Gone are the days of a procurement department leader who sits behind a desk, filing out requisitions and meeting a company’s day-to-day supply, cost and quality needs. Today’s procurement leaders, moving to the C-suite as Chief Procurement Officers (CPO), are taking on more complex roles with greater responsibility and importance because they have an impact on broader business decisions.
While CPOs must still be focused on more traditional requirements like cost savings and supplier relationships, the role is modernizing, becoming a vital component in the digital transformations that many companies are undertaking.
Technology changes are essential for procurement to remain competitive, and CPOs can take on more business-centric roles, integrating with technologies found in finance, HR, legal and IT — making strategic business planning more efficient and effective. And with the current global health crisis caused by COVID-19, tactical and strategic decisions based on data and analytics are essential.
Digital transformation
As companies take on digital transformations, adopting technologies that allow for interdepartmental sharing of data, CPOs are becoming pivotal. Using data and analysis from across a company, these formerly mid-level managers are now seen as a necessary source for budget and financial strategy.
As technology reduces day-to-day tactical work, CPOs now have more time to communicate with a range of stakeholders, making it easier to support what can be a complicated process of replacing or adding technologies and managing teams as they accept the many changes to their individual roles that may result.
Another component of digital transformation that CPOs navigate is the internal talent management that ensures staffers have the necessary skills to navigate the changes. This may mean training for existing workers or adding new workers with different skill sets. According to the 2019 Deloitte Global CPO Survey, 87% of respondents said that having the correct talent in place is the most important factor for procurement success.
The requisite skill sets are changing as technology changes, so procurement leaders need to make sure their team members have the necessary procurement knowledge and technology skills. There is also an equal focus on soft skills. As procurement team members spend less time on tactical tasks that have been automated, they need to be equally as skilled when it comes to interacting with co-workers, company leadership, suppliers and other external contacts. Some of the top soft skills that CPOs are looking for include relationship management and effective managerial capabilities.
Opportunities in a crisis
Because of the coronavirus pandemic, unpredictable and rapidly changing circumstances are giving the CPO an opportunity to reinvent themselves and their departments. According to a recent McKinsey and Co. study, more than 50 million Americans could end up out of work, with industries like food service, in-store retail and tourism feeling the hits especially hard. While many of these losses will likely be temporary, some workers will see their hours cut while some may permanently lose their job.
There are industries seeing growth. Healthcare, delivery of goods and services, specific manufacturing sectors, and retail warehouse staffs are in even greater demand. McKinsey found that as many as 3 million workers will be engaged in these areas, some for short-term engagements and others for longer-term work.
The question becomes how will CPOs manage their workforces as the situation changes? For many companies, contingent workers are becoming a more viable option since they can be added or subtracted more easily than traditional W-2 employees. Companies will need to modify some worker skill sets to accommodate a shift in production to make products that are in high demand now, including hand sanitizer and ventilators.
“While there was a shock across the economy in March, we’ve seen a mounting interest from businesses to tap into their extended workforce,” said Ali Din, vice president of marketing at WorkMarket, an ADP company that offers freelance management technology. “We continually see companies apply different uses based on the flexibility that a freelance management platform affords them as they adjust to changing labor dynamics. Whether companies need contingent workers, 1099 contractors or freelancers, they can take advantage of a purpose-built platform to meet those needs.”
By leveraging digital transformation that brings together various technology platforms that allow communication across departments, CPOs can track workers who have been let go so they can recall them quickly, and they can make sure their teams are filling any available roles with the best candidates. They also have the capacity to assure finance departments that budgets are being met and give HR leaders the worker information they need.
Expectations of younger workers
For today’s CPOs to succeed, they need strong leadership skills, especially those to address the concerns of younger workers. When younger workers are engaged — and many are because they possess the digital skills necessary to support new procurement technologies — they bring an expectation that their employer will be more socially conscious.
This may mean sourcing goods in more ethical ways, supporting environmental initiatives or demonstrating a commitment to equity. Whatever corporate social responsibility looks like to a CPO’s team (and most likely other younger workers in other departments), this is becoming a major focus for procurement leaders and will remain a key issue as the workforce continues to change.
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