Traditionally, at this time of year, the trade press talks about areas in which Chief Procurement Officers are looking to focus. What should CPOs prioritize post-Pandemic?
These articles typically say two things.
One, cost savings in procurement is job one.
Two, this is the year that the procurement role will assume its proper seat at the strategy table. Procurement’s category knowledge and process expertise will create significant value. The CPO group will help with product development, risk management, and financial planning.
In the wake of the Covid pandemic, one might expect a greater emphasis on risk management. After all, we have seen (and continue to see) no shortage of risks: supply shortages, commodity price risk, the risk of rising global trade tensions, cyber-attacks, IP theft, shipping constraints, etc.
Yet, according to Deloitte’s 2021 CPO Survey, none of these three truisms held.
The interesting thing from this survey is that CPOs recognize that they need a more general approach. Deloitte calls it “agility.”
“It turns out that agility is indeed a sort of antidote that helps inoculate firms against complexity and risk so that they deliver healthy performance results even in the toughest of times.”
The traditional hidebound, bureaucratic approach to procurement does not work.
It turns off talent who might participate in the procurement process. It hinders the full use of enterprise knowledge. It may not work on an end-to-end basis. It is not driven by data, preferring anecdote. It may not be nimble enough to keep up with dynamic expectations of different stakeholders across and outside the enterprise.
During the pandemic, management teams needed to make rapid-fire decisions. More importantly, they needed to be able to trust the quality of these decisions.
If you get this comprehensive approach right, then everything else will follow, including cost savings and risk management.
“The agility masters outperform their peers on all the major performance metrics: hitting savings targets, hitting other targets, spend influence, stakeholder influence, C-level influence, and stakeholder satisfaction.”
No wonder Deloitte reports, “In this year’s report, for the first time in its 10-year history, CPOs did not name ‘reducing costs’ (traditional spend reduction) as their top priority.”
Unexpectedly, after a year in which risk management came to fore, the goal of “enhancing risk management” was unchanged in its priority, even as there were large jumps in the perceived importance of digital transformation and enhancing corporate social responsibility.
EdgeworthBox is built for this new orientation. Our solution is a platform that sits as a layer in the procurement technology stack. We augment the incumbent approach to acquisition with tools from financial markets. Buyers improve the quality and the quantity of the proposals they receive in their RFx reverse auctions by making it easier for suppliers to work with them. Easier onboarding, data for market intelligence, and a social network for collaboration with external partners, as well as with internal partners make for the kind of agile, nimble, dynamic responsiveness Deloitte describes. Give us a shout. We’d love to talk to you.