Over the last few articles, we have looked at collaboration – first I looked at collaboration from the CPO’s perspective and then, Vishal looked at it from the accounts payable or AP perspective.
Ardent Partners’ latest report CPO Rising: Keeping Score, which is now available at the following sponsor links here, here, here, or here (registration required), shows that the CPO’s top strategy in 2013 is to focus on collaboration with internal stakeholders (collaborating with suppliers was the third most frequent priority). Collaboration was also the top CPO strategy last year. And, since procurement is seeking to influence the spend from other groups’ budgets, collaboration can clearly aid this cause.
But, since collaboration is not the only possible strategy for a procurement department to execute, I started to wonder what are the CPOs, who have not prioritized collaboration (internal or external), focused on in 2013? Before going any further, it is important to point out that while collaboration can be an effective and important CPO strategy, prioritizing other strategies ahead of collaboration is not necessarily the wrong thing to do. There can, of course, be many reasons why other strategies are more important; context is key. Anyway, I thought it could be interesting to drill down on this idea and here’s what I found:
To start, roughly two thirds of all CPOs have collaboration as a “top two” strategy in 2013. The collaboration for these CPOs can be with the CFO and other executives and/or with internal stakeholders and/or with suppliers.
The top strategies for the roughly one-third of all CPOs who did not prioritize collaboration in any form in 2013 are shown below:
On a comparative basis, all of the above strategies are being pursued by the CPOs in this group at least twice as frequently as the CPOs who have prioritized collaboration. Sourcing more in 2013 is the dominant strategy for this group of CPOs above who are twice as likely to focus on it than their more collaboration-focused brethren. Interestingly, the implementation of cash management strategies is a strategy being pursued more than three times more often by the group noted in the chart above.
So, why aren’t some CPOs focused on collaboration?
To answer that question, I looked at the top business pressures that each group is facing and found that these groups share the same top two pressures – #1 – Finding savings and #2 Increasing organizational effectiveness and influence – and do so at relatively similar levels of intensity. As it relates to pressure, the two primary differences between the two groups are that the ‘less collaborative’ are facing serious pressure to improve cash management (the collaborators are not) and that improving supplier performance and managing supply risk are very important to the “frequent collaborators” but barely on the radar screen of the less collaborative group. Since leaders should be responsive to the pressures they face, it is no surprise that the only real difference in these groups’ strategic focus over the next three years is that the group less focused on collaboration has heavily prioritized cash management and reports little to no concern for supplier management (performance, risk, innovation).
So, the main takeaways from this quick analysis are:
- Collaboration, in its many formats, is important to a majority of CPOs (~66%)
- The CPOs who have not prioritized collaboration (~33%) have instead, prioritized sourcing and cash management to a much greater degree and are also focused on improving cash management over the next few years
- Additionally, the CPOs who have not prioritized collaboration have little to no real focus on their suppliers at present
While the strategies and priorities of the procurement departments around the globe tend to be more similar than different, CPOs can and do have different priorities and strategies, generally with good reason. This nuance is but one of the many reasons why I find the procurement profession so fascinating.
If you also find procurement interesting, I believe that you will enjoy my latest report, CPO Rising: Keeping Score which discusses CPO priorities and much more. To get the full report, click here, here, here, or here (registration required).
