CPO Rising 2017: Tools of The Trade – Ardent Partners conducts an annual procurement-themed market research study each year and this is it. By taking the survey, you have an opportunity to help advance the collective knowledge of the entire procurement profession AND get a copy of the full report when it publishes in March. If you have a few minutes today, please consider participating in the industry’s most-influential and widely-distributed study.
Chief Procurement Officers: Developing Procurement Mastery
To achieve procurement mastery in the age of innovation, today’s Chief Procurement Officers must develop and balance the creative (“art”) and quantitative (“science”) capabilities of their organizations to deliver maximum value in support of enterprise goals and objectives. To do this, the CPO’s primary management task is to make the procurement staff capable of organizational performance and in doing so make sure that their strengths are operational and their weaknesses are insignificant. This can be challenging since every procurement operation is composed of people with different skills, experiences, and motivations. However, the capacity of individual staffers to make contributions is as dependent upon the management of the procurement operation as it is upon the underlying abilities of the individuals.
“We need to hire good, smart people with the right traits and values, and then we must coach and train them until complacency is recognized by all as a sin, and the pursuit of perfection – or at least excellence – becomes the standard. After we do that, then ‘processes’ will improve as a cascading and natural consequence.” – CPO, Public Sector, United States
To help CPOs assess the makeup and capabilities of their staff, each year, Ardent Partners has historically published the organizational capabilities around key areas such as people, operations, and systems. For example, procurement organizations over the last six years have significantly improved in the area of internal collaboration, with two-thirds of groups reporting “strong collaboration” with finance and the CFO . Conversely, these same organizations have room for improvement when it comes to supplier collaboration with only one in four reporting a “strong” level.
Ardent Partners has also performed a more detailed analysis of the specific staff skills in place at the average enterprise to get to a deeper view into the underlying drivers of organizational performance. The Ardent Partners’ Procurement Competency Matrix looks at a list of many of the higher-level competencies that a procurement staff or department should have in place in order to execute well, including specific procurement areas such as category management and managing supply risk as well as more general skills like financial analysis and presentations.
One of the things that makes procurement such a fascinating profession is that when a procurement team is fully engaged, it touches nearly everything inside the enterprise. It also regularly interfaces with suppliers and prospective suppliers. Procurement responsibilities thus can range from the highly strategic and complex to the highly tactical and straightforward. With almost unlimited access to the enterprise, there are so many unique opportunities to create value. To capitalize on the opportunities, the Chief Procurement Officer needs to draw upon a wide range of creative and technical skills and experience. Roles and projects within procurement can require broad skills while others benefit from specialization or repetition.
Consider the broad and very different skills a sourcing lead needs to use when working with the product team. The collaboration might start with early stage prototyping and continue through the launch of a highly technical product using global suppliers and some contract manufacturing. Compare those to the skills needed for someone in procurement partnering with HR in the development of a 360-degree contingent workforce management program. This collaboration might involve reshaping how the current temporary workers, including independent contractors, freelancers, and professional services teams are engaged, sourced, and ultimately managed. These two projects require very different skills from each other and from someone doing PO processing, running low-value, single-price auctions, or tracking contract compliance.
“We still have a lot of opportunities associated with improving the efficiency of how we run our business – whether that’d be next generation tools…to considering what I call ‘right role, right person, right location,’ which includes potentially outsourcing or other organizational models…to potentially considering leveraging our third-party providers for very specialized things” – CPO, Fortune 100 Company
Our research reveals that most CPOs are dealing with teams that have the opportunity to improve across the board. They also show that many CPOs have teams with sizable deficiencies. Fundamentally improving the team may not be easy; but, it must be done. It now falls to each Chief Procurement Officer to decide on what to do and how to prioritize investments as well as to identify the skills that will have the greatest impact on near-term and future outcomes that will fundamentally advance the organization. The state of procurement is strong, but with the right executive leadership and focus on improving procurement competencies, it can be stronger next year.