Editor’s Note: Over the next few weeks on CPO Rising, we’re publishing some “best of” 2023 articles as we reflect on the year and prepare for the new year ahead.
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 focuses on how CPOs can drive enterprise value and achieve next-level performance by improving their analytical capabilities, building better supplier relationships, and communicating and collaborating more effectively.
Turning Data into Intelligence Starts with Visibility
When procurement teams begin to transform their end-to-end processes, particularly when they digitize and automate, they begin to create significant quantities of structured and unstructured data that can either overwhelm or enrich their business processes. Teams that have the tools and skillsets to harness that data can gain significant visibility into many dimensions of the business — like spend, savings, performance, compliance, risk, and so on.
There is a striking contrast between the levels of visibility that Best-in-Class procurement teams have when compared to All Other procurement teams. Just as the Best-in-Class have dramatically greater process and technology capabilities than their less mature peers, they also have significantly greater visibility into a host of operational and performance metrics. These rates can define an organization’s maturity, signal its resiliency, and demonstrate its unique ability to ascend to the next level of performance.
What Gets Procurement to the Next Level?
As we close out another year of examining the state of procurement, one question remains: What does it take for procurement teams to reach the next level? CPO responses provide some illuminating insights.
First and foremost, better data visibility and analytical capabilities are critical for next-level procurement performance. For 49% of respondents, this is the top attribute, and there is no surprise since better data visibility is essential for more strategic and competitive decision-making. The percentage of procurement teams with visibility into overall enterprise spend remains quite low. To achieve next-level procurement performance, visibility into data will need to increase substantially and the use of big data coupled with artificial intelligence, machine learning, and predictive analytics will be game changers for procurement performance going forward.
Earlier engagement on sourcing projects is also critical for next-level performance. Currently, collaboration with line-of-business budget holders rests at 50%. But if procurement can participate in business-unit budgeting cycles, the function can better assess sourcing needs for upcoming projects. With that foresight, CPOs and their teams can make the strategic transition from order takers to value-added partners.
Finally, to reach the next level, procurement needs to communicate and collaborate better with business stakeholders and improve supplier management processes. Additionally, adopting new or improved technology, hiring more talented staff, and improving the use of current technology are also key capabilities that can elevate procurement performance.
The procurement function is at a critical inflection point, a crossroads, and the CPOs who focus on improving their analytical capabilities, building better supplier relationships, and communicating and collaborating more effectively will be well-positioned to drive enterprise value and achieve next-level performance.
Next week will be our final post of this year’s 18th-annual CPO-themed report. We’ll explore how CPOs must recognize the crucial role that intelligence can and will play in shaping procurement strategy and execution and go all-in on big data intelligence.
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CPO Rising 2023: CPO at the Crossroads
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CPO Rising 2023: Procurement’s Top Achievements in Last 25 Years (Part 2)
CPO Rising 2023: Procurement’s Biggest Challenges
CPO Rising 2023: Top CPO Strategies
CPO Rising 2023: Procurement’s Capabilities in 2023
CPO Rising 2023: Technology Adoption and Investment in 2023
CPO Rising 2023: Procurement Performance, Results, and Impact
