The Digital CPO: Why Procurement Leaders Must Lead the Digital Revolution Charge for Their Organizations (Part 1 of 2)

In the late nineties and early 2000, when the first “automated” procurement platforms emerged, many in the purchasing profession reacted with a combination of wonder and fear.

Wonder in that the new technology could deliver amazing results within a fraction of the time than was previously possible with manual processes, and fear that it would replace humans. Based on the early assessments, such concerns were not entirely without merit.

Perhaps this is why during an early CPO Agenda roundtable discussion, top procurement executives from notable global brands concluded that “one strategic thinker, was worth more than ‘ten’ everyday, run-of-the-mill buyers.”

Of course, recognizing the need for procurement teams to evolve and take the appropriate measures to facilitate the transition from a functional to a strategic role is very different.  

Fast forward to the present day, and while there have been even more amazing advances from a technology standpoint, for many procurement professionals, the fear of technology has not dissipated. In fact, with each incredible breakthrough, it has increased.

This first of a two-part article focuses on how CPOs can address the longstanding fear and help their teams transition to a different, more critical role in a technology-driven world.

The Digital CPO

The Sourcing Solved article “How to Succeed as a CPO in the Digital Age” talks about the five things that CPOs must do to hire and manage an effective procurement team.

Of the five—all essential—the one that stands out regarding this article is how CPOs must become comfortable and confident with carrying the technology banner.

While the natural inclination is to look to the IT department for such leadership, in reality, technological advancement is the primary responsibility of the procurement department—at least according to industry studies.

For example, a Gartner study referenced in the above article reports that “70 per cent of enterprise digital transformation will be facilitated through an organization’s supply chain” and that “bridging the disconnect between digital promise and realization will fall squarely on the shoulders of the CPO.”

Recognizing the need to step into a digital leadership role, what does this mean in a practical sense for CPOs?

Ironically, facilitating their teams’ transition has less to do with the technology and more with developing and enhancing soft skills.

Quantifying Soft Skills

What is the first thing that comes to mind when you hear the word soft skills?

For many leaders, it represents highly desirable characteristics or traits that are difficult to assess and therefore present a challenge from the standpoint of tangible measurement and their corresponding benefits.

In the context of developing and empowering the procurement professional’s strategic capabilities, Peter Drucker’s assertion “if you can’t measure it, you can’t manage it” is poignant. After all, how can CPOs make the transition from measuring the hard number accounting of transactional cost savings to interpreting the return on soft skills that are virtually impossible to quantify? It is the classic “between a rock and a hard place” scenario in which technology takes over the job’s transactional aspects. As a result, procurement professionals are “forced” into a strategic role in which quantifying the value is elusive.

How do you measure the value of behaviors, emotions, and experience? What is even more challenging is how do you justify the investment in developing said skills.

The starting point is understanding what it means to become relational in the digital age from in the context of human intervention.

In part 2, we will delve into this last point in greater detail.