Procurement & Supply Chain
What Boards Expect From CPOs
6 min read
The procurement landscape has fundamentally changed due to unprecedented levels of supply chain disruption caused by the pandemic. Lucy Harding, Head of our Procurement and Supply Chain Practice in the UK, outlines the five most critical concerns boards want their CPOs to address in this dynamic and challenging era.
As companies grapple with these disruptions, the role of the Chief Procurement Officer has never been more important.
Beyond managing supply chain chaos, procurement is now considered a key enabler of growth, a mitigator of inflationary pressures, and a driver of significant value creation. CPOs face several new pressures that compound the already challenging market conditions of recent years. These conditions have not only persisted but have, in some cases, intensified.
ESG standards, DE&I initiatives and right-shoring strategies remain key concerns of CPOs, boardroom conversations increasingly pivot to cost management, strong relationships, and digital capability within the supply chain.
1. Reducing costs
In an environment where most businesses face no or low growth, cost has become a strategic concern for boards. They expect their CPOs to prioritize cost reduction while maintaining supply chain reliability. This means identifying efficiencies and negotiating better terms without jeopardizing the stability and resilience of supply chains. Organizations need CPOs who can deliver significant cost savings as part of their strategic mandate.
2. Cultural and objective alignment
CPOs should align with the company’s culture and strategic objectives. This involves fostering strong internal and external relationships to drive value creation and achieve business goals.
A CPO who understands the broader business context and leverages this insight to create impactful change is highly valued.
Boards want leaders who can integrate seamlessly with the company’s ethos while steering procurement toward strategic success. Findings from Deloitte’s recent CPO Survey, produced in partnership with Odgers Berndtson, show this type of collaboration is currently the number one strategy for delivering value.
3. Capitalizing on technology
Boards expect CPOs to utilize advanced analytics and AI to optimize procurement processes. By harnessing data-driven insights, CPOs can make better decisions and drive performance improvements. A key aspect of this technological leverage is enhancing traceability across the supply chain, ensuring greater visibility and accountability.
Boards want tech-savvy leaders who can integrate cutting-edge tools to elevate procurement efficiency and effectiveness. Many CPOs are well underway, with Gartner reporting 58% of procurement leaders are implementing, or plan to implement, AI in the next 12 months.
4. Ensuring supply chain resilience
Given the persistent supply chain disruptions, boards expect CPOs to manage risks effectively and enhance supply chain resilience. This requires regularly assessing global sourcing strategies and maintaining robust supplier relationships.
While supply chain disruption has eased since its height in the pandemic, Deloitte’s analysis highlights an upward trajectory in disruption across supply chain, logistics and raw material costs from the beginning of 2024. This remains a front-of-mind challenge for boards, who expect CPOs to proactively address risks and ensure the continuity and reliability of supply chains in the face of ongoing challenges.
5. Integrating ESG initiatives
ESG considerations are now integral to procurement strategies.
Boards look for CPOs who can incorporate sustainable practices and manage Scope 3 emissions, aligning procurement goals with broader ESG targets.
Sustainability regulation has also increased more broadly with the ISSB’s global disclosure standards and the EU’s Corporate Sustainability Reporting Directive, mandating detailed company sustainability reporting. As a result, sustainability competence has become non-negotiable when hiring new CPOs, reflecting its critical importance in today’s business environment.
Essential capabilities for modern CPOs
To effectively address the multifaceted demands of their role, CPOs must master several key capabilities.
Ultimately, the business is looking for outcomes, which means CPOs need to be business first, procurement second.
Boards prioritize financial performance, and successful CPOs understand this. They see themselves as part of the business leadership and feel empowered and motivated to solve whatever the business problems are at the time. As a CPO, this requires alignment, adaptability and owning the status of leader – traits that are crucial for strategic success and highly sought after by boards.
Odgers Berndtson links global companies with leaders skilled in innovative problem-solving abilities to tackle supply chain challenges. Our executive search spans globally and across sectors, ensuring the best talent is identified to guide your business through change and transformation.
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