Research & Insights
What Is Top of Mind For CPOs?

The top issue on every CPO's mind, be it right or wrong, is cost cutting. Despite all of the media attention on sustainability, value generation, outsourcing or new market penetration, most procurement departments and CPOs are still measured on cost reduction first and everything else second. Thus, the first issue a CPO needs to address in every report and every project is cost control. However, every department has its own set of demands and success requirements – as addressed in recent publications such as:

Other issues are becoming forefront on a CPO's mind, and these include:

  • Availability and on-time delivery as supply shortages, supply chain disruptions and labor strikes are becoming more common
  • Business process outsourcing as the department's limited resources need to be focused on strategic activities, not tactical PO processing
  • Business strategy as supply management still needs to demonstrate its business acumen in many organizations to secure its spot at the table and report directly to the CEO
  • Contract management and spend creep as contracts that are not properly managed give way to maverick spend and increased cost/risk
  • Cross-functional collaboration beyond the current category or sourcing project
  • Demand management as the best cost control is not buying what you don't need to in the first place
  • Digital transformation as the cloud helps to brings everything online and accessible globally
  • Economic instability - currency strength, hedging, and commodity markets as a minor increase or decrease in currency, commodity contracts and markets that are being used for hedging can be the difference between spectacular success or equally spectacular failure
  • Environmental stewardship and sustainability as consumers demand social responsibility in the companies they do business with
  • Innovation driven procurement as the CPO looks for new ways to add value to the top line and brand multiplier, not just the bottom line
  • Market intelligence as the right insights at the right time are critical to reducing spending and adverse risk effects before they occur
  • Master data management as normalized, clean, data is required for analytical success
  • Predictive analytics to determine where prices are going, what markets are trending, which key suppliers are struggling, and so on
  • Quality, reliability and safety to prevent the organization from having to worry about costly recalls or lawsuits
  • Regulation and public policy to prepare for what is coming next
  • Reputation management because a small drop in brand reputation can often result in a 4%+ drop in revenue and even larger drop in enterprise value
  • Risk management to prevent costly supply disruptions
  • Supplier relationship management to reduce cost, improve reliability and jointly identify ways to take cost out and add value to the supply chain
  • Training and development to make sure the team is up to any challenge it needs to face
  • Working capital optimization to help finance optimize use of capital

In the previously cited studies, there is ample data to support the overall trend for a CPO that is expanding the portfolio of spend/supply management services to have higher impact on the enterprise. We have always decided that it’s best not to re-invent the wheel with primary research that has been so amply conducted in the market, but in future articles, we will at least address the “consensus view” of the key concerns and trends that are occurring across these studies.

First Voice

  1. Spend Matters PRO says:

    Availability and on-time delivery as supply shortages, supply chain disruptions and labor strikes are becoming more common

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