CPO Crunch: Measure more to drive impact

David Rae

Procurement's value contribution goes well beyond cost, but few teams are actively measuring it

Those who attended the World Procurement Congress a couple of weeks ago will have heard that Procurement Leaders is celebrating its 20th anniversary this year.

During that time, the procurement profession has changed significantly – evolving from back-office afterthought to a function of board-level, strategic relevance. How we bring value has changed and how we measure our value has changed as well. 

There is a little bit of poetic licence here – procurement has always been relevant and a recognised contributor to enterprise value – but the scale of that impact, the scope and breadth of the contribution has grown beyond all recognition.

The focus of that contribution and the way in which leaders address it was the purpose of a snap poll I ran at the opening of the Congress and around 400 people responded, providing a great insight into the procurement profession of today. 

Some 82% said that on top of savings, they were measured on risk reduction and mitigation. Meanwhile, 70% said they measured sustainability improvement, 54% said revenue contribution and 27% said enterprise talent contribution. (For what it’s worth, I found the latter of these to be pleasingly high.) 

Although some of these stats are certainly encouraging, and it’s gratifying to see how CPOs are actively measuring impact across such a wide range of strategic areas, there is still much to be done. 

For example, just 16% of those who responded to the poll said they measured all four areas of impact on top of cost. While this increased to one-quarter of respondents who said they report against three of the areas, the question that springs to mind is: why? 

Why aren’t more one in every six procurement functions measuring their impact across all of these areas? They are, after all, fundamental to the realisation of enterprise value. 

The point here is not that every procurement function globally should be delivering significant revenue impact, high-potential talent, risk reduction and sustainability improvement to the wider business.

The very clear and salient point is that every procurement function should be aspiring to do so. 

As everyone knows, and as Peter Drucker once said, you can’t manage – or improve – what you don’t measure.

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