CPOs prioritizing reduced costs and risks, more sustainability for 2021

The procurement process certainly got complicated in 2020 and those difficulties have stretched into the first few months of 2021. Between the still-ongoing pandemic, delays related to the Suez Canal blockage, difficulties in procuring raw materials or finished products and more, the executives in charge of these efforts have a lot on their plates.

Even a year after it began, companies up and down the supply chain are still dealing with the effects of the novel coronavirus outbreak and are planning their long-term procurement strategies with these issues in mind, according to the latest 2021 CPO Agenda: 10 Key Issues Procurement Needs to Act on Now survey from The Hackett Group. Indeed, while 41% of chief procurement officers surveyed said that they were expecting conditions to return to pre-pandemic norms by the second quarter of the year, 36% felt the adjustment would take even longer.

The right investments will go a long way for your procurement operations.

For that reason, the respondents indicated that they were highly prioritizing spend cost reduction, ahead of any other considerations related to business processes, the report said. It ranked one spot ahead of reducing supply chain risk. Also of note: Building more sustainable and diverse supply chains crept into CPOs' top 10 priorities for the first time in the survey's history.

A modern approach
The ability of any logistics business to focus on more than one of their top priorities at the same time was underscored by the difficulties surrounding the pandemic, and that seems to have only accelerated a trend that had been building for some time, according to the Harvard Business Review. This means CPOs have to keep many plates spinning at the same time in terms of behind-the-scenes improvements, all while making sure their shipping and receiving efforts continue to proceed with little to no difficulties.

"Cost management still matters, but progressive procurement organizations have evolved to address nonfinancial aspects as well—priorities like innovation, risk management, resilience, and corporate citizenship," Shashi Mandapaty, chief procurement officer for the corporate tier at Johnson & Johnson, told HBR.

Strategic investments needed
Of course, to accomplish all of the above — and potentially more — it's important for CPOs to carefully examine how they spend money and whether they're maximizing the return on those investments on an ongoing basis, according to Spend Matters. Often, they may have to make the business case for tech-related upgrades to their existing processes, and that isn't always easy. It is, however, necessary when it comes to keeping up with the speed of the industry, especially amid the still-shifting landscape rocked by COVID.

The more you can do to take a top-down view of your procurement needs and what it will take to get you from where you are to where you need to be, the better off your company will be going forward. That starts with clearly defining your goals and aligning all of your procurement operations toward those endpoints.