COMMUNITY CHALLENGER REPORT – NETWORK EDITION

ANNUAL STUDY

STRATEGIC
PURPOSE-DRIVEN
PLANNING GUIDE
PROCUREMENT:
2023
ENTERING THE AGE
OF HOLISTIC VALUE
IN PARTNERSHIP WITH
IN PARTNERSHIP WITH

WWW.PROCUREMENTLEADERS.COM
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
CONTENTS

Executive summary 1

Introduction 2

Assessing procurement’s purpose 3

Proving the function’s worth 9

Preparing for the age of holistic value 11

About the research 16

Further reading 17

About Procurement Leaders 18

COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
EXECUTIVE SUMMARY

ADAPTING IN ANTICIPATION OF THE ERA OF HOLISTIC VALUE

AMID DISRUPTION AND TRANSFORMATION, LEADERS ARE EYEING THE OPPORTUNITY TO TAKING ACTION TO UNLOCK PROCUREMENT’S
COST REMAINS PROCUREMENT’S USP DEVELOP A MORE PURPOSEFUL FUNCTION POTENTIAL AND DELIVER HOLISTIC VALUE
Procurement functions have transformed rapidly Forward-thinking leaders increasingly consider Leading organisations are adopting a number
in response to the upheaval businesses have faced sustainability to be the procurement function’s of different approaches to help advance the
over the past four years. greatest opportunity. function’s value proposition to place a greater
Yet despite many purchasing teams’ efforts to A growing number of CPOs have told Procurement emphasis on environmental, social and governance
deliver a broader, deeper and more strategic impact, Leaders they believe their functions should use their considerations. These actions include:
many functions remain preoccupied with controlling spending power to help suppliers improve their
costs. This is evident from respondents’ views on sustainability record, develop the communities from Harnessing data to tell compelling
where procurement has had the greatest impact over which they source, as well as address social and stories about the sustainable value
the past three years: inequality issues. procurement can offer

Cost savings 70% “Procurement’s purpose used to be all Adjusting sourcing criteria to
ensure buyers include ESG factors
about creating shareholder value. It
Cost avoidance 39% has now expanded to creating value
in purchasing decisions

for our communities and driving

Supplier risk 38% Developing specialist teams to
sustainability through our supply ensure sustainability is embedded
Sustainability 23% chains while managing risk and within the DNA of the function
staying resilient. Procurement’s
Operational
efficiencies 23% purpose has become far more holistic”
CPO, pharmaceutical company

1
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
INTRODUCTION

PROCUREMENT’S ROAD TO 2030 STARTS NOW

The extraordinary events of the past four years have The ‘seat at the table’ that procurement functions
both disrupted and transformed procurement. gained following the tumult caused by the pandemic
First, functions pivoted rapidly to ensure business may not be a permanent invitation.
continuity amid the upheaval caused by the spread There is an alternative option for leaders,
of Covid-19. As the pandemic eased, the aftershocks however. One that requires vision, inspiration
began: materials and labour shortages, high inflation, and determination.
logistics delays, war in Ukraine. Following the successes they enjoyed
Amid the turmoil, procurement teams broadened during the pandemic, the opportunity
their focus beyond cost to other, more strategic exists for purchasing teams to
aims: ensuring supply continuity, mitigating risk, leverage their position to unearth
protecting revenue, fostering innovation and new sources of value in areas such
improving sustainability performance – to name but as risk management, innovation
a few. and sustainability – where
Colleagues in other functions took notice as procurement, more than any
procurement increasingly became a trusted adviser to other function, is uniquely
the organisation. placed to tackle the bulk of the
As disruption and inflation begin to ease, however, organisation’s environmental
CPOs find themselves at an inflection point. Does the and social footprint.
function return quietly to the back office? If they have the strength of
One recent poll suggests that may be the view of character to reimagine what
leaders in other parts of the business. procurement is and what it can
A Gartner study found that despite their vital be, the scale of the opportunity
contribution, the perceptions of supply chain teams for leaders to forge a lasting
as a strategically important function peaked at 56% legacy for themselves, their
in 2020 but have since dropped to 47% – lower than teams and their organisation
where it was in 2019 (49%). knows no bounds.

