In ten years’ time, the procurement profession and the role of the Chief Procurement Officer (CPO) has changed in many unique and profound ways. Yet, just like 2010, CPOs and other procurement leaders are entering the new decade grappling with intense challenges (some old, some new) and driving forward to achieve aggressive goals and objectives.
On that front, I’m pleased to continue with our exciting, new series on CPO Rising – “20 for 2020” which examines a broad range of CPO-driven topics. Today we continue with 20 for 2020: Key Themes for the Modern CPO’s Agenda (#6 – Disruption), which is designed to help procurement executives set their organizations’ course for the critical months and years ahead. Enjoy!
20-for-2020: Theme #6 for the Modern CPO’s Agenda: Disruption
The business world is fraught with disruption, risk, and uncertainty. The “Butterfly Effect” — the idea that a small and seemingly insignificant event that occurs halfway around the world could have a large and significant impact on you or your business — is a very real concern. Globalization has long since made the world a much smaller place. What once were purely political or geopolitical events and dangers can now cast doubt on the short-term continuity of operations and the long-term sustainability of a business. Enterprises must care about and be proactive with the state of the world today, as well as how fast technology and business innovations are changing, and how the workforce itself is changing.
Turn on the TV, scan social media feeds, or pick up a newspaper and one thing is obvious: the world is a dangerous place fraught with uncertainty, risk, and disruption. Child labor, human trafficking, modern slavery, and unsafe working conditions are First World problems. Climate change is sweeping the globe; the oceans and the planet as a whole are warming to dangerous and unsustainable levels. Wildfires are decimating whole ecosystems. Diseases are spreading from the developing world to the developed world. Civil wars are raging in multiple countries on multiple continents. Alliances form, crumble, and then switch sides. New and old world powers are rising or rising again, while others are in decline. Populism is popular again. Changes to trade, immigration, and environmental regulations are disrupting national and international economies.
Speaking of which, low-cost countries may not be so “low cost” anymore. Jobs that were lost to outsourcing may be returning but not quite the way they left. Millennials and Generation Z workers continue to replace Baby Boomers who are increasingly retiring from the workforce. Industry 4.0 is here, along with early incarnations of artificial intelligence (AI). As a result, the business world is getting “smarter,” more automated, more efficient, and more productive, yet displacing millions of workers while threatening the job security of millions more. For many, the “Future of Work” has already arrived, as contingent workers make up an increasingly larger share of the workforce in this new “gig economy.” Meanwhile, remote- or virtual-work positions continue to make staff or candidate location irrelevant, opening up many more opportunities for employers and job seekers, who want — and, with unemployment in the U.S. at record lows, almost demand — more flexible work arrangements.
Why Procurement is Best Positioned to Manage Disruption
As business leaders, Chief Procurement Officers can take the lead within the enterprise to overcome or make the best of the risks, challenges, and disruptions that are occurring or approaching. After all, CPOs and their teams have already been taking the lead on driving corporate social responsibility (CSR), supply chain risk management, sustainability, and other supply risk issues. Who better than the CPO? As M.L. Peck, former chief content and engagement officer at the Institute for Supply Management said, CPOs should really be the “Chief Risk Officer” because “that’s where a majority of your risk is.” As a result, CPOs and procurement teams are on deck to steer the enterprise through some pretty dicey waters; many have been doing it for quite some time.
This is not just a great opportunity for CPOs to champion responsibilities that they have already had; it is an opportunity for procurement as a whole to add even more value to the enterprise. For example, because an enterprise’s supply base can introduce significant cyber security risk to the enterprise, it is often up to the CPO and procurement — not the CFO and IT — to evaluate a supplier’s cyber security risk profile and measure its performance and risks to the enterprise. While it may be “one more thing” for the CPO and procurement to do (the danger), it can also be a competitive differentiator (the opportunity) to position the enterprise as a market innovator. CPOs and their teams can help the enterprise become a more resilient, secure, and sustainable partner and player in a given market.
Chief Procurement Officers and procurement teams can also be some of the first enterprise users to work with AI and help other business teams identify solutions with the most value during the vendor selection process. And as more organizations strive to become more agile and cost effective in the Future of Work, procurement can help organizations manage services spend (also known as the contingent workforce, or gig workers), a category that can be very disruptive and risky. Organizations and leaders that lack the expertise to manage this workforce in a cost effective and legal manner can incur significant and often times unsustainable costs. Procurement, with its decades of experience managing services spend, can offer powerful risk mitigation in the face of continuous risk and business disruption.
Final Thoughts
It is an exciting time to work in the procurement industry — a point that Ardent Partners analysts have been making for a few years now, despite (or perhaps because of) all of the uncertainty, risk, and disruption (i.e., opportunity) in the business world. But rather than fear them, smart CPOs and procurement practitioners can and should embrace disruption and risk and turn it into business value.
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