“The most successful procurement teams have a strong ability to articulate what they’re doing in the context of overall business objectives.” – Aaron Addicoat, Senior Manager at Deloitte
Even in the face of challenges like global supply chain disruption, inflation, talent shortages, and the pandemic, “Orchestrators of Value” have emerged as procurement’s highest-performing cohort, delivering outsized impact in terms of savings, performance, and relationships.
What are they doing differently to get these results?
At the end of 2022, Deloitte surveyed a large crop of CPOs around the world to calibrate who the high performers are and gain insight into what this cohort is doing differently to achieve results. Their 2023 Global Chief Procurement Officer Survey from Deloitte breaks down the strategies and approaches that distinguish those high performers from their peers.
To get a better understanding of what characterizes an Orchestrator of Value, what they do differently, and how procurement can adopt and apply these strategies, I recently spoke with Aaron Addicoat, Senior Manager, and Ryan Flynn, Principal, both from Deloitte, about the survey findings.
What is an Orchestrator of Value?
Procurement is increasingly tasked with taking on new challenges and priorities for the business, opening up new opportunities for value creation. This expansion is taking place against the backdrop of a global pandemic, inflation, supply chain disruptions, and a war for talent.
“We have a growing number of priorities and a growing relative importance of each priority, and the fact that procurement can contribute to all of them means there are many things procurement can help with that traditionally we weren’t asked to do,” said Aaron.
In the face of these challenges, say Aaron and Ryan, we’ve seen the rise of what Deloitte calls Orchestrators of Value, or those procurement high performers, who are leading in key performance areas and driving outsized value for the business, despite the headwinds.
Orchestrators of Value, as Ryan notes, are keen on “managing the performance of their supply base, the risks in their supply base, and even driving more innovation from their supply base.”
In the same way musical orchestra conductors bring together different instruments to form one cohesive production, procurement Orchestrators of Value are focused on the right priorities, pulling capabilities and resources from the right places, and developing the right sorts of relationships across the c-suite and broader functional areas of the business to create a symphony of value that reverberates across the business.
Specifically, Orchestrators of Value are characterized by their success in three key areas:
Operating models
By automating or outsourcing transactional activities, centralizing and standardizing operations, and bringing in hybrid managed services and on-demand external support, high-performing procurement organizations free up their core team to focus on more strategic initiatives. While smaller organizations might not have the resources to scale centralization, they may end up relying more on external resources.
Talent strategy
Attracting and retaining the right talent is a consistent challenge for procurement.
Nearly 90 percent of procurement leaders surveyed agreed that talent is the single greatest factor driving procurement performance, yet around 50 percent said they don’t believe they have the talent they need. This is where Orchestrators of Value demonstrate differentiated thinking from competitors. Orchestrators of Value, the survey found, are 60 percent more likely to invest in managed service models and deploy a broader set of talent levers, such as 360-degree feedback, graduate program sponsorships, and job swapping. They also look within their own organizations for high performers from other functions who can be trained in procurement.
But there is still opportunity for procurement, even at the highest performing level, to improve their strategy, say Aaron and Ryan. They cite sourcing and category management as the biggest investment procurement are making in talent, but they advise this shouldn’t come at the expense of ignoring the significant gap in digital skills teams should be hiring for, and doing so will even better position procurement as an Orchestrator of Value.
Digital maturity
Orchestrators of Value leverage AI for automation and digitize their processes wherever possible, and many also use AI for optimizing order processes, modeling, and forecasting. According to the survey, they spend on average 20 percent less time on transactional activities, automating and outsourcing those in order to focus on strategy and relationship management.
And while adopting emerging technologies like AI can be intimidating or overwhelming, Aaron and Ryan advise procurement not to delay taking on full digital transformation.
“The more that you delay digital transformation, the more you’re putting off the value you can get for the transformation and the ability to expand the strategic purview of your procurement organization to deliver more value to the business,” said Ryan.
More Opportunities for Expanding Procurement’s Value Creation
In addition to these key areas, procurement Orchestrators of Value are also focused on expanding their role at the enterprise level and looking for new ways to contribute value to the business, through things like operational efficiency, ESG, cost reduction, growth, business relationship management, supplier relationship management, and demand management.
CPOs view these areas, the survey found, as holding the most potential for procurement to contribute value going forward.
The Role of Branding and Reputation in Value Delivery
Procurement is well aware that there is often a disconnect with other functions in the business who either don’t understand or underestimate procurement’s full capabilities. But Orchestrators of Value don’t just get results for the business, they know how to overcome this challenge by effectively communicating their value and then leveraging that communication to create more opportunity for themselves.
It’s time, Aaron and Ryan say, for procurement to get serious about how to position their brand internally. “We need to think about how we brand what we are and what we do within our own business in order to drive impact; we have to speak the right language that resonates with the business,” said Aaron.
Understanding how to articulate their value proposition as a team is a fundamental characteristic of an Orchestrator of Value, as this strengthens procurement’s reputation internally and draws a clear line for all to see between procurement’s value and the ability for the business to achieve its goals.
To be an Orchestrator of Value, said Aaron, “you have to have the vision and the connectivity to the broader leadership team and be able to speak the language … you have to have a vision that ties to the enterprise vision.”
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Links & Resources
- Aaron Addicoat on LinkedIn
- Ryan Flynn on LinkedIn
- 2023 Global Chief Procurement Officer Survey
- Subscribe to This Week in Procurement
