CPO Rising 2023: The CPO’s Agenda for 2023 « CPO RISING – THE SITE FOR CHIEF PROCUREMENT OFFICERS & LEADERS IN SUPPLY MANAGEMENT

Today, we feature our ongoing coverage of this year’s 18th-annual CPO-themed report, where my team and I continue our nearly two-decade-long dialogue with chief procurement officers (CPOs) and other procurement leaders.

The report is based on research by Ardent Partners and represents a comprehensive, industry-wide view of what is happening in the world of procurement and captures the experience, performance, perspective, and intentions of 341 CPOs and other procurement executives.

Our post today explores the CPO’s agenda for 2023 and the specific areas of prioritization for chief procurement officers and their procurement teams. Market volatility and uncertainty are helping to drive where CPOs focus their efforts.

The CPO’s Agenda for 2023

In 2023, CPOs are prioritizing cost savings, managing and mitigating supply risk, driving digital transformation and ESG initiatives, developing or improving their data strategy, and impacting cash and liquidity management.

Cost savings. Inflation and the pressure that many businesses feel to defend their profit margins have made identifying cost savings the top priority for 46% of CPOs. Last year saw a dramatic return to a focus on savings; this year will have more of the same. Sourcing professionals who have become accustomed to driving both innovation and cost reductions from their suppliers with each successive renewal are dealing with an entirely new market paradigm. The uncertain business environment is making it even more critical to identify cost-saving opportunities.

Managing and mitigating supply risk. The second top priority identified by 43% of CPOs — managing and mitigating supply risk — is due to the major disruptions in the global supply chain during the pandemic and today. The pandemic exposed vulnerabilities in supply chains, with many businesses struggling to obtain critical materials and products. The global business environment is increasingly complex and uncertain, with geopolitical and economic factors impacting supply chains and pricing. This year, more procurement teams are prioritizing supply risk management and implementing strategies to safeguard the organization against future problems.

Digital transformation. Driving digital transformation was identified as the third top priority for 38% of procurement professionals. Procurement teams can utilize cloud-based, digital tools to not only enhance existing corporate processes but also develop real-time abilities to better address dynamic market challenges. The term “digital transformation” pervades business, and yet, technology-driven excellence continues to elude procurement teams. Here too, the CPO sits at a crossroads.

Environmental, social, governance. ESG initiatives were identified as a priority for 27% of procurement professionals. Environmental, social, and governance (ESG) initiatives are becoming increasingly important for enterprises, and with more than half of the average enterprise’s ESG footprint resting with suppliers, the CPO is on the front lines in the fight to create a more sustainable value chain.

Data strategy. Developing or improving the current data strategy was identified as a priority for 24% of procurement professionals. The pursuit of digital intelligence is becoming a CPO imperative as they push for systems that enable better decision-making and drive operational efficiency. The best time to capitalize on procurement’s big data opportunity was yesterday. The second-best time is today.

Cash/liquidity management. Finally, impacting cash and liquidity management was identified as a priority for 20% of procurement professionals. Rising inflation, tighter budgets, and an increasing cost of capital make cash and liquidity management a critical focus for many organizations this year, and procurement can play a key role.

Next week, we’ll explore three specific priority areas where CPOs are placing greater emphasis: savings, digital transformation, and Environmental, Social, Governance.