CPO Rising 2018: The Age of Intelligence (sponsored by Determine) is the thirteenth annual Chief Procurement Officer (CPO) themed report that I have written and is part of the ongoing dialogue my firm, Ardent Partners has had with CPOs and other procurement leaders. The report examines the general competencies and capabilities of procurement organizations today and highlights the management strategies and tactics that leading CPOs use to get the most from their teams.
CPO Rising 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 324 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. Today’s article is the first in a series of articles mapped to each chapter of the report, beginning with Chapter One.
The Rise (and Rise) of Procurement Intelligence
Each year, we pick an overarching theme to the CPO Rising report, which has included procurement agility, innovation, measuring and communicating procurement performance, as well as the “art and science” of managing a procurement operation. With the rise of Big Data and powerful analytics, this year we decided to focus on “procurement intelligence,” an area that we believe will be one of the drivers to change the current paradigm of the procurement industry .
Despite the major strides taken by the procurement industry since the first edition of this report was authored more than 12 years ago, the profession’s biggest opportunities to make an impact on enterprise operations and results are still ahead. One of the most substantial of these is procurement’s emerging ability to leverage advanced analytics to convert divergent data streams into intelligence and then convert that intelligence into value.
More CPOs are focused on this opportunity over the next few years than any other. This a major step in the right direction for procurement writ large, particularly since the adoption and maturation of next-generation business tools has increased the volume of data created across the business world. Procurement teams have seen waves of internal data (e.g., spend, sourcing, and contract), and external data (e.g., supplier and third-party market intelligence) grow to levels never seen before; many have been overtaken by the data and struggle to make headway.
Changing How Success is Measured (and Achieved)
In the realm of procurement, there are many unique types of knowledge and intelligence. These include both traditional (e.g., category management, supply market, process-based, etc.) and emerging (e.g., data science and predictive supply management), each of which can contribute significantly to the success of the department and overall enterprise.
To be successful in 2018, CPOs must ensure that their teams are intelligent and are able to “acquire and apply knowledge and skills” in each of these key areas. And to be intelligent, the prototypical procurement department needs to prioritize data science and analytics capabilities among its staff; process standardization, linkage, and automation; the adoption of modern source-to-settle solutions (taking either the “big bang” approach or an incremental approach), the establishment and centralization of procurement best practices; and the tireless, endless management of performance among the staff and the supplier base.
We are in the early days and most procurement and supply chain organizations are not poised to “flip a switch” and simply become a comprehensively intelligent procurement operation. But, all procurement teams can and should begin working towards this goal this year by automating and linking their processes and working to establish visibility across spend, process, and the supply chain.
No matter the near-term focus, all procurement organizations should have a clear end goal, which includes moving to become a more agile and intelligent paradigm driven by advanced systems, fluid processes, and highly-capable talent.
In Chapter Two: The State of Procurement we’ll explore the concept and reality of an intelligent procurement department, one that is not dependent upon a single technology, process, or strategy but rather an ecosystem of interconnected and interdependent plans, solutions, and innovations whose whole is greater than the sum of its parts.
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