2
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
ASSESSING PROCUREMENT’S PURPOSE

ASSESSING PROCUREMENT’S PURPOSE: IDENTIFYING IMPACT AREAS

Despite many purchasing teams’ varied and frequent
FIG 1 AREAS IN WHICH PROCUREMENT HAS MADE THE GREATEST IMPACT (% OF RESPONDENTS)
successes in recent years, the survey results indicate
that procurement professionals consider functional
impact to be inextricably linked to cost. Delivering cost savings 70
When asked to identify where their function has Cost avoidance 39
been able to make its greatest impact over the past Reducing the likelihood or impact of supplier risk 38
three years, the majority of respondents pointed to
delivering cost savings, with cost avoidance in second Improving sustainability 23
place (see Figure 1, right). Driving operational efficiencies 23
Three-quarters of respondents to an April 2023
Improving supplier diversity and inclusion 18
Procurement Leaders pulse stated the urgency to cut
costs had increased since the start of the year. Developing team skills and talent 16
Considering buyers have faced a prolonged period Digitalisation 11
of high inflation, the fact most respondents highlighted
Improving cash flow/working capital position 11
savings as their top impact area may be indicative of
the depth of procurement teams’ skills in this area and Contributing to revenue growth 11
their ability to deliver to business need. Improving product and/or service quality 7
However, these findings reinforce the perception of
Driving innovation from the supply base 6
procurement as a cost controller. While it is a crucial
part of the job, it should not prevent procurement teams Supporting mergers and acquisitions 5
from making progress towards other important goals. Demonstrating ROI to the bottom line 4
Less than one-half of respondents cited risk
Asset-disposal activities 1
management as one of their top-three impact
areas while less than one-quarter said the same of Other 6
improving sustainability. Source: Purpose-driven function survey, Procurement Leaders, 2023

3
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
ASSESSING PROCUREMENT’S PURPOSE

UNDERSTANDING THE ROLE OF METRICS

Analysis of the metrics that procurement teams track
FIG 2 AREAS IN WHICH PROCUREMENT PERFORMANCE IS TRACKED BY METRICS (% OF RESPONDENTS)
helps to indicate why many organisations continue to
tie the function’s value to costs.
Delivering cost savings 93
Survey respondents indicated cost savings is the
most frequently used metric among procurement Cost avoidance 82
teams, followed by cost avoidance (see Figure 2, right).
Improving sustainability 73
More than one-quarter of respondents said they do
not have metrics in place for sustainability and, with it, Reducing the likelihood or impact of supplier risk 64
no means to track their progress in this area. Driving operational efficiencies 60
Similarly, more than one-third of respondents
revealed that their organisation does not have any Developing team skills and talent 58
metrics in place to measure supplier risk, indicating the Improving supplier diversity and inclusion 56
purchasing teams at these businesses are unable to
quantify the impact of their actions to ensure supply Improving cash flow/working capital position 55
continuity over the past few years. Digitalisation 45
For the CPO of one pharmaceutical company, some
Improving product and/or service quality 43
procurement organisations’ lack of sustainability
metrics is a cause for concern. “It is quite worrying that Contributing to revenue growth 39
27% don’t have any metrics to measure sustainability.
Demonstrating ROI to the bottom line 32
It clearly shows that sustainability is still not getting the
attention it deserves in real terms and that more needs Supporting mergers and acquisitions 20
to be done to bring it to the top of the list of priorities Asset-disposal activities 20
for procurement.”
Driving innovation from the supply base 18

Source: Purpose-driven function survey, Procurement Leaders, 2023

4
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
ASSESSING PROCUREMENT’S PURPOSE

SATISFACTION WITH METRICS

When asked whether they are satisfied with how
FIG 3 SATISFACTION WITH PROCUREMENT METRICS (% OF RESPONDENTS)
the function’s performance is measured, 26% of
respondents indicated that they were either somewhat
or completely dissatisfied (see Figure 3, right).
13 59 2 20 6
This indicates a broader concern around the
function’s lack of influence within the business (see
Understanding the impact of procurement’s influence ■ Completely satisfied ■ Somewhat satisfied ■ Neither satisfied nor dissatisfied
problem, page 11, for more).
Understanding who is responsible for setting ■ Somewhat dissatisfied ■ Completely dissatisfied
these metrics helps to illustrate why one-quarter

