Have you heard of a CEO named Tang Yu? Since taking over a China-based NetDragon Websoft in 2022, Yu has focused on the company’s strategic direction and operational efficiency with impressive results. NetDragon’s share price soon rose 10% on the Hong Kong stock exchange.
But here’s the plot twist: Tang Yu is an AI CEO. A press statement from the $10 billion-dollar company announced Yu will boost the speed of execution, optimize process flow, and improve productivity while acting as a real-time data hub and analytical tool to improve both decision-making and risk management.
And she’s not the only AI in a position of power.
In Japan, a robot named Michihito Matsuda ran for mayor of a Tokyo district and placed third after arguing that a politician’s main job should be to collect statistics from voters to create better policies.
Hot Take: Automate the CPO Role
You may also remember that Jack Ma, the co-founder of Alibaba, predicted that “in 30 years, a robot will very likely be on the cover of Time magazine as the best CEO.” Ma believed that the emotionless logic and efficiency of AI would give it a significant advantage over fallible human equivalents.
I'm going to be provocative here: organizations looking to slash costs should give serious consideration to automating their Chief Procurement Officer (CPO).
If an AI like Tang Yu can thrive in such a critical position, why shouldn't we consider the same for procurement leadership?
The Usual Assumption: Who’s Replaceable?
Historically, discussions around automation have focused on the lowest-paid workers—those in repetitive, manual roles—as the most replaceable by AI. But why stop there?
If we’re willing to consider the potential for AI to outpace humans in these entry-level positions, why not extend that logic to the highest-paid roles? A robot CPO never sleeps, doesn’t require an eye-watering CPO-level salary, and can process data faster than any human ever could.
What Does a CPO Do?
To understand the implications of automating the CPO role, we must first examine what a CPO actually does - concentrating first on the “numbers” part of their job.
- Tracking Performance: Monitoring KPIs and ensuring targets are met.
- Budgeting and Forecasting: Developing financial strategies and anticipating future needs.
- Assigning Tasks: Delegating responsibilities to team members.
- Decision-Making: Making data-driven choices based on metrics.
- Risk Assessment: Identifying potential pitfalls and mitigating them.
- Fostering Efficiencies: Streamlining processes to reduce waste.
- Crisis Response: Reacting swiftly to unexpected challenges—after all, robots never sleep.
According to McKinsey, approximately 25% of a CEO’s time is spent on tasks that machines could do. We can infer that this percentage may be even higher for a CPO, who often juggles a myriad of time-consuming responsibilities.
Decision Intelligence
Imagine an AI-powered CPO tackling these tasks effortlessly. With machine learning advancements, particularly in the field of decision intelligence, AI can enhance executive decision-making by linking data with outcomes. Major players like IBM, Google, and Alibaba are investing in this technology, suggesting that the future of procurement could be less human and more algorithmic.
Moreover, automating these functions could significantly reduce human error. In another McKinsey report, 72% of executives admitted to making poor decisions as frequently as good ones. An AI CPO, with its ability to analyze data without bias or fatigue, could potentially make decisions with a higher degree of accuracy.
The Human Side of the CPO
But the CPO role isn’t just about spreadsheets and analytics. There’s a vital human side to procurement that we can’t overlook:
- Setting the Vision: This is about crafting a strategic direction for the procurement function. A great CPO articulates a clear vision that inspires the team and aligns procurement goals with the broader objectives of the organization.
- Chief Relationship Officer: Building strong relationships with internal stakeholders and suppliers is crucial. A CPO needs to be a bridge between departments, ensuring everyone’s on the same page and that supplier partnerships thrive.
- Communication: A CPO must be able to share insights and updates in a way that resonates with various audiences, from the executive team to frontline employees.
- Culture Building: Establishing a positive working environment and driving change is essential for a motivated procurement team. A CPO fosters a culture where innovation and collaboration are encouraged, making procurement a dynamic part of the organization.
- Motivation: Inspiring the procurement team to strive for excellence is a big part of the role. This involves recognizing achievements, providing support, and creating an environment where team members feel valued and engaged.
- Relevance: Keeping procurement aligned with organizational priorities and staying in tune with market trends is crucial. A CPO must continuously adapt and evolve procurement goals to ensure they support the organization’s overall mission.
Do We Even Need the Human Side?
This begs the question: do we even need the human aspect of procurement?
If one holds the traditional view that procurement’s only role is to acquire goods and services while minimizing costs and risks, then perhaps a robot CPO is perfectly suited for the job.
However, if we envision procurement as a dynamic, value-adding partner within the organization—capable of identifying opportunities and driving innovation—then an automated CPO may fall short.
While AI offers incredible efficiencies and reduces the chances of human error, the relationship-driven aspects of leadership are just as important. As we look to a future where technology plays a bigger role, it’s essential to consider what we truly value in leadership and how we define the role of procurement.
Ultimately, the question isn’t just about whether we can automate the CPO role, but whether we should—and what that means for the future of procurement as a strategic function.
You might not be ready to automate the CPO role - but there are ways to improve the overall procurement experience. Download our playbook to learn more:
