The CPO’s Conundrum (Part 1A): How Outside-In Issues Are Shaping the Course of Procurement

If you were to ask a roomful of CPOs what was their top concern was, for this year or even the coming decade, chances are the majority would lead with cost management and supply assurance.

This makes sense. Within the hierarchy of procurement value, providing the right goods and services at the right time and place, preferably at the right (or better) price, constitute a foundation without which organizations cannot function.

Because of this requirement to secure and manage supply markets, procurement’s value proposition to the business is ultimately defined by its ability to access and derive value from markets. This means procurement value, then, is driven heavily from an outside-in perspective. That value starts with assurance of supply, just as top-line growth and brand development are foundational to sales and marketing.

The problem, however, is that supply assurance and cost reduction are just two of a host of broader issues that are being pushed to the front of mind for today’s CPOs. Because the CPO must manage multiple changing supply markets, and because those supply markets are affected by numerous external forces over which the CPO — let alone the business or even some governments — has no ability to influence, the CPO’s agenda is in reality much broader than assuring supply and reducing costs.

This brings us to what we call the CPO’s conundrum: Procurement organizations are primarily measured by the C-suite on supply assurance and cost control, but the agenda that the outside world is setting for the CPO is far bigger than just that. How, then, can procurement leaders meet the agendas recognized and prioritized by management while also addressing the equally (or perhaps more) important agendas of the changing, external supply world?

This Spend Matters PRO series examines the roots and resulting challenges of the CPO’s conundrum. In this brief, the introduction to this series, we discuss the current items on the CPO agenda, as well as the outside-in forces that are most notably butting their way in.

In subsequent installments, we will analyze overarching issues on the new CPO agenda individually, including corporate social responsibility (CSR) and sustainability, digital business strategy, political and economic instability, and regulatory risk.