From CPO to CEO: How the CEO of the World’s Largest Company (Apple) Used His Procurement Background to Thrive

With the unusually high levels of traffic in what has been traditionally been our slowest month, I can tell that many others are fascinated as I am by the career of Tim Cook, Apple’s CEO (click to read our first two articles Think Different. and Vision + Execution: Steve Jobs Understood Procurement’s Importance to Apple’s Success). Cook was able to make the career move from CPO to CEO, I mean, talk about a Chief Procurement Officer Rising. Tim Cook’s career path epitomizes our view of procurement’s potential and the gaining influence and impact of the CPO. It wasn’t too long ago that I wrote:

In the months, years, and decades ahead, one thing is clear: supply management’s evolution will accelerate, as will its impact on business processes, business relationships, and business results. The CPOs and other leaders at the helm will face daunting challenges, execute exciting strategies and blaze new trails as they continue this larger discussion in their own ways. The CPO will continue to rise: what’s past is prologue!

[The above was from the first article published on this site What’s Past is Prologue]

And while Tim Cook’s career awesomely validates our view on procurement, it also awesomely validates the careers of our readers – those thousands of procurement professionals who spend their working hours advocating for increased visibility, seeking more and more responsibility, and making a greater impact.

I’ll refer now to Walter Isaacson’s recent book on Steve Jobs and provide an excerpt that highlights some of Cook’s successes at Apple:

At Apple, his [Tim Cook’s] role became implementing Job’s intuition, which he accomplished with quiet diligence. Never married, he threw himself into his work. He was up most days at 4:30 sending emails, then spent an hour at the gym, and was at his desk shortly after 6. He scheduled Sunday evening conference calls to prepare for each week ahead. In a company that was led by a CEO prone to tantrums and withering blasts, Cook commanded situations with a calm demeanor, a soothing accent, and silent stares. “Though he’s capable of mirth, Cook’s default facial expression is a frown, and his humor is of the dry variety.” Adam Lashinsky wrote in Fortune. “in meetings, he’s know for long, uncomfortable pauses, when all you hear is the sound of his tearing the wrapper off the energy bars he constantly eats.”

At a meeting early in his tenure, Cook was told of a problem with one of Apple’s Chinese suppliers. “This is really bad,” he said. “Someone in China should be driving this.” Thirty minutes later, he looked at an operations executive sitting at the table and unemotionally asked, “Why are you still here?” The executive stood up, drove directly to the San Francisco airport and bought a ticket to China. He became one of Cook’s top deputies.

[Sidebar: here’s where it gets good]

Cook reduced the number of Apple’s key suppliers from a hundred to twenty-four, forced them to cut better deals to keep the business, convinced many to locate next to Apple’s plants, and closed ten of the company’s nineteen warehouses. By reducing the places where inventory could pile up, he reduced inventory. Jobs had cut inventory from two months’ worth of product down to one by early 1998. By September of that year, Cook had gotten it to six days. By the following September, it was down to an amazing two days’ worth. In addition, he cut the production process for making an Apple computer from four months to two. All of this not only saved money, it also allowed each new computer to have the very latest components available.

Reread the last paragraph of the excerpt above and ask yourself, how many CPOs and procurement departments do you know that have performed similar feats of sourcing/supply management/manufacturing/inventory/process like those of Tim Cook? How many of them are now CEOs? Perhaps a more fair questions is – How many Chief Procurement Officers have not gotten their due?

What was the difference for Cook? To start, Tim Cook had the trust and support of his CEO (Steve Jobs) and reported directly to him. Apple, the most successful company in the world thought differently about procurement.

Isn’t it time for CEOs to “think differently” about procurement?

Isn’t it time for all of us to “think differently” about procurement.

 

Postscript: We will definitely be back with more on this subject.

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