7-Point Plan for Building a Procurement Powerhouse 7-Point Plan for Building a Procurement Powerhouse

The clue might sound like it's in the job title. The narrow, traditional view of a chief procurement officer is that they organise the buying of stuff — even if some of that isn't stuff at all but services — in a timely, efficient, and cost-effective manner. There's only one problem with that view — it's wrong.

The CPO's remit has changed radically with the advent of globalisation. Efficient procurement is now a strategic asset as multinationals calculate where best to buy stuff — be it raw materials, manufacturing plants or labour. Digital technology has expanded procurement's remit — and the demands on the function — exponentially.


Jamie Ogilvie-Smals, vice president at GEP, global provider of procurement consulting, services and software to large companies across the world, says: “In an environment where durable competitive advantage is the exception, rather than the rule, the CPOs we see being highly successful are those who fully understand how procurement can impact strategic business objectives, and align their teams to do this.” Today's highly effective CPOs need to adopt these seven habits ...


Think Strategically

Every company wants to get to market quicker but how do they achieve that? Logic suggests that CEOs and CFOs would talk to the CPO who runs the supply chain that delivers products to the customer. Yet too many boards regard procurement as a tactical function, albeit with spending power so it is up to CPOs to show their strategic worth. — You need the right mindset to do this: the best-performing procurement chiefs will have a broad range of issues (competitors, company culture, risk management, value creation) on their radar.

Align Procurement To The Business

You have to decipher your business’s objectives to succeed. This isn’t always easy as organisations often have competing priorities and sometimes the connection between strategy and day-to-day decision-making is — unclear but CPOs need to align their function to the business and, as a member of the managerial team driving — the business, engage early in the decision-making process so they can influence thinking.

Drive Innovation

Innovation isn’t all about paradigm-shifting new products. As management guru Peter Drucker said, innovation is “a change that creates a new dimension of performance.” So it can happen anywhere it could be using the latest — technology to simplify a process (or create a new one), perhaps applying a completely new approach to category management, collaborating with suppliers, customers and third parties to develop a faster route to market. Momentum is key truly innovative companies don’t bask in their success, they build on it.

Dare To Differ

Most companies think they know where they derive their value from, but do they? As a CPO, you probably have fingers on more pulses than anyone else in the organisation, so don’t be afraid to do some forensic analysis and challenge the status quo. At worst, you will have proved you are not afraid to think creatively. At best, a bold new alternative may yield greater rewards than the customary focus on continuous improvement.

Promote Procurement By Storytelling

Managing upwards — or sidewards — has not traditionally been one of procurement’s strengths. It needs to be. Collaborating with finance, sales, marketing and operations, procurement can help anticipate market fluctuations, make supply chains more resilient and save money. The better managers understand procurement, the more likely they are to invite you to shape strategy. CPOs need to be able to visualise procurement and the value that it brings to an organisation. In an age of shortening attention spans, make sure to turn your successes into stories or sound bites.

Manage Change

You need to be at the hub of the conversations about value in your business. To do that, you need to motivate people who don’t report to you and develop a network of contacts inside and outside the business to help you hear what is happening. Listening to the outside world is something most companies could be better at, and, by having the right conversations with suppliers and other third-parties, you can take the lead on this issue. As CPO, the role of change agent falls to you you should be able to see change before anyone else and share that with stakeholders to create — or protect the value of your business.

Recruit a Diverse Team

The biggest mistake you can make is to hire a team of people who are just like you. As the demands on procurement become more complex, varied and time-critical, you need a diverse blend of experience to cope. And diversity isn’t just about race and gender though that is a large part of it it’s about diversity of background, experience and — — thought too. You never know when a particular skill, lesson or thought process will prove valuable. Eclectic procurement teams, encouraged to share their different opinions, can also help stimulate innovation.


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Theme: Procurement