Editor’s Note: Today’s article includes an 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. Enjoy!
In 2019, Chief Procurement Officers (CPOs) and their teams are standing on the shoulders of giants (an expression attributed to Sir Isaac Newton; also a pretty cool Oasis album), watching the Fourth Industrial Revolution disrupt global commerce and beginning to feel the effects. The business world is transforming itself through data-driven innovations and insights, but procurement has lagged behind many of its functional peers within the enterprise. But, as the average age of a procurement staff (and their leaders) has decreased over the last decade, more CPOs continue to view technology investments as a top strategy. In truth, most CPOs see room for immediate improvement and believe that their organizations should be performing better. What has worked in the past is no longer good enough in 2019; it will be even less so in the future. This means that CPOs must take new steps if they are to maintain their momentum or risk falling back. More specifically, procurement teams must continue doing what they have been doing, while also finding newer, more innovative, and more impactful ways to expand the value they create within their enterprise and across their supply chain.
A decade ago, Ardent Partners wrote in depth about the need to stay ever vigilant and on the lookout for the new, game-changing ideas in CPO Rising 2011: 1nnovative 1deas for the Decade Ahead. A few years later, in CPO Rising 2014: Convergence, the growth of procurement’s influence and its subsequent convergence with other business functions and units illustrated how innovative, effective, and widespread the procurement function had become. But as has been discussed, procurement’s success in driving value – measured by the total spend under its management, the savings it realizes, and the addressable spend that it sources, among other ways – has started to slip. And although respondents to this year’s survey feel quite assured with procurement’s impact on the organization and the positive trend of that impact, they also provided indicators to the contrary.
While procurement’s overall performance metrics have been stagnant this past decade, their impact is being felt to a greater degree by their businesses. A vast majority of CPOs believe that their procurement organizations either have their procurement resources tightly-aligned with the most important business projects and initiatives (27%) or that their procurement resources are generally-aligned and are usually working in unison with the business (52%). The total of those two groups is nearly double the number that was captured by these two groups in 2018. Additionally, 20% of CPOs believe that their procurement resources support the business, but are also strongly focused on its own goals. Almost no CPO considers their team as poorly-aligned and siloed off from the rest of the enterprise. These numbers strengthen the argument that procurement is as agile and impactful as its leaders collectively think it is.
