CPO Crunch: Position procurement as an investment to maximise
Procurement Leaders | A World 50 Group Community
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During a recent Procurement Leaders’ CPO Connect call, the CPO of one of the largest companies in the world shared how the senior leadership team had recently been emailed by the CFO.
With a huge focus on headcount control, the email suggested each senior leader should explore which positions and roles might be carried out by AI agents in place of humans. The offered an insight both into how boards are viewing AI, and the type of impact artificial intelligence is likely to have on procurement.
The potential longer-term impact of the technology is by no means net positive for the function, especially when many CEOs and CFOs view it as a means to improve efficiency and push greater margin, rather than as an enabler of growth or innovation. (I’m sure the email referenced above didn’t suggest that whatever savings were made could be invested elsewhere.)
I’ve noted in an earlier CPO Crunch how the procurement function of the future will have reduced headcount compared to today, and that leaders’ priority should be to defend budget even if headcount is reduced. Emails such as the one sent by our friend the CFO suggest that the battle will be tough.
This is a potentially dangerous time. As technology improves, whole swathes of the procurement process will be automated, resulting in a leaner operation that CFOs see as a cost centre.
Meanwhile, the potential for procurement to drive top-line impact through revenue contribution, supplier-enabled innovation and sustainable growth programmes has been marginalised by the need to respond to crisis after crisis.
As such, CPOs must embark on an internal tour of influence. They need to reignite and excite key stakeholders on the importance of supplier-enabled growth. They must remind the board that third-party cost should be seen as an investment to maximise, not a cost to minimise.
Further, leaders must be clear how artificial intelligence will be an enabler of that, rather than the barrier it might otherwise become.
SVP & Head – IT Procurement | Driving Governance, Compliance & Cost Excellence | Fellow - Institute of Directors (F-IOD) | Certified Professional Sales Person (CPSP) | Certified Strategic Procurement Professional (CSPP®)
1wBuvanesh Tharashankar this is a useful introspection of our function. Maybe our short term strategies should focus more on such turnaround in democratising value.
SVP & Head – IT Procurement | Driving Governance, Compliance & Cost Excellence | Fellow - Institute of Directors (F-IOD) | Certified Professional Sales Person (CPSP) | Certified Strategic Procurement Professional (CSPP®)
2wIt’s time to reframe procurement. Let’s move beyond savings and compliance, and toward value creation and enterprise growth. CPOs are ready to lead the charge—but they need the board’s support to truly transform the function. Traditionally, third-party spend has been viewed as a cost to minimize. But in a world where agility, innovation, and speed-to-market are competitive differentiators, this view is outdated. Procurement spend should be seen as an investment to maximize—one that fuels transformation across the enterprise. Whether it’s co-developing new products with suppliers, accessing emerging technologies, or building resilient supply chains, the procurement function holds the keys to strategic advantage. Board members play a pivotal role in enabling this shift. By elevating procurement to the strategic agenda, boards can: * Encourage cross-functional alignment around supplier-enabled growth. * Support investment in procurement capabilities and technologies. * Champion a culture of innovation and collaboration with external partners. This isn’t just a procurement issue—it’s a business imperative. #BoardLeadership #StrategicProcurement #SupplierEnabledGrowth #EnterpriseValue #CPO #InnovationThroughPartnership
Global Procurement Transformation Leader and Consultant for multinational corporations, lecturer and Co-Author of "Procurement Confidential" - the real story of how business gets done.
3wI predicted this exact scenario to happen 18 months ago as the first AI tools were being released. Instead of it being used by Procurement as a huge enabler of innovation, it was going to be used by CFOs as an organizational downsizing tool against Procurement as part of an efficiency/productivity strategy to reduce G&A costs. Procurement still has not broken out of its shell, still seen by CFOs as a cost unit performing a function no different than accounting, A/P, A/R, tax, treasury or QA. I saw it unsuccessfully competing for AI resources from Finance against Marketing and Sales and NPD/R&D because it still defined itself as a “Savings R Us” / “ Negotiations R Us” / “Contracts R Us” command & control function not tied to corporate goals of revenue & market share growth . I have seen the enemy, and he is us.