Supply Chain Dive called the trend early on in the year, stating in January that the need for more — and more critically thinking — CPOs is accelerating.
Deloitte concurs, stating in their 2021 Global Chief Procurement Officer (CPO) Survey, “Looking beyond the pandemic, the recent growth in complexity, risk, and need for external innovation may have also finally opened the door for procurement’s arrival as a true strategic partner.”
Although they may have always had a C in their title, CPO’s haven’t always had a seat at the proverbial table. "The CPO was probably the person outside the room, and now they have a seat at the table," said Pettis Kent, Assistant Professor of Supply Chain Management at Loyola University Chicago Quinlan School of Business. The rising status of the CPO, demonstrates a very clear move to empower a centralised procurement team, with strategic buy in.
Our very own CEO, Tai Alegbe, summed it up nicely in the September edition of Procurement Magazine. “We are seeing top Procurement teams shift Procurement and Supply Chain from a back-office function to a strategic asset that is helping drive their businesses forward. This change is vital, with threats to business resilience increasing dramatically in recent times, combined with increasing expectations from boards, auditors, customers and regulators. They’ve got their work cut out!”
The implications of the global pandemic, compounded by the impacts of Brexit, have put the spotlight on procurement, further fuelling the need to shift from mainly transactional and reactionary to strategic, proactive procurement focused on driving larger organisational initiatives.
Up-ended markets, the increasing threat of inflation, extreme pricing volatility, capacity shortages, global logistical bottlenecks, increasing customer demands, and a need for sustainable practices—the list of drivers for procurement to help steer organisational optimisation through proactive procurement is a long one.
However, you can’t use a hammer to fix all that is broken. Driving collaborative action across your value chain requires the right tools.
Enter digitisation. Tai stated it best, “we’re seeing the top teams adopt technology that helps them become more proactive, easing the burden with real-time and relevant insights across their entire supply chain. The delivery of these insights at the right time, so teams can make the right strategic choices, is what enables Procurement to fulfil its strategic role in driving the business forward. The value to the business is huge, with Procurement able to negotiate better, source more effectively, reduce risk, identify opportunities and meet the myriad of regulations.”
The CPO agenda is a long one. Leadership must be ready to transform, leveraging tech to leapfrog to where they need to get to.
Proactive Procurement- From Firefighting to High Performing
Fire fighting. Truth be told, it’s how many procurement teams spend their days fighting to meet the day-to-day needs of the business. Proactive procurement—forward-facing strategic procurement focused on risk management, compliance, and larger corporate initiatives—looks to limit the number of fires by mitigating risk and automating processes so you can move on with bigger and better things.
Deloitte found that while most CPOs spend 74% of their time on transactional and operational activities, high performers spent approximately 63%, 15% less. They also found that although “agility masters” don’t spend quite as much time on strategic work as the “high performers,” they are spending more time performing transformational activities to build capabilities so they may eventually deliver higher performance.
But how do you transition from reactive to proactive?
By leveraging the right digital tools to digitise risk management and resiliency efforts, you can empower employees with the actionable data, valuable supplier insights and frictionless communication they need to increase supply chain visibility, mitigate risk, and ensure compliance. In addition, opening the lines of communication makes for a more transparent relationship and helps build trust, increasing supplier collaboration and alignment.
Supplier Intelligence, Empowering Proactive Procurement
There are many different areas of risk that lay within your supply chain. Yet, for many, risk management remains a mostly intuitive task, complex supply chains opaque beyond tier 1 being a limiting factor. In fact, Deloitte found that only 18% of CPOs were formally tracking the risks that existed in their direct (tier 1) supplier base, and only 15% had visibility beyond that.
Empowered with supplier intelligence and increased visibility, your employees can implement a more formal approach and take action quicker, minimising impacts or eliminating threats altogether before they disrupt your business. Increased supply chain visibility enables you to identify opportunities for improvements, and proactive due diligence helps ensure you align your business with the best-fit supplier, while real-time supplier data puts you in the driver’s seat in contract negotiations.
Proactive Procurement in Action
Furthermore, with Contingent at your fingertips, you can:
- Check the financial standing of a supplier in real-time
- Keep an eye on legal ownership and control with a clear view of entities and hierarchy structures, including persons of influence
- Assess suppliers based on their ESG performance and adherence to international and regional standards
- Ensure ethical procurement by screening against ethical requirements or modern slavery
- Ongoingly monitor 3rd parties for compliance with industry-relevant regulations
- Improve vendor selection and management with insights into supplier capacity, quality and performance
- Avoid the monetary and reputational cost of disruption with proactive, ongoing alerts from 1000s of sources
- Better inform your business strategy with insights on your suppliers via real-time global news feeds
Proactive Procurement, Good for You, and Your Business
Value-driven outcomes— it’s what procurement dreams are made of. There are few in procurement who value the menial work of issuing PO’s and the tracking of goods. Procurement holds great responsibility, and those in it prefer to use their time driving change through how they spend.
In retrospect, perhaps Covid was the impetus for change that procurement needed.
Revealing the fragility of current-day intricate global supply chains built for JIT, the global pandemic fuelled the need to move far beyond transient costs and spend reductions and onto generating value.
Stakeholders, shareholders, and governments all now have their eyes on procurement to drive large initiatives and transformational change— the kind that strengthens resumes and makes careers. Driving transformation, unearthing competitive advantage and focusing on more noble and rewarding tasks like sustainability and DEI are now all part of the CPO agenda. And both companies and employees are better off for it.
Proactive supplier insights allow teams to align actions with company objectives and better inform leaders so they join those high-level strategic conversations armed with intricate, and up to date, supplier knowledge.