Editor’s Note: Today’s article includes a large excerpt from Ardent’s annual “State of Procurement” research report, CPO Rising 2019: Value Expansion. This report is based upon the responses from more than 300 CPOs and is the culmination of a year’s worth of research, conversations, and insights. We consider it a “must-read’ for procurement professionals, and it is available now by clicking here.
While the Chief Procurement Officer (CPO) has been able to move into the same “neighborhood” as the other C-level executives, the procurement chief’s residence has often been found on “the other side of the tracks” when compared to their other higher-profile neighbors. Due to the broad impact of procurement’s many efforts, such as cost savings and efficiency gains to name a few, many executives raise the question of just how much “farther” the function can go when looking at future investment in the procurement operation. This inquiry, today, is easily satisfied because of the average company’s overall desire to become more digital, providing the CPO and the entire procurement team with the exciting new potential to push the boundaries of enterprise value. The opportunities that sit before procurement to drive more value as a result of digital transformation and data intelligence are sizable and, more importantly, attainable. And, though the other executives may not be giving the CPO the keys to a new castle anytime soon, by continuing to make an impact, CPOs may be able to move to a nicer part of town.
As is, from where CPOs “live” today, a majority of them already believe that their departments’ impact is making a difference, which has been a part of a larger three-year trend. What is perhaps most interesting is that no respondents to this year’s state of procurement survey see a downward trend in impact over the past three years; 72% believe that they are trending up, while 20% believe that they are trending up significantly. At worst, just eight percent (8%) see a flat three-year trend. It is both curious and surprising that not a single respondent of the more than 300 who answered the question feel as though their momentum is trending in a negative direction. It is also unlikely to be true.
An important follow-up is whether or not this view is shared by the rest of the enterprise, or simply wishful thinking on the part of today’s CPOs. Many may be living in the same neighborhood as they were last year, but their view of the neighborhood may be very different from reality. What is certain, however, is that a procurement department’s momentum will not be sustainable unless new elements are added to the mix. In fact, it is Ardent’s view that most procurement departments have not yet added important new innovations and have either hit a figurative wall or will soon see one approaching.
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