Yesterday is history, tomorrow is a mystery.
While it forms part of a famous quote, the sentiment rings true to Chief Procurement Officers.
Today’s world is filled with uncertainty and disruption, in addition to innovation and technological transformation as humans increasingly want things yesterday in many cases. In truth, we live in a fast-paced, digital-first environment with the acceleration of AI tools only adding speed to workflows and company operations.
But avoiding a scattergun approach and managing it successfully is a different kettle of fish. It can be tempting to rip up the carpet and adopt a new process because a rival is enjoying success, from an external point of view anyway. However, implementing any new tech or way of working for technologies sake could spell disaster and is a decision that requires strategic and critical thinking.
Simplifying challenges
With an eye on the CPO of tomorrow, Jack Macfarlane, Founder and CEO at DeepStream, believes that a procurement leader’s next step is adopting smart technology and solutions to solve day-to-day challenges, streamlining data and processes and leveraging the profound efficiencies and benefits that AI and other tech have to offer.
“Tomorrow’s CPOs are driven by technological innovation, sustainability and the increasing importance of developing resilient supply chains to mitigate the effects of a changing world,” explains MacFarlane. “Increasing geo-political instability is affecting global supply chains and procurement strategies across the globe, leaving CPOs grasping for means and methods to withstand disaster, recover supply chains, and build a robust plan for the future.”
While technology transformation often takes headlines on the CPO agenda, an ever-increasing drive in procurement and beyond is sustainability and what initiatives organisations can implement to be more environmentally conscious. Ultimately, given pressure from government legislation and indeed customer demands, procurement functions often don’t have much room to manoeuvre. However, Macfarlane believes CPOs still have a choice about the way in which their companies go about being greener. “The growing concerns around sustainability and ethical sourcing are continuing to complicate existing procurement strategies,” he adds. “CPOs now find themselves in a role of increasing importance to the core ESG values of any business, and rightly so. Lastly, they will be using data-driven decision-making and real-time analytics to improve supplier management and optimise cost management.”
Balancing transformation with sustainability
While Jenny Draper, Managing Director at Barkers Procurement, explains that one of the biggest factors shaping the priorities and skillsets of future CPOs is technological adoption. “Some procurement professionals may be wary when it comes to AI, and unsure how to integrate it into their day-to-day operations,” she says. “Embracing technologies such as AI, automation and data analytics will be crucial for CPOs to optimise procurement processes, identify cost-saving opportunities, and gain real-time insights into supplier performance.
“Another factor is regarding sustainability and ESG, which are becoming increasingly more important. ESG is being mentioned more frequently in corporate strategies, with pressure coming from the top down; CPOs are being tasked by boards and stakeholders to be accountable for ESG practices down the length of their entire supply chains. In order to do this accurately and efficiently, CPOs will need to have a process in place for tracking and monitoring their efforts, and reporting back on their successes.”
Procurement’s rise
Emma Edwards, Head of Procurement for Hard Services at OCS, believes CPOs must strive to align procurement’s strategic priorities and activities to those of the C-suite, allowing teams to focus on issues essential to the business using bold, measurable goals. She explains that tomorrow’s CPO will be an integral part of the business foundations, with ‘having a seat at the table’ a standout function.
“They must build data-rich teams, passionate about delivery and earning trust across the organisation, and be great communicators,” says Edwards. “Appropriate stakeholder consultation and briefing is important to avoid frustration from customers and operational teams. If procurement isn’t visible, it can be hard for stakeholders to see its value.
“Using category strategies and strategic sourcing effectively requires focus and discipline from extended teams. Supporting transition away from traditional value proposition and driving cost benefits towards mutuality with fewer, more strategic suppliers, requires stakeholder support but should provide efficiencies as suppliers benefit from potential pipelines.
“Investment in people with strong focuses on commercial acumen, problem-solving and negotiation will differentiate teams and directly impact performance. CPOs must provide a culture offering optimum team performance.
“With supply chains becoming more complex, and mobilisation more critical, supplier relationship management (SRM) is vital. This can be challenging, but good SRM plus digital innovation provides a platform for extracting value, transparency and ensuring suppliers meet performance obligations, anticipating and managing risk early.”
Tomorrow’s CPO
In Proxima’s Tomorrow’s CPO Report, published earlier this year, Thomas Udesen, CPO at Bayer, encouraged the next generation of CPOs to focus forward and meet tomorrow’s challenges head-on by harnessing innovation and digitalisation. “Avoiding the mistakes of the past is one thing, but coupling that with embracing new and innovative emerging solutions will be what sets you apart as a leader,” he tells Proxima. “Today’s technology has the ability to automate and drive efficiency through the legacy of the industrial age, moving focus away from demand control to impact and outcomes. This is what will drive progress.”
Elsewhere in Proxima’s report, Laura Cook, Chief Procurement Officer at Primark, believes it is important not to rush into decisions and look to make long-term decisions. She lists three decisions – carefully consider your next move, the importance of varied experience and finding your network – as key challenges for a CPO to overcome. “Take the time to think about your next move. What type of environment is going to enable you to be yourself and thrive? Business direction and strategy, cultural fit, team maturity, and line management, to name a few, should all be considered.”
Forward-facing procurement
Looking ahead, tech transformation and a strong sustainability drive looks set to dominate procurement practitioners’ thoughts over the coming years. The efficiency created by AI acceleration has meant cost and time savings previously unimaginable so the responsibility now lies with CPOs and the C-suite to determine how these tools should be delivered strategically. While the future is unclear, one thing is certain. Tomorrow’s CPO is sure to be busy.