66% 13%
of procurement professionals indicated that they
are unhappy with the way in which the function’s
performance is measured.
Two-thirds of respondents said the organisation’s
CPO is involved in setting functional metrics. With
some leaders not involved in establishing their The proportion of respondents that said the CPO The percentage of procurement professionals
function’s key performance indicators, this may go is involved in setting the metrics by which their that said the organisation’s CEO is involved in
some way to explaining why these metrics do not cover procurement organisation is measured establishing procurement metrics
the full breadth of procurement’s value proposition at
many organisations. Source: Purpose-driven function survey, Procurement Leaders, 2023

5
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
ASSESSING PROCUREMENT’S PURPOSE

PROCUREMENT’S PURPOSE BEYOND COSTS

More than half of CPOs consider improving “Procurement’s purpose used to be all
sustainability performance to be the function’s greatest THE ESG OPPORTUNITY:
opportunity over the next three to five years, according about creating shareholder value. It

97%
to Procurement Leaders’ Ovation Pulse 2022. has now expanded to creating value for
Explaining the reasoning for their answer, one our communities as well, and driving
leader stated: “Given the current pressures that we
sustainability through our supply chains
face, it’s tempting to answer things like risk or revenue
protection. But we need to be mindful that our long- all the while managing risk and staying
Of procurement chiefs believe the function should
term focus should be on sustainability if we not only
help suppliers with a poor sustainability record
resilient. The function’s purpose has
want to achieve the ambitions of our corporations but, become far more holistic”

97%
more importantly, create an impact on the environment
and communities we live in.” CPO, pharmaceutical company
The CPO of a global pharmaceutical company
interviewed by Procurement Leaders for this report
echoes this view: “Procurement’s purpose used to
be all about creating shareholder value. It has now Of leaders think procurement should improve
the lives of others through its sourcing decisions
expanded to creating value for our communities as

86%
well, and driving sustainability through our supply
chains all the while managing risk and staying resilient.
The function’s purpose has become far more holistic.”
Given Scope 3 emissions can often account for
more than 70% of a business’s carbon footprint,
procurement has a crucial role to play in helping Of CPOs said purchasing decisions should help
organisations to meet their net-zero targets. But, as address inequality and social justice issues
the function continues to deliver on hard savings, are Source: Procurement Leaders Ovation Pulse, 2022
leaders missing an opportunity to build a legacy?

6
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
PARTNER’S PERSPECTIVE

THE
OPTIMISING DECISION-MAKING ACROSS BROAD PRIORITIES
Procurement’s role is increasingly a juggling act, “Automation of manual, transactional activity does not just improve operational
The
balancing
next three
different
years
objectives
will represent
that shifta instep-change
priority and efficiency; it also frees capacity for more strategic tasks and deeper analysis”
for
often procur
compete.
seeds of the function of the future begin
to Maximising
emerge (see Figureorganisational
13, page 28).valueThere requires
is an Alex Saric, Ivalua
opportunity
effective, and for agile,
procurement
optimisation. toTheevolve
right talent
towards
is a
being:
prerequisite. Besides process or category expertise,
digital,
● A highly
analytical
integrated
and soft business
skills are essential
partner, today.
more can access for a 360-degree view if they are to optimise great example, having unified supplier data across 25
Top-performing
closely aligned procurement
to strategic teams
enterprise
haveobjectives
upskilled decisions. The simplest and most effective way to do SAP instances globally to empower category managers
talent
thanaccordingly,
siloed spend through
categories.
training and/or updated so is with a unified supplier management platform to reduce costs while improving supplier performance
hiring
● T heprofiles.
centre G strategies for the enterprise. integrated to your back-end systems and third-party and relationships.
Yet talent alone is insufficient to meet the growing data sources. If you have already committed to a best-
demands on and complexity of procurement. Staff of-breed approach of disparate solutions, a separate AUTOMATION
must be empowered by technology to rise to today’s ‘data lake’ can help. Indirectly, digitisation also plays a key role. Automation
challenges. Effective deployment of technology helps This single source of truth should also include sub- of manual, transactional activity does not just improve
in four ways: tier visibility. Suppliers should be given direct access operational efficiency; it also frees capacity for more
to enter their sub-tier details as this reduces errors strategic tasks and deeper analysis.
TRANSPARENCY and effort and helps prevent duplicate entries. With Important lessons from teams that have achieved
Arguably the most important benefit of technology is the data in one place, it becomes possible to visualise the greatest levels of automation are:
in enabling quicker, more informed decision-making. supply chains and assess true dependencies. l Set ambitious targets. Often best-in-class is defined

