According to research by The Hackett Group, the second highest priority for Chief Procurement Officers in 2015 is to increase scope and influence. This was among a range of data presented today at the Zycus Horizons conference in Florida.
This finding begs a number of questions. First, why do CPOs see raising their influence and expanding their scope as a priority? Beyond personal or functional ambition, is any one actually calling for an extension to their role? What benefits are expected to flow as a result? Presumably this ambition is driven either by a perceived need to fill gaps, or by the belief that the work currently undertaken by others can be done better by Procurement.
The second question relates to these areas of benefit. One would expect that other 2015 priorities would give some clue as to the new values that will be achieved as a result of greater influence. Reduced costs tops the list – and this is certainly not a new area of endeavor. Reduced supply risk comes third – again, hardly new, but certainly an area where there is room for improvement. At 32%, ‘deeper influence on complex market spend’ is a legitimate ambition for many; complex relationships often operate with limited Procurement involvement. Innovation – an area which you would think could yield significant extra influence – comes in at only 21% on the list of priorities.
So there are some useful indicators here regarding the possible approach to increased influence and scope. The main opportunities are likely to be earlier engagement and increased market insight, selecting suppliers on value and competence more than on price. And then also expanding performance oversight and the management of on-going change, including innovation. Together, these areas would actually tackle all of the objectives listed above.
But the question remains, does Procurement have the skills and tools needed to execute on these improvements, or the ambition to acquire them? I will comment on that tomorrow, in my second report from Horizons 2014.