The chief procurement officer (CPO) plays a critical role not only in the procurement function, but also in high-level decision-making around strategy, technology and sustainability. As their responsibilities expand, these executives also face new challenges ranging from supply chain disruptions to inflation and global market volatility, to name just a few.
In its new 2024 ProcureCon CPO Report, Icertis explores the shifting CPO role and highlights the key pain points that are keeping these professionals up at night right now. “In an increasingly complex and challenging procurement landscape, the role of the CPO has undergone a significant transformation,” Icertis says. “No longer confined to the traditional procurement function, the CPO now plays a strategic role in steering the direction of the organization.”
Here are some of the key points that the survey revealed and/or reinforced:
- Procurement teams are a strategic arm for driving value. Icertis says 46% of CPOs are wielding influence in high-level decision-making compared to two years ago. “More than half of procurement officers are prioritizing cost reduction and 46 percent are focused on proactive mitigation of supply chain risk, indicating an emphasis on streamlining operations to protect business outcomes and impact the bottom line,” it adds.
- CPOs have a lot to think about this year. The top three priorities for CPOs over the next 12 months include making process improvements (for 43% of respondents); managing supply chain disruption (37%); and implementing more technology (35%). Just over half (53%) of respondents say reducing costs is a high priority over the next 12 months, and a similar percentage has just started making progress on strategic planning for 2024.
- CPOs are at the forefront of technology adoption and artificial intelligence (AI) initiatives. According to the report, 44% of CPOs have led AI adoption efforts in the past 12 months, revealing their pivotal role as champions of innovation and transformation.
- Artificial intelligence is essential for ESG goals, positioning procurement departments to lead sustainability initiatives. Icertis says 86% of CPOs currently play a “moderate to large” role in driving sustainability decisions, with 46% prioritizing ESG and sustainability goals in 2024. Also, 43% of procurement leaders are using advanced tools to extract and interpret data-based ESG metrics, thus “underscoring a key opportunity for AI-powered contract intelligence to inform decision-making,” the company points out.
Measuring the CPO’s Expanding Role
Most survey respondents (46%) acknowledge an enhanced role of the CPO in top-tier decision-making. Conversely, 47% of the respondents say the CPO’s role in high-level discussions hasn’t changed over the past two years. However, only 7% say the CPO’s role in high-level decision-making has diminished.
“The expanded role of the CPO in high-level decision-making indicates a shift in the organizational significance of the procurement department,” Icertis points out. “It underscores the recognition that procurement is not merely a function, but a strategic arm that can drive business value.”
The company sees the CPO’s expanding role as a “promising sign” of procurement’s growing influence and its potential to shape business-critical initiatives. It also sees more opportunities opening up for CPOs wishing to drive their own strategic objectives with the support of the rest of the company.
“Especially in times of volatility and change, the organizational significance of the procurement department continues to grow, spanning contract creation and approvals to surfacing untapped savings, avoiding missed obligations, and ensuring ongoing compliance throughout supplier relationships,” Icertis’ Bernadette Bulacan said in a press release.
“As the global regulatory landscape undergoes dynamic changes and businesses grapple with challenges like supply chain disruptions, inflation, ESG audits, and market volatility,” she continued, “the expectations of CPOs have never been higher.”