatory compliance has also become higher priority for CPOs and procurement teams, and will likely become an even higher priority over the coming years as more industries become more regulated and as more enterprises conduct more business in more countries and different jurisdictions.
CPO Priority # 4: Increase the Level of Procurement-led Innovation Initiatives
Over the past 15 years, we have experienced a procurement revolution, symbolized by the rise of the Chief Procurement Officer, an executive with reach and influence. Business today is in transition, what was valued a decade ago is no longer the top priority. What’s now being prized within the larger enterprise and within procurement itself is the ability to be agile and to drive innovation. This has effectively pulled procurement further into the spotlight, as it really does serve as a process hub within the organization and it really does serve as the prime relationship point for third-party suppliers. CPOs are recognizing this shift and changing their priorities as a result.
Summary
Over the next three years, CPOs (and their teams) will be focused on a wider range of priorities than in previous years. These priorities include the usual suspects, such as savings and processes, but also newer areas of focus like compliance (compliance is not a new priority, the level of focus on it is) and procurement-led innovation. But CPOS must constantly evaluate their priorities and resources to ensure that they can “do better with same” now while also becoming better prepared to face the expected and unexpected challenges that will arise over the next few years.
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