Validation of CPO Priority Shifts in 2022 

Top 10 Challenges in Procurement in 2022 

1. Mitigating Supplier Risk to Help Ensure Supply Continuity  

 #1 for the first time due to supply disruptions caused by Covid, war and other factors. 

2. Reducing Spend  

Usually this is priority #1. Organisations don’t want to pass on increased supply costs to customers, so they’re looking to procurement to help reduce spend. 

3. Acting as a Strategic Advisor to the Business 

Procurement is really stepping up. It’s working to boost business agility. It’s helping organisations become more resilient and adapt faster to disruption. It’s pivoting to address ever-changing customer demands, accelerating time to market. And it’s helping companies meet their environmental, social and governance (ESG) objectives through ethical, sustainable supply chains. All the while, it’s taking care of its traditional responsibilities: reducing cost and mitigating risk. 

4. Driving Corporate Sustainability  

Fostering sustainability isn’t just about doing the right thing. There’s growing evidence that it increases profitability and generates competitive advantage. It also helps build resilient businesses that can cope with unexpected disruptions. In today’s turbulent business environment, resiliency is a key capability. 

5. Accelerating Procurement Digital Transformation 

Hackett’s research found that 61% of companies are working on enterprise digital transformation, and 39% are planning to upgrade a major technology platform or introduce a new technology. 

6. Improving Analytics, Modelling and Reporting Capabilities  

Procurement is facing calls to catch up. In fact, 74% of organisations have a current initiative under way to enhance and further develop their data, insight and analytics capabilities. 

7. Aligning Skills and Talent with Changing Business Needs  

The Hackett Group’s report states that procurement professionals should develop new skills to help them play a more strategic role within the business. For example, it advocates for procurement professionals extending their capabilities around sustainability, data-driven intelligence, and supplier risk management. The Deloitte Global 2021 CPO Survey extends this idea by urging procurement professionals to build capabilities that help strengthen organisational agility.  

8. Modernising Procurement Application Platforms  

Process digitalisation helps increase compliance with procurement policies and reduce maverick spend. Critically, process automation also boosts efficiency. It enables procurement professionals to spend less time on routine tasks so they can focus more on driving value and innovation. 

9. Boosting Agility  

If procurement wants to be more strategic, it must be more agile and learn to react quickly to changes. There are two key aspects. First, procurement needs the ability to respond rapidly when internal stakeholders’ objectives change. For instance, if the company wants to switch brand of IT hardware on a global level, it shouldn’t take months to find, vet and onboard a new supplier. Secondly, procurement must react quickly to changes in the market to accelerate time to market. 

10. Improving Stakeholder Centricity  

Procurement must focus more closely on the needs and expectations of its stakeholders. That includes customers who buy finished products, internal business stakeholders and suppliers. 

The interviews validated the key points illustrated by SAP, Hackett Group, and Deloitte. 

The interviewees all agreed that: 

“The traditional pyramid of value-creation drivers in the procurement function is reshaping fast—if not inverting. As we see it, in order to future-proof their role, CPOs will need to think and act much more strategically than ever before as their position is elevated among other C-level executives. They need to excel at orchestrating and embedding sustainability in complex ecosystems, catalyzing digital innovation across the broader company, and capturing value from innovation at speed and scale. 

Senior corporate leaders have a unique opportunity to reset the role of the CPO.” 

According to Heidrick & Struggles the fundamental changes identified in the procurement function centre around the emergence and acceleration of newer, more sophisticated drivers of value creation:  

1. The expansion of the procurement ecosystem. The value chain has shifted from a rather linear process into a complex, networked environment that is continuously evolving into a more dynamic marketplace impacted by new forces (such as digital, sustainability, emerging technologies, and geopolitical events) … 

2. The increasing importance of sustainability as a strategic initiative. Companies have come to the realization that supply chains are major contributors to their environmental footprint and social impact, as measured against ESG frameworks.  

3. The acceleration of digitization and emergence of new technologies. A sustained focus on digitization and the increased adoption of new technologies such as AI, machine learning, robotic process automation, and data analytics have allowed procurement to automate many routine tasks, in turn freeing up time for more complex and value-added strategic activities.  

4. The supply chain rising to the board agenda. Extreme disruptions to global supply chains—such as those seen during COVID-19—have made board members keenly aware of how fundamental supply chains are to business continuity and risk management. They need to have access to timely business insights that affect their decision-making process. 

Read the full report and interviews here: Resetting the role of the chief procurement officer