In the first part of a two-part series, we look at what organisational boards are expecting from CPOs and the procurement function.
Purchasing, Procurement, Strategic Sourcing, Category Management, Spend Management, Supplier Relationship Management…the list goes on.
The Procurement profession has created a myriad of titles over the last decade, which can be confusing to those not involved in the function. To complicate matters further, the role of procurement varies by industry depending on its strategic dependence on third party suppliers.
Regardless, the “bread and butter” role of procurement remains a valuable function of any business – to source fit for purpose goods and services and to deliver on time, in full and at the right price to meet the business needs.
Procurement has been moving up the corporate structure, gaining visibility in the Boardroom over the last decade or so. Today, it is increasingly viewed as a function that can offer significant strategic value. Effective strategic procurement has become a Board priority.
Establishing Good Practice
For some CPOs, their focus is on limiting exposure to commodity price fluctuation and managing supply chain risk. This comes not just in the form of supply chain disruption but increasingly reputational risk, exacerbated by the social media phenomenon. For others, it is harnessing innovation from the supply base. In addition there is the ever present expectation to deliver cost savings.
The challenge is to deliver this within a complex matrix of geographical regions and business divisions. The Procurement Leader of today must exhibit a high level of leadership capability, personal gravitas and cultural dexterity. Creating the balance between global strategy and local need is an ever present conundrum.
Establishing good procurement practice is fundamental to building the trust with business stakeholders and the Board. Building strategic partnerships with suppliers can prove vital in stormy economic times and constrained supply markets, and will be a valuable competitive advantage in a more buoyant global economy. Increasingly important is the on-going management of suppliers in terms of service delivery and cost management.
More focus is required to harness supplier relationships that drive innovation as an enabler to improved quality, productivity and speed to market.
In the second half of this series, we will be looking at what a Board looks for when hiring its CPO, and what they are expecting from these individuals once they are in place.