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Changing business dynamics and an increasingly complex business environment have become the norm for chief procurement officers (CPOs) whose actions help build more agile, resilient organizations. In its “2021 Global CPO Survey,” Deloitte highlights some of the key priorities that are topping CPOs’ “to do” lists this year, and says many of those priorities relate to agility in some form or fashion.
“COVID-19 affected almost every function in one way or another, and procurement has been no exception,” Deloitte states in a press release. “Leaders had to change strategies in an instant to adapt to the ‘next normal.’ But the change CPOs have had to endure and the associated layers of complexity were building up even before the pandemic struck. It isn’t just about cost savings and operational efficiency anymore.”
In fact, today’s procurement departments and their CPOs are also focused on innovation; digital transformation; the introduction of new products and services; climate change; geopolitical stability; increasing societal expectations; world health; and myriad other strategic priorities.
“Clearly, there’s plenty on CPOs’ plates,” Deloitte adds, “with no relief in sight.”
Assessing the Environment
If insights from Deloitte’s “2021 Global CPO Survey” are on target, then high-performing CPOs are successfully navigating the complexities of the current business environment while also delivering across a greater breadth of KPIs (key performance indicators).
“Although CPOs are still heavily focused on costs, they have expanded their value propositions to influence demand, drive innovation, and work closely with strategic suppliers and partners,” says Deloitte. As part of those efforts, CPOs are fostering commercial compliance, increasing speed to market, accelerating mergers and acquisitions (M&A) integration/divestiture programs and driving continuous improvement.
“Our findings reveal that agility does, in fact, strongly correlate with higher overall performance and other procurement capabilities,” Deloitte notes. “The top quartile agile procurement organizations in our study (aka, “agility masters”) outperform their peers on all major performance metrics.”
Things to Do Now
Here are some of the top strategies that Deloitte says these “agility masters” are using to improve their own organizational agility and resilience in 2021:
Focus on relationships and influence across functions and supply markets. Deloitte tells procurement organizations to consider managed service providers and ecosystem partners as their extended enterprise and to put stakeholder/customer management at the center of their strategy. “They can build collaborative muscle by flipping their linear sourcing-centric approach to third-party/partner management and developing a holistic supplier management approach,” it adds.
Leverage flexible workforce and resource deployment models. According to the 2021 survey, high performers invest in agility by developing talent and accessing capabilities, knowledge and experience leveraging on-demand, hybrid service delivery models (e.g., teams augmented with external support services). “Although full-time hires remain the main source of talent acquisition,” Deloitte points out, “high performers also highly favor internal agile workforce deployment (i.e., using staff from within business unit procurement, corporate procurement, other functions, shared services, etc.).”
Spend more time on strategy and transformation. High-performing CPOs are also fulfilling roles as transformational catalysts and intelligence strategists, Deloitte adds. While most CPOs spend 74% of their time on transactional and operational activities, it says high performers spent approximately 63% of their time on these types of activities. “Interestingly, we also found that agility masters don’t spend as much of their time doing strategic work as the high performers,” it adds, “but they’re spending more time in transformational activities to build capabilities on the fly that helps them deliver higher performance down the road.”
Use next-gen technologies. Deloitte found that the highest-performing CPOs are four to five times more likely to have fully deployed advanced analytics/visualization; 10 times more likely to have fully deployed robotic process automation (RPA) solutions and fully deployed predictive analytics capabilities; and 18 times more likely to be using artificial intelligence (AI) and cognitive capabilities. “Strong digital capabilities can help procurement organizations improve data visibility and the ability to collaborate/synchronize with suppliers, enabling greater agility both within these organizations and across the extended supply networks,” Deloitte says.
Make better use of data. “No matter how many analytical capabilities an organization adds to its armory, bad data often translates into bad analytics,” Deloitte states. CPOs can begin to address this issue through standardization (to enable better configurability), reducing their reliance on IT partners, controlling their own data destinies and making improvements iteratively along their data transformation journey.
