Procurement excellence: the evolving role of the CPO

In this article, we take a look at the challenges facing organisations, how these have radically transformed the CPO job description, and how CPOs can adapt to achieve procurement excellence in the long term.

Procurement pros for modern challenges

In recent years, procurement has taken up a much bigger space in the boardroom, with CPOs expected to work more strategically and innovatively than ever before. CPOs are no longer exclusively procurement specialists focused on cost savings. They’re responsible for helping solve a diverse and complex range of problems, from meeting ESG requirements to digitalisation.

Today, business disruption is commonplace due to climate change, human resource issues, transformation, and politics – from global pandemics impacting the workforce to regulatory requirements pressuring organisations to adopt new processes. As a result, a CPO has to wear many hats.

On top of leading the procurement function, CPOs are expected to fulfil the following roles:

Risk Manager

Managing material and product shortages, and other disruptions in the supply chain to ensure reliability for the company

Volatility and Cost Manager

Tackling increasing costs and erratic price changes, while delivering cost savings for the business

Sustainability Manager

Keeping the organisation’s ESG goals at the forefront of procurement decisions because your supply chain is where you can have the biggest impact on sustainability targets

Transformation and Innovation Agent

Incorporating new technology, AI, automation, and purchasing tools, hiring and retaining the best talent, and managing increasing complexity

All of this has led to a rise in procurement excellence – a strategic drive towards transformation for procurement departments, from adopting new technology, evolving processes, and optimising supplier bases. And there’s been a boom in tools and platforms to help procurement professionals deliver on these standards.

Fortunately, these initiatives are paying off. In 2021, Deloitte’s Global CPO Survey showed that CPOs of higher performing procurement teams spent 15 percent more time on strategic activities than their poorer-performing counterparts.

What future changes can we expect for CPOs?

Decision makers

CPOs are already becoming more strategic and that will only continue. They’ll be at the forefront of big decisions and will need to partner with different parts of the business to help deliver on those strategies. It will also be essential for CPOs to think more globally, both when it comes to sourcing from different countries’ perspectives, dealing with tax frameworks, and tackling cyber crime.

Communication and compliance

Skills CPOs won’t be able to shy away from include communication – so they can sell their strategies, analyse and share financial impacts, and understand business plans. They’ll also need a solid grasp of compliance. Prioritising rules and regulations when it comes to negotiating contracts will be a key element of delivering sustainability initiatives.

Coveted careers

With strategic thinking, communication skills, stakeholder management, and exceptional leadership all crucial parts of what makes a modern CPO, top talent from different backgrounds are beginning to take note. With connections across the business, being a CPO is a surefire way to have a real impact. And this is making these roles more desirable. Compensation will undoubtedly evolve to reflect this too.

The pressures of sustainability on procurement professionals

Achieving excellence means overcoming demands the state of permacrisis puts on each step of the procurement process and reaping the rewards of sustainability. These challenges include:

The increased pace of innovation to gain a competitive edge
Multi-supplier sourcing to build more resilient supply chains
More frequent negotiations to manage demand and price volatility
The compliant decentralisation of buying to enable end-users
Single-creditor solutions and other measures to reduce process costs

CPOs need to know how to alleviate these demands while meeting sustainability requirements, all without adding so much complexity to their procurement processes that the benefits are outweighed by the operational costs.

However, a recent study conducted by the JARO Institute for Sustainability and Digitalisation alongside CBS International Business School and Unite, found that while sustainability is seen as highly important, it remains largely unimplemented because of knowledge gaps and implementation complexity.

Tracking sustainability in B2B procurement

Discover the findings of the ‘Sustainable Procurement and Responsible Supply Chains 2023’ study which was conducted by the JARO Institute for Sustainability and Digitalisation e. V. in cooperation with CBS International Business School and Unite.

Read the study results

There’s no denying sustainability adds complexity to each key stage of the procurement function, and these additional needs are making the process much harder to maintain in the long run:

Analysing demand – focusing on more sustainable products and services, where products are made, and what they’re made from.
Qualifying and selecting suppliers – taking into account your organisation’s ESG requirements and managing the risk of any suppliers you bring on board.
Managing prices and conditions – considering how sustainability criteria will impact prices.
Operations – making sure end users have the knowledge to make sustainable buying decisions.

These dynamic times require real-time data and automation to create more transparency and make better decisions.

Christel Constant, Unite Executive Board member, at the IFPSM World Summit

How can CPOs achieve procurement excellence?

So how do organisations and their CPOs get the data and automation they need to make sustainable processes more, well, sustainable?

There are lots of solutions on the market which support parts of the process, for example, dashboard tools that offer data-driven insights or help you better understand buyer–supplier relationships. There are tools designed specifically to give your actions and decisions a sustainability rating, as well as e-auction tools that help with price finding and sourcing.

Currently, all these different tools are disparate, which makes it much harder for the CPO to bring everything together and reap the benefits. But there is a way forward – the future lies in orchestrating these tools to bring all these elements together in one place. This will give CPOs the information and functionality they need to make informed decisions, harness the power of automation, and have insight-driven conversations with their organisations.

Reaping the rewards

One organisation that’s bought into the platform approach is energy provider EnBW, whose bold procurement initiatives are led by Category Manager Catalogues/Marketplaces Jürgen Schuster. He knows a thing or two about how the CPO's role has evolved in recent years and sets a great example of a more holistic approach.

EnBW was looking for a singular procurement solution that would enhance its sustainability efforts, boost productivity, take care of its indirect purchasing needs, and reduce maverick buying. And then it found Unite.

“The main advantage of Unite is process improvement,” explains Jürgen. “We’re moving away from free-text ordering to catalogue ordering. You can browse the catalogue, find items, put them in your basket and order. All the processes are running automatically in the background. You don’t have the hassle anymore of having to request quotes and then manually placing the orders.”

Energy provider EnBW enhances sustainability and efficiency by centralising procurement

Sustainability is extremely important to EnBW. In the future, EnBW hopes to implement its sustainability goals even more transparently and automatically with the help of Unite.

Read the success story

CPO strategy in action

Beyond process improvement, Jürgen’s team has a big role to play in achieving the business’s goal for carbon neutrality by 2035 – with the carbon footprint of all procured items being public knowledge by 2025.

5,000 employees now use Unite as their central procurement solution, which encourages them to filter products based on sustainability criteria. Using Unite has allowed the team to approach sustainability from both sides. “On the one hand, that means piloting large-volume projects,” says Jürgen. “On the other hand, we have to bring sustainability to the masses, to really anchor it in the company.”

Two ways it’s already doing this include working closely with Unite to develop sustainability KPIs as part of our Yook carbon footprint pilot as well as being involved with our Sustainability Stakeholder Dialogue where we get together with purchasing managers and leading suppliers to talk about all things sustainable.

“EnBW’s participation in Unite’s 2nd Sustainability Stakeholder Dialogue underlines the company’s commitment to a more sustainable future,” said Jürgen. “The discussions and insights from this event will help to further strengthen the sustainable efforts of all participants and drive the transformation towards a greener economy.”

The path to procurement excellence

The role of the CPO has changed forever. And so are the practices and tools a procurement team needs to support its organisation’s needs, meet regulatory requirements, achieve ESG goals and attract the best talent. Unite is putting these challenges front and centre to help make procurement excellence a reality.

Want to see excellence in action for yourself? Discover our procurement solutions.

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