Not Your Grandfather’s Procurement (Part 3)

Mark Brohan

In Part 3 of a 3-part series, Marcell Vollmer, chief digital officer at SAP Ariba, shares his take on where digital procurement is headed. Read Part 1 and Part 2.

Q: In the 2018 survey, you noted, “Respondents see the role of chief procurement officer [CPO] morphing into more of a strategic role, especially with a title such as chief value or collaboration officer.”

Vollmer: Yes, this is happening across industries, as more and more CPOs are leveraging technology to become more effective leaders at their organizations. This transformation into a strategic role allows CPOs to orchestrate supply networks, drive innovation and growth, align business operations with companies’ ethical and social values, and manage risks, even as markets and technologies continuously evolve. For these reasons, procurement is so much more than just a cost-savings lever. Increased collaboration with the C-suite and with other departments also gives the CPO more visibility into overall business operations, allowing them to identify new patterns and opportunities to drive strategic growth.

On the title itself, the CPO is still the title used for procurement leaders, but sustainability gets added more and more, and collaboration is increasingly important to create value in close alignment with the different lines of business. The time may come that the CPO will get a new title focusing on value, collaboration, and sustainability.

marcell vollmer

Q: This conclusion from the 2018 report is very telling: “83% of executives see the ‘digital’ transformation of their procurement program as a top priority, yet only 5% of companies have the full systems and technology in place to make it happen now.” Did the new survey report any progress? If so, how much?

Vollmer: The survey did reveal that a lot of procurement organizations failed in successfully delivering the digital transformation. This is and needs to be on the agenda of every procurement leader to prepare the organization for the future and offer a great place to work for employees to deliver value.

Q: What are some of the other big takeaways from the latest survey?

Vollmer: The biggest takeaway is likely that this isn’t your grandfather’s procurement organization anymore. Procurement today is miles away from where it was just a few years ago – but for many organizations, it is still miles away from where it could be. CPOs have work to do to fully take advantage of technologies such as AI, machine learning, and analytics. Most, if not all, procurement leaders do understand the value of digitally transforming procurement, but many still do not know where to begin or don’t have the buy-in from the C-suite.

Therefore, adoption continues to be low for emerging technologies, as organizations take a “wait and see” approach – as evidenced in this year’s report. Over the next six to 12 months, we expect more CPOs to move on from this “wait and see” approach. The first step is to know why you want to invest in these technologies and to get buy-in from the right decision-makers. Transforming for the sake of transformation isn’t going to work. To succeed, CPOs need to invest in the right talent and technologies and set clear goals and priorities. In doing so, procurement organizations will reap the full benefits that digital technologies have to offer and become critical, strategic assets to the business’s bottom line.

The next survey in 2020 is expected to show some changes compared to this year’s results. It will be interesting to see how procurement is further evolving. And personally, I believe procurement has a beautiful future ahead by continuing to transform into a strategic, value-generating function creating impact for all lines of business by delivering innovations, mitigating risks, and securing a sustainable supply chain.

This article originally appeared on B2BecNews and is republished by permission.

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Mark Brohan

About Mark Brohan

Mark Brohan is editor and publisher at InternationalHealthManagement.com and director of B2B e-commerce research. Follow Mark on Twitter @markbrohan.