Over the past several months, Ardent Partners and IBM have worked to bring together several best-in-class chief procurement officers around specific themes with the express aim of garnering the best ideas, strategies, and practices that these industry-renowned experts use to drive top-flight results at their respective enterprises. Each roundtable is recorded and provided as a podcast for listeners to take advantage of the insights they might have missed. Our first, delivered last fall focused on collaboration strategies that CPOs could use to drive value and influence. This first recording can be accessed by clicking here.
This second installment, titled “Procurement Strategies and Best Practices to Increase Business Value in 2015 and Beyond,” (click to listen, no registration) focused on how procurement teams can link their operations to broader enterprise goals.
The CPO Roundtable Panelists
The panelists for our latest roundtable were Chris Shanahan, vice president of procurement and Becton, Dickinson, and Company, who has been responsible for global procurement operations since 2005; Bill McNally, assistant administrator for procurement and deputy chief acquisition officer at NASA, who directs procurement across the entire space agency; and, lastly, Dan Carrell, vice president of integrated supply chain, global operations, and client service procurement at IBM, who manages contracts across the company totaling $20 billion of spend. These three leaders have teams that that in aggregate total more than 4,500 procurement professionals and manage more than $75 billion in total spend. I served as the roundtable’s moderator and host.
CPO Roundtable Theme
In 2015, Chief Procurement Officers (CPOs) will seek to extract and deliver more value from their departments than ever before as they attempt to stretch the limits of their organizations while also maximizing the relationships they have developed with suppliers and internal stakeholders. Procurement’s ability to impact the business depends on each organization’s ability to master its processes and technologies and upon the ability of its leader, the CPO, to maintain the department’s focus on the larger goals and objectives of the organization. Our roundtable discussion focused on the strategies that these procurement executives use to link procurement operations to the right business results. Here are three of the many ideas, strategies, and examples share on the roundtable, one from each CPO.
Managing Seats in an IT World: The NASA Story
Bill McNally, the NASA deputy chief acquisition officer, told a compelling story of how his team worked to leverage the space agency’s capabilities with regards to IT services contracts. The procurement team at NASA performed a higher-level review of how its end-user “seat-license” IT contracts were structured and managed across the decentralized organization. Previously, the NASA let each decentralized ‘center’ manage its IT contracts independent of any enterprise-level coordination or oversight. McNally and his team worked to change that, setting up four enterprise-level contracts —for networks, business applications, web, and development needs—and leveraged the aggregated buying power of each group to drive better contracts across its IT spend. McNally’s team also pulled together a best-practices team to go through all the lessons learned during the process and, after examining what they went through, managed to save NASA several millions of dollars as well as giving them more consistent and secure IT services.
IBM and Stakeholder Engagement
For Dan Carrell, the IBM vice president, engagement with key stakeholders is a critical part of his job as a leader in the procurement sphere. While he has always had a tight relationship with the hardware side of IBM, the solutions organizations have had a much more nebulous relationship with the procurement function. To counteract this amorphous interaction, Carrell created a role called the Procurement Brand Manager that is embedded in each business unit so a procurement perspective is added into the solution development process at a very early stage. These procurement brand managers, Carrell notes, also understand the drivers of the business and can use that knowledge to more effectively link procurement into the process. As part of this, Carrell has also become more open with sharing procurement data, which has further served to drive engagement.
Becton, Dickinson, and Company: Engagement and Teamwork on a Global Scale
Becton, Dickinson, and Company’s (“BD”) Chris Shanahan emphasizes a focus on teamwork and engagement throughout the organization at large. To facilitate this, Shanahan has set up cross-functional teams throughout the BD global footprint to support traditional procurement activities but also help the company become smarter and improve customer satisfaction. Shanahan noted his team’s involvement on two executive initiatives: (1) “cost to win” which focuses on a combination of retaining existing business and winning new business by looking at overall production and delivery costs and (2) “zero escape” which analyzes product quality and draws linkages of that quality directly to suppliers Both initiatives help ensure that procurement is driving strategies that are linked to business requirements and have a tangible outcome. And all of this, according to Shanahan, relates back to satisfying the customer, a key objective for any business.
The procurement function has taken on a very different role in recent years, morphing from a function devoted to managing orders and facilitating materials into a team that can and does have a very real impact on the enterprise bottom line. The future holds many more changes like this, and leading CPOs like Shanahan, Carrell, and McNally are sure to be at the forefront of many of these shifts in the industry.