CPO Rising 2017: Staying Focused on the Long Game in Procurement

We recently published my twelfth annual CPO-themed report. Today’s article is part of an ongoing series focused on the report’s key findings. You can get the report here (registration required).

Complacency Kills

When discussing recent trends in procurement, the Great Recession of 2008 – 2009 remains an easy reference point to highlight the impact that a finely-tuned procurement operation can play. But almost a decade later, those tough times are squarely in the “rear view” of most procurement organizations.

The past few years have been good to the profession and Chief Procurement Officers (“CPOs”) began 2017 on solid ground made firm by stable, if not rising, markets, and a growing level of influence and credibility within the enterprise. Business continues to change at an accelerating speed, as enterprises and their suppliers are forced to adjust to new, disruptive technologies, intensified competition, and a marketplace that continually resets its expectations. As a result, business requirements have become more diverse and dynamic, lead times are shrinking and getting shorter, while the definitions of performance and success have become moving targets.

Any concerns about procurement losing momentum in 2017 should be laid to rest by the shifting trade winds. The longstanding trends of globalization and open trade, which fostered global supply markets and pushed procurement towards the center of business, are being challenged by different political leaders around the world. New political actions like Brexit and the announced plans to change longstanding trade agreements in the United States are significant events that should require many sourcing teams to reevaluate current supply chains and quickly model the impact of proposed changes. While the effects are not clear, it falls to the CPO and their teams to ensure that they are ready and able to act if, and when, policy changes are announced and implemented.

In 2017, savings remains an important piece of the performance pie, but the CPO’s spotlight on performance has expanded to include other key metrics like procurement’s impact on cash, internal feedback, contract compliance, and spend under management. And, enterprise executives, including the Chief Financial Officer (“CFO”), have developed a better and deeper understanding of the overall value that a procurement operation can deliver. These business leaders also understand that procurement has a greater ability to directly impact enterprise results by finding and harvesting innovation in the supply chain and enabling business agility.

The potential rise of global trade wars notwithstanding, the stage is set for most CPOs to have another good year. But, procurement leaders must be wary of complacency and the risk of being left behind or caught unaware by the next market shift and the impact of newly proposed trade policies. Success breeds success, but success also breeds complacency. Complacency kills innovation and stifles the adventurous spirit; it is the companion of mediocrity. Yet, when everything is an emergency, nothing is an emergency. CPOs must find a happy balance to keep their teams focused and engaged but not burned out.

Final Thoughts

In closing, consider a sports analogy to underscore the dangers of complacency (and the value of focus and determination). Five months ago, the Atlanta Falcons were up 21-3 at halftime during Superbowl LI, and it was not looking good for the New England Patriots. In fact, it would take the better part of the third quarter for the Pats to halt the Falcons’ advance, close the gap to tie the game, and ultimately win it in overtime in arguably the greatest comeback in NFL Superbowl history.

Well, in 2017 it’s halftime in the “game of procurement.” And make no mistake, there’s plenty of time left on the clock for procurement leaders to refresh their standard, business-as-usual approaches, intensify their efforts, and sharpen their tools. And for CPOs and procurement teams that are ahead of the game, remember: there’s plenty of time to get complacent and fall behind. So stay focused and “do your job.”

Are you free tomorrow at 2:00 PM ET? Join me and Ardent Partners’ Research Analyst, Matt York, for a complimentary webinar on Intelligent Procurement: How A.I. Can Expand Value, sponsored by GEP. Don’t get complacent – get “intelligent.” Click here to register.

Complacency Kills

Final Thoughts

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