The top three challenges identified in this survey If you face the added challenge of having existing as achieving 80% or so digitisation of the S2P
(see Figure 4, page 9) all involve data. supplier data dispersed among many ERPs, consider process. While that is a great improvement for many
To overcome these isses, staff should have access Master Data Management solutions, which are organizations, leaders greatly exceed that. CACI and
to a single source of truth that combines information embedded in some source-to-pay (S2P) suites, to unify Credit Agricole achieved virtually 100% digitisation.
generated in the source-to-pay process with supplier- that data. The requirements and approach to achieve that
provided and third-party data. Data will inevitably come A S2P digitisation initiative is a great opportunity to are often defined early in projects, so setting
from various sources, but staff need one system they fix existing issues. Chassis Brakes International is a an unambitious target can block you from ever

7
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
PARTNER’S PERSPECTIVE

THE integrate project management to maximise the impact. vendor adjusts its roadmap. No-code/low-code
DIGITAL DELIVERS FOR CACI Global Automotive Parts leader Meritor presents a configurability is becoming more prevalent for
great example, having digitised the entire product and this reason.
● More than 50% supplier reduction
● 
supplier life cycle, including new product introductions.
Virtually 100% paperless procurement and
The next three years will represent a step-change Despite periodic fears about technology displacing
accounts payable
for ● procur seeds of the function of the future begin AGILITY people, what we see is a symbiotic relationship.
More than 99% of 40,000 suppliers enabled
to emerge (see Figure 13, page 28). There is an
● 100% employee adoption
Lastly, keep in mind that requirements, priorities Technology frees and empowers talent to realise its
opportunity for procurement to evolve towards and conditions are rapidly evolving. Given today’s potential. For procurement, it is a critical enabler of
being: geopolitical environment, climate change and calls effective decision-making in our complex world.
● A highly integrated business partner, more for ever-more regulation, uncertainty is likely to
exceeding
closely aligned
it. For to
example,
strategic
ignoring
enterprise
requirements
objectives
of remain. Your technology choices can either stifle or DISCOVER MORE
your
thanmost
siloed
complex
spend spend
categories.
categories when selecting enable agility. l The path to greatness: How Chassis Brakes
● technology
T he centreensures
G strategies
that isfor
never
thebrought
enterprise.
into scope. Key elements to consider when looking to future- International drove a successful transformation
l Eliminate friction. Much of the inefficiency results proofing procurement include: across global procurement and supply chain
between processes, often from disjointed solutions. l Data model extensibility. Information sources and l CACI’s complete source-to-pay transformation

Ensure the overall S2P architecture provides a types continue to evolve. Five years ago, few planned l Crédit Agricole’s complete digital transformation of

seamless flow of information and activity throughout for the depth of Scope 3 emissions data that is now procurement with high ROI
the S2P process, with a consistent experience for available and increasingly required for reporting, as l Driving growth through supplier collaboration

users and suppliers. one example. Renaming existing fields or adding a at Merritor
few may not suffice. Being able to add entirely new
COLLABORATION tables, report on that data, incorporate into the user
Success increasingly requires close engagement interface and even intelligent workflows will ensure
with internal stakeholders and especially suppliers. you remain agile.
They are often the best source of ideas to avoid or l Workflow flexibility. If you need to suddenly modify

minimise tradeoffs. Technology can play a key role in processes, you should be able to do adjust workflows
enabling more efficient, effective collaboration. Look accordingly.
for solutions that digitise collaboration across the full l Self-service configuration. Agility requires being

supplier life cycle, enable secure sharing of information able to do the above quickly and simply – without
and documents, development of action plans and hiring consultants or, even worse, hoping your

8
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
PROVING THE FUNCTION’S WORTH

