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For CPOs, Life Is Getting Complicated

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During a routine meeting with one of our clients, the Chief Procurement Officer at a large Fortune 500 company, we were struck by something this person said: “I feel like I’m wearing so many hats these days, I need a hat stand to keep them all in one place!” Our client’s observation encapsulated something we were starting to see more often: a dramatic broadening of the role of the CPO.

A mere decade ago, a CPO’s job, while often difficult, was relatively straightforward: Find the best deal possible when sourcing raw materials or setting up production. But increasingly, that’s a fluid concept. What’s more, the changing nature of both technology and the manufacturing workforce has pulled CPOs into decisions that were once outside their purview.

Intrigued, we wanted to delve deeper into this trend, and we decided that this would be a fascinating area of focus for our annual “Chief Procurement Officer Survey.” Every year Deloitte conducts this global, cross-industry study to take the pulse of sourcing and procurement professionals. So, this year we’ll be exploring the role of the CPO — how it is evolving, and how procurement leaders are navigating and mastering complexity in the areas of technology, workforce management, and both the business and political environment.

Let’s start with external complexity. Trade and tariff requirements have created a lot of uncertainty about how, where and why to source raw materials and produce goods. It's not simply a matter of reshoring production when tariffs are imposed on goods produced in a particular country -- it's far more nuanced than that. In fact, we are starting to see companies split up their manufacturing in order to serve different markets. For example, a company might move some of its manufacturing back to the Americas but still leave capacity in place in China because the market there is so enormous. As consumption becomes more global and tariff competition heats up, CPOs need to stay on top of all of this and maintain a flexible mindset. They need to be nimble and prepared to tweak aspects of the supply chain more rapidly than ever before.

Procurement technology is another area that has changed dramatically, requiring the involvement of CPOs. Originally these technologies were primarily transactional in nature and used to support the purchase-to-pay cycle. Later, software became available to help procurement professionals analyze expenditures and administer and manage vendors. But now we are seeing a whole new ecosystem of technology that leverages data analytics to do everything from determining supplier risk to identifying bottlenecks in a global supply chain.

In other words, technologies have become so procurement-specific that IT professionals can no longer be solely responsible for choosing them. Rather, CPOs need to be intimately involved in the technology-selection process and working with cloud service providers to tailor offerings to their company’s specific needs.

Finally, talent management, long an area of frustration for procurement leaders, is today demanding their attention. Talent models for procurement are changing rapidly, with more work being allocated to business process outsourcing (BPO) providers or conducted by contractors or temporary personnel who have very specific assignments. In those situations, selecting an appropriate model and evaluating talent is best done by procurement, not HR generalists. Procurement professionals will also have a better handle on whether automation may be an alternative to certain transactional workforce roles. Indeed, based on several other Deloitte surveys, including our “2019 Global Human Capital HR Trends Survey,” it is clear that HR professionals agree: CPOs need to step up and get involved in hiring decisions.

Clearly, there are many changes afoot that present challenges for procurement leaders. The good news is that it also spells opportunity: Those that can master the complexity of their jobs can increasingly find a seat at the table for their organization’s top decision-makers.

Deloitte’s eighth annual "Chief Procurement Officer Survey" is currently underway and we invite you to participate. All participants will receive a copy of the survey report and an invitation to a webinar where we will present our findings.

Brian Umbenhauer is a principal with Deloitte Consulting LLP and Sourcing & Procurement global service offering leader. He also leads the U.S. Consulting Industrial Products & Construction sector. He can be reached at bumbenhauer@deloitte.com.

Lee Barter is a partner in Deloitte Canada’s Supply Chain & Manufacturing Operations practice and leads the Sourcing & Procurement service line. He can be reached at lbarter@deloitte.ca.

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