Over the next few weeks we will highlight some of the outstanding executives that are presenting at the CPO Rising 2016 Summit. It is fitting that we commence this series with our CEO Keynote Speaker.
Ardent Partners is excited to announce CEO Louie Psallidas as a keynote speaker at the upcoming CPO Rising 2016 Summit this March 29 & 30 in Boston. Louie will present The CEO’s View of Procurement: Strategies to Engage the C-Suite. A common challenge for CPOs is getting a seat at the executive table. As a current CEO and former CFO, Louie has spent his career in the C-Suite. Attendees of event will hear first-hand what a CEO wants from the CPO and what the CPO can do to gain alignment with the CEO, be a better partner with the business, and gain a stronger voice in the C-Suite. CPOs and other procurement executives will not want to miss this exciting session.
Over the last 30 years, Louie Psallidas, President and CEO of Uno Pizzeria & Grill and Boston-area native, has risen up through the ranks of the restaurant industry to lead one of the biggest restaurant brands in the country. He served as Chief Financial Officer (CFO) at John Harvard’s Brew House, Papa Gino’s, and Uno’s before ascending to the role of CEO in 2014. His blend of industry experience, financial acumen and operational efficiency, along with an eye for the customer experience, gives him a unique perspective as he leads Uno’s “from two feet over” from his former seat as CFO.
On to the interview….. Last month, we interviewed Louie on his background and career, and heard his thoughts on how and where procurement fits within business today. Here is the second in a two-part Q&A series between Louie and Andrew Bartolini.
Andrew Bartolini: So, in talking to some CFOs and some CPOs, it’s almost like the transition that procurement is trying to enable – it’s years beyond, but it is following the same path as finance – it’s almost like changing the role of procurement from one of controller to one of treasurer. Maybe the analogy’s not exactly perfect, but it’s one where you move from command, control, visibility, and compliance to value-added partner, stewardship, guiding stakeholders to make smarter decisions, and fostering more opportunities in the marketplace.
Louie Psallidas: That’s a good analogy and the right mindset if you’re looking to become a strategic partner to the CEO. I have a brand-new CPO that just joined us 30 days ago; those are the conversations that we have. My analogy in the hiring process was, “I have a person who is a purchasing agent in the top seat of our procurement organization, and that isn’t satisfactory. I need a strategic partner.” It’s sort of the accountant analogy. I called him a purchasing agent; he was pretty good at buying stuff. But he really wasn’t great at managing all of the risks associated with the supply chain.
AB: Right. In many ways, that’s very emblematic that something like that can rise to the level of the CEO to make that determination. Let’s rewind back to your post-Deloitte years. As you started working in the food service industry, did you engage with procurement at points in time, or did it really depend on the situation and the company? And as you advanced along your CFO career, how did you engage with procurement, if at all?
LP: It’s a great, thought-provoking question. As I reflect on it, I would say that initially I had very limited interaction with purchasing. Over time, as I grew and matured, I began to see more and more of the value, or in some cases, lack thereof that was coming from it. Eventually, I had a seminal moment that made me go, “Holy crap, we’re not paying enough attention here!”
It was back in 2005-2008 when commodities just exploded. Anything we tried to hedge from energy, wheat, milk, you name the commodity, it was just out of control. It really brought to light how we are managing risks in the commodities. Do we have the appropriate risk management protocols in place in the areas that you don’t normally think about? So, it really opened up the organization’s eyes.
In the pizza industry, for example, I remember very clearly. You just can’t charge more than $10 a pizza; that is a set price in the market. So you have to eat cost increases. If you have to pay $2 a pound for cheese, that’s your problem – you can’t pass that along. So for me, that really highlighted the risk. It was a seminal moment during that very tumultuous time in the commodity markets.
AB: Yes, and again, your experience there really dovetails with what our research has shown over the years. Let’s rewind to the late 90s – early 2000s, when procurement and finance came together in a very ad-hoc way. Maybe it was around budgeting time, but they really weren’t functional partners. But there’s a lot of value that procurement can deliver that doesn’t hit the general ledger. So there’s a disconnect, but it really did take that seminal moment that you experienced, more broadly across regions, industries, and company sizes, too. That’s where what I would call a detente occurred between the CFO and the CPO. And now things are much more collaborative in general with organizations, by in large by necessity. You can’t have groups operating in silos.
LP: This is great timing because I’m sure you read about Chipotle and what they’re going through. I spend more time now talking about it. It’s a great case study – if there was ever – that shows the importance beyond cost of the CPO, right? This is really going to be a focal point of my presentation. I read every single shred about Chipotle because I hold them in very high regard – that is a good company, and sometimes bad things happen to good companies, and that’s what happened here.
If you sort of read between the lines, what they said is that it’s much more cost effective to have produce locally sourced from the small farmer so that it has all the right talking points from a guest perspective – i.e., local, small farmer, small batch, you know, all of those talking points – and ultimately it cost less. But you give up a lot of controls when you have that. Those small guys don’t necessarily have either the knowledge or the capability to clean that produce in the right way, so that responsibility transfers to you. And if you don’t do it correctly, you wind up with these kinds of situations.
AB: Yes…. These things are very front and center in your industry and we see procurement on point for that.
LP: Absolutely. This is a HUGE value-add area for procurement professionals and I’m sure it transcends in other ways to other industries; I can see it applying to medical device, pharmaceutical, all up and down the industry spectrum.
AB: So let me ask you, as you look out into 2016 and you’ve got your CEO’s agenda, what are some of the things that you’re most focused on, procurement-related or not?
LP: As we laid out our strategic plan for the coming year, one of the things that we’re going to continue to focus on is, “What is our North Star? What is our number one, most important, non- negotiable, take-no-prisoners value? That is going to be food quality. I literally hit the send button on an internal email before this call outlining the list of things that we agreed are investment considerations for the food program next year – where are we going to invest our capital and continue to upgrade our food? Supply chain plays a really important role in that. Also, our CPO is on that committee. For example, we really want to upgrade from Chilean salmon to Norwegian salmon, but that has a cost associated with it. How do we minimize that? And how do we ensure a safe and continuous supply of that?
AB: Right, that’s front and center. Well, Louie, I think this has been fantastic and I’m very excited to continue working with you ahead of the Event.
LP: Likewise. I’m really looking forward to this event.
Louie will be giving a keynote speech on the morning of Day 1 of the event. You can learn more about him by going to the CPO Rising 2016 event website.