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Leading the Way: CPOs Play Key Roles in Organizational Strategy

July 19, 2023
A new report unveils the increasingly multifaceted nature of today’s chief procurement officers.

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It probably won’t come as much of a surprise to buyers and procurement professionals, but chief procurement officers (CPOs) are playing an increasingly vital role in organizational areas that haven’t traditionally fallen under their domain. Even as they continue to grapple with supply chain shortages and disruptions, CPOs are being called upon to support their companies’ environmental, social and governance (ESG) initiatives, lead digitization efforts and find new ways to drive organizational value.

Deloitte’s 12th Annual Global Chief Procurement Officer Survey 2023 more than proves these points and also highlights some of the other areas – outside of basic, transactional procurement – where CPOs are contributing their expertise and experience.

"Following the COVID-19 pandemic's unprecedented supply chain disruptions and the rising expectations for procurement to enable growth, CPOs are currently being challenged to do more, and better, with less,” said Deloitte Consulting LLP Principal Ryan Flynn in a press release. “As we navigate this pivotal moment for the industry, investment and development of talent and operating models will likely differentiate the CPOs who win from everyone else.”

The survey revealed that procurement is engaging across a broader set of priorities than ever before, with ESG and corporate social responsibility (CSR) becoming increasingly important. Other findings include:

  • Digital transformation remains a top priority for today’s CPOs.
  • Enhancing ESG and CSR jumped to the No. 2 priority spot (72%), up from No. 7 in the last report.
  • Driving operational efficiency (74%) remains the No. 1 priority.
  • Digital transformation (72%) tied for priority No. 2 (up from its previous No. 3 spot), while improving margins via cost reduction (71%) came in at No. 3 (down from No. 2 in 2021).

Centralizing Key Capabilities

Organizational design-wise, Deloitte says there is a continued trend toward increased centralization of key capabilities (e.g., business engagement, sourcing, contracting, risk management and data and analytics). The firm also says that the standardization of policies, processes, systems and data is again, by far, the top strategy to manage potential workload volatility and enable greater agility (increasing further since 2021).

Not surprisingly, CPOs cite talent acquisition and retention as the biggest internal risk right now. In fact, more than 70% of CPOs in Deloitte’s study had difficulty attracting talent over the past 12 months.

“Addressing the scarcity of talent supply through traditional talent acquisition channels (e.g., hiring full-time staff) is a top strategy for nearly all firms,” Deloitte states in its report.

“Procurement talent is one, if not the, key differentiator for CPOs – 90% of Orchestrators of Value (defined as those CPOs who work with business unit leaders, functional partners and suppliers to empower their respective teams) believe that their teams fully or largely have the skills and capabilities necessary to deliver their procurement strategy, with less than half of followers in agreement,” Deloitte adds.

Moving the Needle

Going forward, Deloitte anticipates continued volatility in the global business environment. To help CPOs manage this uncertainty while also moving the transformation needle in the right direction, the company tells procurement leaders to consider further standardization of processes and systems; increased investment in in-house talent development programs; establishing stronger bonds with key suppliers; and emphasizing more transparent, ambitious ESG programs.

Addressing these points won’t be easy, Deloitte acknowledges, and especially in change-weary organizations. “However, pushing through the transformation barriers requires ever-increasing levels of complex orchestration, and the result is a return-on-investment focus that sings to business leadership and helps put [CPOs] in a position to have a fighting chance at meeting the individual expectations of leaders and peer functions (including third-party partners),” it adds.

“Furthermore, it involves positioning procurement as a leader in the organization to collectively orchestrate and improve value delivery with a more intentionally designed fit-for-purpose operating model.”

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