Cost-reduction priorities hamper procurement's evolution

Dive Brief:

More than any other C-Suite executives, Chief Procurement Officers (CPO) are unable to secure the necessary investments to improve their organizations due to pressures to reduce costs, according to Deloitte's Global Chief Procurement Officer Survey 2017.
Although 75% of respondents felt procurement's role in digital strategy and analytics will grow, and 62% noted a large to moderate skills gap in analytics, roughly 25% of respondents are spending less than 1% of their budgets on training.
Despite this lack of spending, the top four CPO priorities are cost reduction (79%); risk reduction (57%); improved cashflow (48%), and business expansion (52%). However, at least in North America most CPOs (56%) felt supported by their teams and felt an increase in savings performance (61%).

Dive Insight:

The chief procurement officer (CPO) is a relative newcomer to the c-suite. But seemingly before the wrapper is off their new office furniture they are called onto the proverbial carpet to get the ‘cost reduction or else’ message from the corner office.

Far too many CPOs come into their new jobs with an aggressive agenda of progressive supply management techniques such as forging stronger supplier relationships, building internal cross-functional alliances, increasing the use of big data, transitioning to the digital supply chain, and bestowing heaps of professional development time and money on their staffs to get them up to speed on the latest and greatest. All, in an effort to improve supplier performance, enhance customer satisfaction, and certainly, control costs. Yes! The company finally recognized that procurement is critical and deserves a spot on mahogany row. What a great job!

Or is it?

Deloitte's survey shows that reducing costs is the biggest priority for chief procurement officers. And, that pressure continues to build, forcing CPOs to abandon their carefully developed plans while pressuring their staffs to uncover savings across the supply chain wherever they might be.

It is no wonder that the term of the CPO is historically short and their embattled staffs hunker down for more of the same. While some companies recognize the importance of supply management, far too many are focused only on the bottom line, giving lip service to the successful techniques that brought the CPO to the c-suite in the first place.