The responsibilities of the chief procurement officer (CPO) in 2018 are a far cry from those just a few years back. Traditionally, the CPO tackled the optimisation and reduction of costs.

However, a recent study by Deloitte found that while cost reduction may still rank as the top business priority for CPOs, a broad set of other priorities are quickly catching up. Boards are increasing turning to Procurement to help navigate the complexities of today’s market.

The management of risk is now a top priority, as the level of risk continues to increase and new forms (e.g. cyber security) present themselves; the same Deloitte study found 50 percent of CPOs reported a significant increase in procurement risk in 2017. Whether it be the impact of natural disasters or geopolitical events on supply, data governance and security, or child labour, CPOs are now on the frontlines, monitoring for events that could have an impact on supply chain operations and corporate reputation.

CPOs also find themselves at the forefront of innovation, well positioned to collaborate with a diverse range of suppliers and internal stakeholders to untap new ideas, methods, and approaches.

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This connection with suppliers also means the modern CPO is expected to help ensure compliance with rapidly evolving regulations. Unfortunately, these rising expectations are rarely being matched with greater resources. Procurement must work smarter than ever before to succeed.

Access to relevant insights and data

A key requirement to smarter procurement is access to actionable insights, where and when needed. One of the main barriers CPOs need to overcome is the poor quality of data available to them.

Many CPOs are faced with data segregated across disparate systems, whilst some are simply overwhelmed by the amount of information they are confronted with. Lack of normalisation across systems prevents a 360 degree view of suppliers, or the proper identification of opportunities.

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Smart procurement technology can address the poor quality of data and lack of integration. These platforms can pull together and merge relevant information from diverse sources into one place, including risk, internal performance scorecards, and external financial figures. This allows access to new insights and avoids information overload – giving the right data at right time. A unified data model allows intelligent technologies, such as AI, to analyse large data volumes for trends, bringing actionable insights to the fingertips of CPOs.

More capacity is needed to enable strategic thinking

Many CPOs and their teams spend too much time on operational activities and manual processes that add limited value to the business and distract from more important responsibilities.

If procurement is to do more, it must be more efficient and free capacity. Digitising the source-to-pay process eliminates paper, exceptions, unnecessary phone calls / emails and improves transparency for all stakeholders. Integrated platforms serve this purpose well.

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Those that integrate smart Procurement technologies also open the possibility to implement digital assistants and chatbots to further streamline processes. Instead of manually searching for reports, spending data, and performance scores, CPOs can ask questions using natural language within the smart Procurement platform, such as, “How much did we spend with X supplier in 2017” or “what is our exposure to China?” The digital assistant will then find the insights requested. Digital assistants could also be external, providing suppliers with a resource to provide quick answers on issues like the buying or contracting process, or checking if invoices have been paid. This would remove another job from the CPOs to-do list.

Navigating change and ensuring compliance

Organisations have never had to deal with so much uncertainty and complexity. Whether it’s geopolitics, such as Brexit, or regulatory change, such as GDPR – CPOs play a key role ensuring compliance in an agile manner that causes minimal disruption. When it comes to compliance, smart procurement can help CPOs keep on top of regulations and ensure that suppliers are also toeing the line. But to do this, they need full visibility.

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Smart procurement technologies give CPOs a 360-degree view of their entire supplier network and provides data-driven insights. Flexible systems are important to quickly and efficiently capture new information, then to build and monitor improvement plans as required to ensure compliance and auditability. For example, allowing custom workflows and questionnaires to assess supplier GDPR compliance and then track corrections for those initially not in compliance. The risk of failing to comply with regulations can result in huge fines and cause considerable damage to corporate reputations. Smart procurement enables CPOs to ensure compliance across suppliers and their own organisation.

More intelligence, quicker decisions

The modern CPO might be facing a juggling act when it comes to business priorities, but the application of smart procurement technologies allow them to operate intelligently, and to quickly make informed decisions on a multitude of issues. With unified data, automation and a 360-degree view of suppliers in place, smarter procurement gives the modern CPO the tools to monitor risk, unleash innovation and ensure compliance.

CPOs are empowered to assess suppliers effectively and determine the best options for co-innovation in a way where the greater dependence on certain suppliers of choice does not increase risk.

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CPOs will also be able to proactively monitor risk and implement alerts for risk factors, considering internal performance assessments, supplier-provided information (e.g. certifications), and 3rd party data (e.g. predictive risk scores, geopolitical or environmental alerts). In addition, smart procurement enables the breadth and depth of collaboration required to ensure compliance with current and future regulations.

As 2018 continues to unfold, we are likely to see a barrage of risk factors, regulatory changes, and greater demand for innovation that the CPO, powered by smart procurement technology, will be able to tackle with minimal fuss.

Sourced by Alex Saric, CMO, Ivalua