Editor’s Note: Today and for the next few weeks, we will feature a series of articles based in large part on Ardent Partners’ flagship research report, CPO Rising 2016: The Art and Science of Procurement (click to download). This benchmark report, sponsored by SAP Ariba, is based on the experiences of 331 Chief Procurement Officers and procurement practitioners. Today’s article is a preview of the report and features primary research data, analysis, and insight into current trends in procurement and supply management. Enjoy!
Chief Procurement Officers (“CPOs”) have a much more “political” job today in 2016 than they did 15, 10, or perhaps even five years ago. They have to lobby the C-suite for executive and budgetary support, align their department’s mission with that of the enterprise, and align their procurement staff with internal and external stakeholders. Collectively and individually, it is no small feat. That is why communicating the procurement department’s value and performance to executives, key budget holders, and line of business leaders, is a critical part of any CPO’s duties. The need to do this better (33%) is the pressure that has increased the most among procurement executives since the 2015 edition of the CPO Rising report, when 25% of all CPOs reported it as a top pressure. Let us take it from the top.
- Executives: As stated in an earlier article in this series, CPO-executive engagement is critical not only for aligning procurement’s mission and goals with those of the enterprise, but also for communicating its value and performance. In fact, the two go hand-in-hand. CPOs need to regularly engage the executive team, specifically the CEO, CFO, and/or COO with clearly-defined value propositions based not only on realized and implemented savings, but also on other performance measurements, like contract compliance, risk mitigation, and faster, more efficient processes. There should be no mistaking what the CPO and his/her team brings to the table.
- Key budget holders: Although executives are often budget holders, other times budgetary decisions are made by other figureheads, like Boards of Directors or an enterprise’s Treasury department. Here, too, the CPO needs to put on their salesman’s hat and “sell” procurement’s value and performance. Nothing sells success like prior success. And nothing reassures reluctant budget holders that their precious dollars will be well allocated like demonstrated, documented performance measures, like realized/implemented savings and projected ROI on desired investments.
- Line-of-business leaders: Here, CPOs and their teams need to grease the operational wheels by demonstrating the value that they bring not only to the enterprise but also to their peers. Procurement can do so much more than purchasing, and yet so many enterprise stakeholders believe that they should just “stay in their lane.” Communicating procurement’s value and performance to line-of-business leaders, and then their subordinates, can help procurement overcome this institutionalized mindset that can be a roadblock to greater influence, efficiency, performance, and organizational change.
Too often, perception is reality. The perception that procurement is nothing more than a back-office band of buyers can pervade despite the speed, efficiency, savings, compliance, and risk mitigation that they can and do deliver across the enterprise. If the CPO does not explicitly communicate the reality, it can allow the perception to persist. Executive support, capital investments, and stakeholder relationships can be jeopardized if the CPO is not vigilant and vocal. Thus, the CPO needs to engage executives, budget holders, and their counterparts across the enterprise and clearly communicate the value – in all of its forms – that they and their team deliver. They need to be a passionate advocate for procurement at all levels of the enterprise and always drive their value proposition.