Has there ever been a more challenging time to be a chief procurement officer? Or a more exciting one? Changes in the business world at large have been accelerating for decades, leading to a fundamental transformation of the procurement function.
The role of the procurement professional has historically been based around cost control and the timely purchases of goods and services, but today’s CPO is responsible for a far wider breadth of responsibilities.
CPOs are now expected to enable growth through new business approaches; build deeper and more collaborative relationships with suppliers; enable greater sustainability, resilience and innovation; and harness new technologies such as artificial intelligence and machine learning to help business leaders make better decisions and deliver improved outcomes.
The CPOs who are leading the pack possess the right balance of vision, purpose, collaboration and flexibility to drive enterprise-wide transformation, and are building high-performing procurement teams consisting of a far wider array of skills, knowledge and experience.
Following are five core capabilities that forward-looking CPOs are prioritizing to help transform their businesses and meet today’s challenges:
Willingness to take risks and disrupt the status quo. Corporate leadership today is largely about driving change. And while procurement leaders traditionally have focused on establishing and maintaining disciplines and methods designed around cost management and compliance, increasingly they are becoming champions of break-through innovation and business transformation.
The inherent nature of innovation involves experimentation, calculated risk-taking and uncertainty. New approaches should be viewed as learning experiences, and any unexpected setbacks seen as stepping-stones to company and personal leadership growth.
To help drive this positive change, transformative CPOs are partnering with startups, thought leaders, networks, suppliers, advocacy groups and internal stakeholders who can act as catalysts for innovation, and show how existing models and processes aren’t necessarily the only, or the best, way to do things.
Focusing on agility and adaptability. To remain competitive in today’s volatile economic environment, companies must evolve and pivot faster than before. Holding on to outdated technologies and manual processes can result in businesses being left behind. Leading CPOs have recognized the need to develop best-of-breed digital ecosystems which allow multiple innovative technologies to work together, and deliver superior user experiences for both their teams and business stakeholders.
Procurement needs to become an agile and adaptable function, embracing the uncertainty that is at the heart of business today, while seeing each challenge as an opportunity to revisit models and processes, and increase both the top and bottom lines.
Building new types of teams. Successful CPOs are ensuring that a wide range of voices are heard across their teams, with people from different backgrounds bringing fresh perspectives, insights and experiences to the table.
Rather than hiring managers with many years of procurement domain experience in various category roles, transformative leaders are actively seeking to recruit new talent with well-developed business or functional expertise, exceptional digital literacy, sales or relationships management experience, or consultancy backgrounds with strong, creative problem-solving skills.
Leading by example, these CPOs are demonstrating that they have the ability to challenge convention and seek new approaches to solving procurement’s most pressing challenges during these uncertain times.
Redefining procurement’s role. Procurement leaders are now often called in to help teams across the business with increasingly complex supply challenges, partnering with I.T., H.R., finance and or legal enables procurement to drive digital transformation across all functions.
Indeed, the career paths of tomorrow’s CPOs are likely to involve working in different areas of the business to develop relationship building, account management expertise as well as sales and change management skills that are increasingly needed to fulfill the broader mission of the procurement function.
These transformative CPOs are also redefining how value is measured across the organization, promoting a fresh vision of the future of procurement. The new scorecard includes factors such as growth enablement, increased social inclusion, sustainability and development of new products.
Aligning resources to corporate priorities. One of the biggest challenges CPOs face today is that their functions need to take on a more strategic role, rather than focusing primarily on day-to-day transactional activities. Procurement leaders are prioritizing opportunities with the greatest impact on the entire organization, whether that’s leading the way on stakeholder experience, digital transformation or the environmental and social governance (ESG) agenda through responsible, transparent and sustainable business practices.
To help guide more strategic thinking, leading CPOs are using new technologies that free up their talent to focus on the more human aspects of procurement, such as relationship management, supplier innovation and business partner problem-solving, while at the same time exceeding stakeholder expectations created by the consumerization of enterprise buying.
Ultimately, it is openness to new ideas, calculated risks and different voices, along with a thirst for experimentation and transformation, that will characterize the leading CPOs of tomorrow.
Keith Hausmann is chief revenue officer at Globality, a B2B marketplace and platform.