CPOs Struggle To Prove Themselves A Strategic Asset To The Enterprise

Chief procurement officers (CPO), like many members of the C-Suite, are embracing their evolving roles of greater strategic importance within the enterprise. But a new report from Advanced suggests the CPO may actually be evolving into a new title altogether: the Chief Value Officer.

Surveyors for Advanced discussed the findings of their research into more than 175 global business professionals for the Advanced Procurement Trends Report 2018, exploring how the evolving role of the procurement function could lead organizations to strike the title of Chief Procurement Officer. A change in title reflects a change in responsibilities for the CPO, the report noted.

The most stark change comes from procurement executives’ cost-cutting efforts. Previous surveys conducted by Advanced found as many as 80 percent of CPOs prioritized cutting costs. This year, however, that figure was halved to less than 40 percent citing cost-cutting as their main priority. Instead, procurement teams’ focus is landing on more strategic initiatives and efforts to align with the goals of their organizations overall. More than 60 percent of survey respondents said their procurement strategies are well-defined and closely aligned with the priorities of their firms.

In a statement, Advanced Managing Director Mark Dewell said the survey emphasizes the shifting role of chief procurement officers.

“It’s extremely positive to see the historically tactical perception of procurement starting to face in favor of a much more strategic and business-critical function,” he said. “Our research shows how procurement is adapting to new challenges, and playing a more valuable and vital role in today’s increasingly agile and competitive organizations.”

That adaptation could materialize in a rethinking of the CPO title, he continued.

“As part of this process, we expect to see a major shift from the traditional Chief Procurement Officer role to one of value creation and, thus, the introduction of the Chief Value Officer,” said Dewell.

As procurement executives shift their attention away from cutting costs, 44 percent of survey respondents said their savings target is just 5 percent or less for the year ahead (though, nearly one-fifth said their savings target is more than 15 percent). Simultaneously, these executives are paying greater attention to innovation: 96 percent said their plan is to at least maintain, if not increase, their technology investments from last year.

Researchers noted a shift in the technologies that procurement officials are paying attention to most. Last year, it was data and analytics. This year, “supplier networks” look to analytics and cloud-based solutions as the most relevant technologies to the procurement function. Dewell added that procurement teams are excited about innovations like artificial intelligence (AI), blockchain and robotics as well.

“However,” he said, “it’s clear the current focus remains on more-established technologies, such as supplier network and the cloud, which are essential components in streamlining processes and boosting productivity.”

Of course, it’s impossible to say whether the title of Chief Procurement Officer will truly shift to Chief Value Officer, or whether the CPO title will change or go away at all. However, the prediction is a clear signal among industry analysts that it’s not only the procurement function that’s changing, but its leadership as well.

It’s a shift that isn’t without its pain points, though.

The Advanced report revealed that the largest challenge procurement officials face this year will be moving from a tactical to strategic function of the enterprise (cited by 22 percent), suggesting that it’s not quite time for a CPO title change. An additional 27 percent said they are most concerned that procurement will be seen as a barrier to, rather than an enabler of, corporate goals. While researchers have been tracking the evolution of the procurement department for some time now, procurement executives’ fears could show that the enterprise itself is not ready to fully embrace the new role of procurement either.