PROVING THE FUNCTION’S WORTH: DEMONSTRATING VALUE

When asked to identify the biggest challenges in
FIG 4 BARRIERS TO DEMONSTRATING PROCUREMENT’S PERFORMANCE (% OF RESPONDENTS)
terms of demonstrating the function’s performance,
many procurement professionals surveyed for this
Data management and analysis 57
report pointed to data deficiencies.
Looking beyond the technology at the function’s Limited visibility into supplier performance 38
disposal, 27% of respondents said their team lacks
influence over decision-making and 22% indicated a Siloed information systems 35
lack of executive support is inhibiting procurement Difficult economic and geopolitical environment 29
from demonstrating its performance to the rest of the
organisation. Lack of influence over decision-making 27
According to one procurement chief, a lack of Lack of executive support 22
influence can be a huge inhibitor. “Lack of influence
is a huge problem when it comes to areas where Outdated performance metrics 16
procurement needs to make bold decisions – such
Misalignment with enterprise-level targets 9
as sustainability or improving supplier diversity. If,
due to a lack of influence, procurement cannot make Other 11
bold decisions, then it can’t be a strategic partner to
the business.” Source: Purpose-driven function survey, Procurement Leaders, 2023
The procurement sustainability lead at one utilities
company tells Procurement Leaders that a lack of
early involvement continues to prevent the function
from adding value – despite its elevation amid the “There are always new projects getting started but innovation through the supply chain and bringing
disruption of the pandemic. “During Covid, we saw procurement is still only involved after everything in sustainability. These internal silos often result in
procurement’s influence increase significantly. We has been designed and finalised. Without that early procurement having to clean up the mess afterwards.
were assigned new strategic roles and were brought involvement in projects, procurement cannot do its We need procurement’s early involvement in projects
closer to the business. work properly in developing suppliers, supporting to avoid these situations.”

9
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
PROVING THE FUNCTION’S WORTH

FROM INVISIBLE TO INFLUENTIAL: GAINING INTERNAL SUPPORT

So, how can procurement gain greater influence and need to become better at promoting ourselves. If
more executive support? we solve the data problem, we can have those high- PLANNED DATA INVESTMENTS
During a recent Procurement Leaders CPO Connect level discussions and can gain more influence within

62%
Call, the head of governance at a life science company the organisation.”
noted the importance of stakeholder support in By leveraging data to demonstrate its potential
repositioning the function. They said the team focused impact on the business, procurement can make a
on gathering bottom-up support and selling the strong case to explain why it is integral to realising
concept internally to secure executive buy-in. enterprise-level strategic targets beyond cost savings.
The procurement chief at an auto parts manufacturer There is no quick fix for the problems procurement New tools
found success taking the opposite approach, engaging faces with data management and analysis, but there

57%
with senior leaders to identify growth areas. This has is hope the function will make a breakthrough on this
led the function to focus on leveraging the supply base front. According to the data from Procurement Leaders’
to improve sustainability performance and developing Data-enabled supply chain transparency report, 62% of
new service models. teams are planning to invest in new tools and 57% are
undertaking data quality initiatives.
IS INFLUENCE DATA-DEPENDENT? Given that procurement maintains this focus and Data quality initiatives
Some procurement professionals, however, believe continues to invest in this area, it will be in a stronger

44%
data is vital to winning influence. In an interview with position to overcome challenges pertaining to data
Procurement Leaders for this report, the head of management and analysis in the future. Having a
indirect procurement at one manufacturing company stronger grip on supply chain data will allow the
says: “Procurement’s lack of influence is a mindset function to provide evidence of its value.
problem. A whole generation of people still think
the function is only good for cost savings and isn’t New data sources
that important. I believe that mindset will change
eventually but we also need to change ourselves; we Source: Data-enabled supply chain transparency, Procurement Leaders, 2022

10
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
PREPARING FOR THE AGE OF HOLISTIC VALUE

