The Year of the CPO
This time last year, many of us left our offices. Some of us still haven’t returned. It’s safe to say the way we work will never be the same again. And that’s not a prediction; it’s what we’re hearing from procurement leaders at our regional Procurement Executive Networking (PEN) Lunches.
Many things are discussed at these lunches, but one topic dominates the conversation: everyone is deeply divided on going back to the office. In fact, this topic comes up in every meeting. While many procurement leaders say that a transition to a hybrid work experience is the best way to bridge the gap in employee sentiments, it’s clear that this is the new status quo.
No one wants to revisit 2020, so let’s not go in that direction. Instead, let’s look at the ways that 2020 helped grow procurement’s strategic influence and what’s on procurement leaders’ agenda moving forward.
Better Access to Diverse Talent
Attracting and retaining talent is always a top concern for procurement leaders. The good news is that remote work has vastly expanded the talent pool. Better careers are available to a diverse range of people, while also lowering overhead spending on high salaries and real estate.
Now anyone can work with innovative, world-renowned companies without having to live in expensive cities or uproot their families. Good-paying jobs and opportunities are expanding to underserved populations, which helps build up and preserve communities.
Notably, the role of Chief Procurement Officer was listed as one of the fastest growing C-Suite titles in 2020.
A Transparent Commitment to Diversity, Inclusion, and Sustainability
Many procurement leaders say that improving diversity, inclusion, and sustainability initiatives are now part of their organization’s strategic plan for 2021. Procurement has a direct role to play when it comes to expanding opportunities to underserved communities and businesses.
How are procurement leaders tackling this challenge? In really creative and tactical ways. Some are putting aside specific dollar amounts to spend with diverse suppliers or those whose ESG commitments align with the business. Others are requiring contractual obligations and vetting suppliers based on responses to questionnaires and surveys with specific questions about the supplier company and – importantly – their supplier’s suppliers.
There is widespread agreement that visibility is essential to support diversity, inclusion, and sustainability initiatives, particularly when it comes to working with small and diverse suppliers. The fact that ESG goals are now considered strategic to the business signifies remarkable progress for procurement and the communities in which we do business.
Smashing Silos, Bottlenecks, and Redundancies
With the sudden transition to remote work, businesses had to find ways to transform day-to-day operations to fit the new working environment. Digitization made the transition easier. E-signatures now replace wet signatures and everything from contract management to supplier information has moved from siloed databases and binders to the cloud.
Technology has allowed people at all levels of the business to stay connected while fully distributed. Automation within contract lifecycle management has been a boon for the industry, decreasing source-to-contract cycle times exponentially.
These changes may seem small, but they are contributing to increased efficiency in the sourcing process, and it can all happen from anywhere.
Providing Flexibility and Support for Employees
The best employees are happy employees, so give them what they need to be successful. We asked procurement leaders how they support their distributed teams. Here are some of my favorite examples:
- Upgrading employees’ home office equipment
- Virtual happy hours and cooking classes
- Digital scavenger hunts
- Coffee chats and catch-ups that are non-work related
- Buying digital gift cards for “dinner and a movie”
- No Zoom Fridays
In return, many businesses are seeing increased productivity and better team performance. And employees enjoy more flexibility and a better quality of life.
Turning Supplier Relationships into Supplier Partnerships
Similarly, give your suppliers what they need to be successful. The wave of bankruptcies during the pandemic resulted in many suppliers receiving delayed, partial, or no payment at all.
Ensuring that supply stays consistent from your existing and most strategic suppliers, it may require unorthodox techniques. To help key suppliers stay afloat, procurement leaders say they have provided advanced payments or shorter payment terms to bolster suppliers’ working capital.
Another welcome shift is that procurement is no longer chasing the lowest-cost suppliers. Instead, stronger supplier partnerships are fueling value and innovation. The visibility gained through stronger relationships helps minimize risk in the supply chain and ensure supply continuity.
A Focus on Visibility Throughout the Sourcing Lifecycle
Many procurement leaders tell us that COVID accelerated their organizations’ digital transformation plans. Now that teams have access to technology that wasn’t available a year ago, the task is to use the data to better forecast spending, mitigate risk, and collaborate with suppliers to find and fix the weakest links in the supply chain.
Reconfiguring supply networks to be more geo-diverse and improving agility are the primary goals. These goals can be achieved with the visibility to monitor things like your suppliers’ financial health, modify category strategies based on demand or current events, and utilize AI and machine learning to analyze and forecast spend and risk.
Consistently working on solutions that help the business outside of cost savings will help build more resiliency into the business as a whole.
The Silver Lining
Even though 2020 is still visible in the rearview mirror, the discussion is not all business and bottom lines. The conversations have grown to include topics like employee mental health, how to build more inclusive and equitable workplaces, and treating our suppliers like partners.
In my view, that’s something to celebrate.
