Two months after our formal launch at CPO Rising and things are really starting to heat up. (1) Thank you for your time and interest in support of the site; it honestly means a great deal to me to have gotten such a welcoming reception from you. More than anything, the numerous comments and offline emails (that are impressively rich with ideas, I should add) have been very energizing to me – keep ‘em coming! (2) With event season winding down, we are poised to introduce a host of new themes/series to the site in coming months, so watch for those. (3) To date, our marketing for this site has been completely organic, so, with that in mind………. if you find the site to be at all interesting, informative, educational, and/or entertaining (our intended goals), please show your continued support by spreading the word amongst your colleagues and across your networks. Thanks!
New day, new month, new school, and new breed. I’ve previously described Ron Carcamo, Chief Procurement Officer at Yahoo! Inc. (and “friend of the site”) as one of the “new breed of CPOs.” After watching him deliver an effortless, yet compelling, keynote address at a gathering of CPO-types in San Francisco last month, I believe that moniker still applies. Much like his fluid presentation manner, Ron navigates the corporate environment with style and ease, attributed in no small part to the credibility that his experience as an international CFO and global business executive brings. But after working with and getting to know Ron over a number of years, I’ve come to realize that there’s much more to it than just his experience. The agility of his organization and the results it has achieved are the result of a business sense and managerial style that focus less on trying to solve classic procurement conundrums so much as seeking to transcend them. What do I mean? A few quick examples:
(1) Tackling marketing spend – Discussion: “We have a recommended approach to source this spend, but are very open to any ideas that you think are better.” Results: Big sourcing save in 2009 for Marketing.
(2) Outsourcing spend – Discussion: “The spend is big enough to warrant a formal process to (a) decide whether or not to outsource and (b) select the most qualified provider(s) [if outsourcing makes sense].” Results: Procurement now manages/stewards all outsourcing initiatives which is significant spend at Yahoo!
(3) Savings calculations – Discussion: “We focus on a measure that we call ‘value contribution’ and let our partners in finance who work side-by-side with us take the lead on determining budget impact.” Results: Alignment and credibility with the CFO and other executives.
But before I go too far astray on the procurement house that Ron has been building for the past three years, I want to circle in on a specific CPO Case Study at Yahoo!
Last week I wrote an article that discussed one of our 10 for 2010 “Ideas for the New Year,” specifically, working to embed your staff with line of business operations. Today and tomorrow we will look at how Ron did exactly that – embed (or in his words ‘integrate’) his procurement staff with the business.
By early 2009, the procurement team at Yahoo! had begun to make significant strides forward in its evolution from a tactical purchasing/procurement function that focused on speed to a more strategic department that focused on value. After his first two years as CPO, Ron felt that while the foundation of his functional procurement framework (which included people development, performance management, process and systems support, and transaction management) was now fully operational, much work was still needed to become a Best-in-Class strategic sourcing and vendor management organization. With the global recession at its full-blown ugliest, Ron saw and then took the opportunity to accelerate procurement’s influence at Yahoo! by embedding/integrating his staff in the business. He searched and destroyed engaged[i]!
Ron saw three specific actions that his team needed to take that when combined with executive support would “operationalize” his strategy of embedding his team in the business.
The Key Actions? (1) Get Close (Proximity), (2) Play Your Position, (3) Become an Extension of Finance.
The Details and Results? (1) Tomorrow in Part Two of this CPO Case Study.
[i] On the day after Memorial Day, the title of this post is a play on a military strategy called “Search & Destroy” which calls for sending forces into hostile territory with the explicit purpose of searching out the enemy and destroying them. While the business can sometimes be described as hostile territory, once procurement gets there, the better strategy is usually to engage and not destroy. Oh, and of course, “Search” is a little something that Yahoo! happens to do 🙂
Very interesting and by the sound of it successful model that Ron has developed.
Thanks for sharing Andrew
Interesting to see which way the pendulum is swinging in Procurement circles between centralized and decentralized philosophies. Seeding Procurement people into the business is effective as long as they don’t “go native” and become disconnected from shared best practices and learnings of the Procurement function. If you put some checks and balances in place, like stage reviews, peer reviews and sourcing strategy documentation reviews, you can achieve the best of both worlds. However, if it becomes a relationship of just doing what they ask without any pushback or independent review, then any gains achieved will be tactical and non-sustainable over the long term.