PREPARING FOR THE AGE OF HOLISTIC VALUE: THE DRIVERS

What does procurement’s future look like and To realise procurement’s true potential – and to
how does that compare with where the function safeguard the business – sustainability will have to
stands today? become a bigger priority. However, among procurement
The head of functional strategy at a leading professionals who feel the function lacks both support
consumer goods company says: “Sustainability is and influence, there are concerns as to whether it
where procurement will make its mark in the future. can assume more responsibilities.
All the sustainability targets that organisations have A procurement executive at one chemicals
established cannot happen without procurement’s company says: “We are anticipating a
active involvement and support.” lot more due diligence work and we
In addition to organisational targets, several external are already stretched thin. We are
factors are driving the sustainability agenda – most responsible for so much and all
notably pressure from regulators and consumers. this additional work coming to
our desks is going to be difficult
REGULATION to manage for procurement
The regulatory landscape is changing – particularly in without additional support
Europe and North America – with a host of new laws and resources.”
coming into force that will impose more stringent ESG By making headway
rules on businesses. in data management
The German Supply Chain Due Diligence Act, for and analysis and
instance, which took effect on 1 January 2023, imposes leveraging its expertise
obligations on companies aimed at preventing human to drive sustainability,
rights and environmental abuses. procurement can
Failure to identify and remedy any violations could indeed elevate its
result in fines totalling up to 2% of the organisation’s value proposition and
annual turnover. It is likely that any fiscal penalty will be establish its role as a
compounded by severe reputational damage, too. trusted adviser.

11
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
PREPARING FOR THE AGE OF HOLISTIC VALUE

THE INFLUENCE OF CUSTOMER AND EMPLOYEE VOICES

Several executives who spoke to World 50 Group Similarly, research from Deloitte’s Consumer “It is about what your customers are
as part of The new customer project reported their Industry Center has found that employers with
demanding at the end of the day that
organisations have made cuts to ESG-related spending leading sustainability programmes have a distinct
due to economic uncertainty. These leaders cautioned, advantage in recruiting, engaging and retaining values- gets done. We measure and report
however, that customers still expect ties to sustainability driven employees. on sustainability and most of that is
and diversity – even if they do not necessarily want to Sustainability will leave a defining imprint on the because our customers demand it”
pay any added costs. Sustainability is becoming a non- future workforce and the consumer choices, both
negotiable consideration for consumers. of which will have a significant impact on the future Procurement director, technology company
Leaders within the procurement function understand prospects of a business enterprise.
this. A procurement director at one global technology A growing body of evidence indicates that

#1
company says: “It is about what your customers are sustainability is no longer a “nice to have”, it is now a
demanding at the end of the day that gets done. We “must have”. Organisations must come to this realisation
measure and report on sustainability and most of that and prioritise ESG accordingly. As stakeholders and
is because our customers demand it.” shareholders spend more time focusing on this topic, it
Businesses that have made sustainability is imperative that procurement is able to demonstrate C-suite respondents said employee reactions
front and centre of their mind have seen tangible the progress it has made on sustainability, as well as are the top consideration that influences their
benefits of taking such an approach. With increased the value it can offer in future. thinking when making complex decisions
customer satisfaction, investor interest and employee Source: Untethered World: Leading in a time of chaos,
satisfaction being the critical indicators of their World 50 Group, 2022
successful approach.
The Procurement Salary Survey 2023, meanwhile,
found that among procurement professionals
at director level who said they are considering
leaving their job in the next 12 months, 4% cited the
organisation’s ethical standards as their reason for
looking to move on.

12
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
PREPARING FOR THE AGE OF HOLISTIC VALUE

ELEVATING PROCUREMENT’S FOCUS: FROM COSTS TO HOLISTIC VALUE

While leaders consider sustainability to offer the “I might be able to get away with
greatest opportunities for the function, CPOs and
not having made advancements in
their teams face a significant challenge in winning
the support of others within the organisation – sustainability but I cannot afford to
despite many businesses having announced lofty miss my cost savings targets. It comes
ESG aspirations. down to what we can get away with and
The procurement chief at a pharmaceutical
company explains that organisational pressures
what we are held accountable for it”
are a major consideration in determining what the CPO, pharmaceutical company
function focuses on. “In truth, as a CPO, I might be
able to get away with not having made advancements
in sustainability but I cannot afford to miss my cost continue to face pushback when trying to grapple with
savings targets. It comes down to what we can get the more non-cost targets.
away with and what we are held accountable for.” An anecdote from the head of indirects at one
This is reflected elsewhere within the function. manufacturer helps bring the challenge to life: “We have
One head of indirect procurement at a manufacturing just done another round of pitching to the CFO asking for
company says: “Sustainability has to take the back seat investment in new procurement software that will not
when there is any kind of financial pressure. Spending directly impact cost cutting, but will be incredibly useful
an extra 15% with a more sustainable supplier is just in monitoring and assessing supply chain sustainability.
not on the agenda when cost savings are a priority.” The answer we got was not an encouraging one. When
A lack of influence and support is evident among we do the same for a tool that will help with cost savings,
those procurement functions that prioritise cost over it is a totally different conversation.”
all else, rather than accounting for the multitude of As the demands on the function continue to grow,
areas in which the modern procurement organisation procurement must align its long-term strategy with
can deliver value. business targets and retain sight of its future value
Although majority of procurement teams (77%) are proposition – one in which leaders are judged on their
aligned with enterprise-level strategic objectives, they impact on the planet, people and profit.

