We’re hard at at work on our 14th Annual CPO Rising Research Report and expect to publish it shortly. As I noted earlier in the year, it is Ardent’s view that the procurement profession momentum is slowing down and that new strategies are needed to maintain it.
Today, I’ll offer up a quick sneak preview of the report by sharing a few excerpts.
#ValueExpansion
For the average procurement department in 2019, the low-hanging fruit has been picked. In fact, for many procurement teams, the fruit trees are barren, having been picked over and over and over again during the last 10 years. Procurement departments and the function in general need new sources of “food” or value as the case may be. And, they will need innovative ideas and approaches in finding ways to do so.
It is not the case that every procurement organization has plateaued. Some have strong momentum as they head into 2019 and the next decade. In fact, many procurement organizations still have the opportunity to jump to a new value creation trajectory by simply doing the basics, or doing the basics better ands/or extremely well. And that point is important for Chief Procurement Officers (CPOs) to understand. But, the industry data clearly shows that there are just as many procurement teams and CPOs that need or will soon need a catalyst to expand the impact of their work on operations, costs, profits, and even sales. Identifying these catalysts and building them out, and constructing different ways that CPOs can leverage these new value drivers is the focus of CPO Rising 2019: #ValueExpansion.
Performance Plateau: The Results are in
The results are in and the procurement industry is starting to plateau. Despite the many significant innovations that have emerged to propel procurement’s first wave of transformation, and the fact that procurement leaders and their teams rate their impact on the enterprise pretty highly, recent year-over-year performance data tells a different story. The average percentage of spend under management by a procurement department has stayed generally flat for the past eight years and is not likely to rise significantly any time soon. In 2018, only 15% of all CPOs had placing more spend under management as a top priority looking out over the next two to three years. This year, only 6% of all CPOs feel pressure to place more spend under management. For the past decade, spend under management has been and continues to be a great leading indicator of the potential value that procurement has to influence results. It has been a key metric used to define Best-in-Class performance by Ardent Partners. This is not to say that placing more spend under management has to be a top goal or priority. To the contrary, there can be many other, more important targets than increasing this metric. Nevertheless, the fact that such a small percentage of procurement departments seek to increase this number, when the benefits of doing so have been quantified indicates that the industry is evolving….
CPO Rising 2019 is coming soon!
I’d like to thank the 308 Chief Procurement Officers and other procurement executives who took this year’s survey. You’ll be receiving the final report in your inbox soon.
If you are interested in getting an advance copy, you can register for the webinar by clinking the link or the image below.
