How CPOs Are Making Process Improvements in 2022

CPOs now occupy a strategic position within the organization, weighing in on everything from financial decisions to new technology upgrades. Many of today’s CPOs have also transformed their procurement functions into operations that generate substantial revenue for the company.

These are significant gains for the position, but they don’t come without challenges. Many CPOs still struggle to achieve buy-in from other decision-makers when it comes to major transformation initiatives. Companies are racing to implement the latest procurement technologies, but they require investment.

Furthermore, procurement leaders have been strained recently due to supply chain disruptions brought on by the COVID-19 pandemic. There is more urgency for CPOs to transform the procurement department into a lean, agile function that can adapt at a moment’s notice to market changes.

Improving Procurement Processes

In 2022, CPOs will focus on a wide range of areas to improve the procurement function.

According to a recent ProcureCon study of CPOs and their procurement functions, over one-third will focus on process improvement (39%), minimizing supply chain disruption (38%), and improving sustainability (34%) in 2022. Meanwhile, 32% said their CPOs will focus on mitigating the effects of inflation.

All these focus areas align with current overarching trends in the market and the supply chain.

CPOs are striving to improve their procurement functions in an era of digital transformation. Meanwhile, CFOs and COOs continue to rank the supply chain as one of their top concerns for the year ahead.

Addressing Internal and External Challenges

Still, procurement leaders are also working to address some emerging and ongoing challenges in 2022. Some of the challenges affecting the procurement department may be temporary, as they relate to disruptions brought on by the pandemic. Nonetheless, most CPOs would agree that the function, and its place in the organization, have fundamentally changed.

Rising inflation is a new issue that has taken precedence in recent months. Supply chains are still struggling to overcome recent disruptions, while high demand and low supply have led to price increases for everything from consumer goods to basic materials like lumber. There is still an impetus for procurement teams to improve their internal processes as much as possible, so they can take advantage of cost savings and ensure they can procure the goods, services, and resources the company needs at reasonable rates and prices.

But CPOs are also staying aware of oncoming challenges in the year ahead, some of which have been ongoing for years.

For example, 40% of the respondents to the CPO study said lack of buy-in from key decision makers would be a significant challenge in the next 12 months. Lack of buy-in has been one of the most long-standing challenges for CPOs, even as they have obtained a more strategic position within the organization.

Other significant challenges include problems with change management or the integration of new processes (39%) and insufficient resource capacity within the function (36%). These two challenges align with other novel issues facing procurement teams around the world. Namely, they are still in the process of gaining agility by onboarding and integrating new technologies in the face of supply chain disruptions.

Indeed, 41% of the respondents said trouble integrating with legacy systems is somewhat of a challenge. Many CPOs are turning to outsourced experts like technology consultants to build integrations or find workarounds for their new technology implementations, specifically as they relate to legacy systems.

What Lies Ahead for CPOs

Procurement’s role in the organization is now much more strategic. Chief procurement officers are improving internal processes to deliver more strategic value, rather than just managing them as an administrative function.

While some of the challenges facing procurement have been long-standing, like inaccurate forecasts and poor vendor relations, others like inflation and recent supply chain disruptions pose new threats for CPOs.

To learn more about what may lie ahead for procurement leaders and how they can succeed despite these obstacles, download the 2022 ProcureCon CPO study today.