13
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
PARTNER’S PERSPECTIVE

THE
DRIVING RAPID, CONTINUOUS PROGRESS IN SUSTAINABILITY
Working with procurement executives at many of “Suppliers can help you refine your gaps. A growing best practice is to collaborate with
The
the world’s
next three
sustainability
years willleaders,
represent
Ivalua
a step-change
has found a targets and their buy-in is key. Simply competitors, who are likely asking many of the same
for
commonprocurframework
seeds of thefor function
success of – the
despite
futurethebegin
fact suppliers for similar data. The gold standard involves
to
thereemerge
is a great
(see
variety
Figure
of approaches
13, page 28).
and even
There theisbest
an
dictating targets to suppliers will often verification of your analysis by the Science Based
opportunity
continue to learn for and
procurement
adapt. to evolve towards simply move you to the bottom of their Target Initiative (SBTI).
being:
At its core is the empowerment of both preferred customers list”
procurement
● A highly and integrated
suppliers,business
as maximising
partner,
progress
more PLAN DEFINITION
requires
closelyaaligned
partnership.
to strategic
The enterprise
following should
objectives be Alex Saric, Ivalua With your baseline established, you can identify the
partthanof siloed
any serious
spendinitiative
categories.
to assess, monitor and highest-carbon suppliers and categories to prioritise
improve
● T he centre
sustainability.
G strategies for the enterprise. your efforts and define improvement targets. Engage
data. Being able to view all suppliers by category your suppliers when setting targets. This benefits you
INCENTIVES and all relevant information is fundamental to all of in two ways:
Leaders ensure teams are incentivised to prioritise procurement’s objectives, not just sustainability, yet First, you will learn which suppliers are willing to
sustainability with related KPIs tied to performance remarkably few have effectively done so. Establishing collaborate to improve and which you may consider
reviews and bonuses. Given the breadth of procurement a single source of truth, as discussed in more depth replacing. Second, suppliers can help you refine your
objectives these days, compromises will have to be earlier in this report, is critical. For example, IKEA targets and their buy-in is key. Simply dictating targets
made so ensuring incentives are aligned with company assesses 100% of its global suppliers annually on ESG to suppliers will often simply move you to the bottom
priorities ensures employees are not torn between leveraging the Ivalua platform. of their preferred customers list.
doing the right thing for the company and themselves. With an accurate view of what you buy from
whom, you can then build a baseline of your GHG SUPPLIER EMPOWERMENT
TRANSPARENCY emissions. This should be done at the category Leaders help their suppliers succeed. A key strategy at
Procurement teams must be empowered with the and supplier level, leveraging industry data sources most high-sustainability leaders is providing suppliers
visibility needed to make timely, informed decisions, augmented by supplier-provided emissions data. as much flexibility in how they meet requirements as
including optimising when tradeoffs must be made In theory, supplier-provided data would be most possible. Doing so not only improves sustainability
(that is, between cost, GHG emissions and risk). This precise but in practice many suppliers lack the performance, but also minimises any tradeoffs against
starts with gaining control of enterprise-wide supplier visibility so industry factor data will be needed to fill other objectives.

14
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
PARTNER’S PERSPECTIVE

THE
Leaders also digitise collaboration to enable
A FRAMEWORK FOR SUSTAINABLE PROCUREMENT
efficiency and scale (collaborating with more suppliers),
Sharing targets, dates, collaborating on product design 1. Incentivise procurement with sustainability KPIs and management by objectives.
and other aspects of the supplier and product life cycle 2. Gain control of your supplier data:
should
The nextbe digitised.
three years will represent a step-change a. Establish a single source of truth w/360 degree visibility.
forIdeally,
procurthis
seedscanofbe
theenabled
functiondirectly
of the through
future begin
your b. Map your sub-tier.
supplier
to emerge management
(see Figure platform
13, page 28).
for aThereseamless
is an 3. Baseline your GHG emissions at the category and supplier level and identify priority areas.
experience.
opportunity Iffor yours
procurement
does not support
to evolve
collaboration
towards 4. Set targets in collaboration with suppliers.
effectively,
being: or you have taken a best-of-breed approach, 5. Empower suppliers to achieve targets:
look
● A athighly
separate integrated
collaboration
business
tools youpartner,
can leverage.
more a. Digitise collaboration to enable scale and efficiency.
closely aligned to strategic enterprise objectives b. Provide suppliers flexibility in how meet requirements.
AUTOMATING
than siloed spend
SUSTAINABILITY
categories. 6. Automate sustainability in the procurement process.
Lastly,
● T he turn
centreyour
G strategies
informationfor
and
thepolicies
enterprise.
into results
by automating sustainable procurement in your
workflows. For example, you can prioritise or filter
products visible to employees based on emissions.

DISCOVER MORE
l IKEA: How to successfully integrate sustainability
into the overall supplier strategy
l Report: The race towards carbon neutrality:

Procurement on the frontline

l Report: Circular economy: Opening new

routes with procurement

15
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
ABOUT THE RESEARCH

ABOUT THE RESEARCH ABOUT OUR PARTNER

This report incorporates the findings of a survey completed by 141 respondents
between April and May 2023. The survey findings have been supplemented
by interviews with senior procurement executives, as well as insights from
Procurement Leaders strategy cohort discussions.
Ivalua is a leading provider of cloud-based spend management software.
Ivalua’s complete, unified platform empowers businesses to effectively manage
ABOUT THE AUTHOR all categories of spend and all suppliers, increasing profitability, improving ESG
performance, lowering risk and improving employee productivity. Trusted by
ABUBAK AR MEHDI hundreds of the world’s most admired brands and recognised as a leader by
Research and community manager Gartner and other analysts, Ivalua maintains the industry’s leading customer
Procurement Leaders retention rate. Learn more:
www.ivalua.com
Abubakar is a senior analyst and community manager
at Procurement Leaders, where he leads the Risk and
Sustainability Cohort and is also responsible for conducting
research into a variety of topics. He has a background in
law and his research interests include sustainability, risk
management and regulatory compliance.

FURTHER INFORMATION AND FEEDBACK

If you have enjoyed this report, would like some more information, or feel it has
not met your expectations, please contact:
[email protected]

16
COMMUNITY CHALLENGER REPORT: PURPOSE-DRIVEN PROCUREMENT – NETWORK EDITION
FURTHER READING

OPEN RESOURCES FOR PROCUREMENT LEADERS MEMBERS

● C ASE STUDY: The path to greatness: How Chassis Brakes International drove ● C PO CONNECT CALL NOTES: Prioritisation, cooperation and story-telling:
a successful transformation across global procurement and supply chain How CPOs and their teams are contributing to growth

● CASE STUDY: CACI’s complete source-to-pay transformation ● C ASE STUDY: UCB’s approach to embedding a culture of sustainability
in procurement
● CASE STUDY: Crédit Agricole’s complete digital transformation of
procurement with high ROI ● C ASE STUDY: UCB’s approach to measuring procurement
sustainability progress
● CASE STUDY: Driving growth through supplier collaboration at Merritor
● C ASE STUDY: The Scottish Government’s approach to evaluating
●  ASE STUDY: IKEA: How to successfully integrate sustainability into the
C sustainability in tenders
overall supplier strategy
● REPORT: The new customer: Patterns and personas
● R EPORT: The race towards carbon neutrality: Procurement on the frontline
● REPORT: Untethered world: Leading in a time of chaos 
● R EPORT: Circular economy: Opening new routes with procurement

17
ABOUT PROCUREMENT LEADERS
The global community for CPOs and their leadership teams

SIX GLOBAL OFFICES

290+
Corporate member companies

35,000+
Senior leaders

165+
Procurement solution providers

62,000+
Active members

2,700+
Event attendees annually

Join us in making procurement a critical business driver

35+
Member countries
Learn more: procurementleaders.com