Over the past few Thursdays, I have been highlighting the 15 annual CPO/State of Procurement reports that I have written. After several years of focusing on the importance of procurement agility, we published CPO Rising 2015: The Agility Agenda in March of that year. This report remains one of my personal favorites (of the 15 in this series).
Back then, we felt that the context of what procurement can do for the enterprise had changed. Globalization and the ongoing advances in technology and communication have created extraordinary opportunities beyond the four walls of the enterprise. We believed that the procurement department was best positioned to access them. And, then we argued that the procurement teams that adeptly connect their tools, resources, and expertise to support the evolving needs of the business will succeed above all others. Our primary thesis was that agility will define the next wave of procurement success. We also included an actual “Agility Agenda” for Chief Procurement Officers and their teams to use to take a more holistic approach to designing an agile organization.
Here are a few excerpts:
Agility, in the context of procurement, requires enterprise sourcing and procurement teams to be highly responsive to any changes in stakeholder needs, supplier capabilities, and market conditions. The team must be “light on its feet” with sourcing opportunities and category management. Procurement agility translates into the ability to quickly leverage alternative suppliers for a given commodity, part, or service in the event of a supply disruption or new business requirement. It could also mean adjusting service-level agreements (SLAs) with suppliers in the event of sudden business changes. Where it was once acceptable to revisit most supply markets once every three to five years with a new bid, agile sourcing may require shorter contracts and more iterative sourcing. Like a world-class athlete, the CPO can develop an agile organization by blending together the collection of key resources, activities, and capabilities to create better coordination and responsiveness. Agility takes training and discipline. Agility is also a habit.
It really is a great time to be working in procurement. The profession has established itself in most industries with a clearly-defined value proposition, a standard approach to engagement, and a playbook of best practices. The resources available to Chief Procurement Officers and the tools they can employ are more robust and more accessible than they have ever been. It is true that many procurement departments still struggle to accomplish basic things and there are still enterprises where the concept of a strategic procurement operation has never been considered.
In 2015, procurement leaders are still focused on savings, delivering value, and automating and linking their processes, but they are also focused on new innovation, collaboration, visibility, and agility initiatives as they continue to prepare themselves and their teams for the next phase of procurement’s evolution. The state of procurement in 2015 is strong.
The level of competition and innovation that exists in today’s market mandates that enterprises leverage their supplier relationships to maximum effect. This means that the decisions, operations, and performance of an enterprise’s suppliers can have a direct and, frequently, immediate and significant impact on its own results. All of this places procurement in the crucible of business operations, relationships, and results.
With procurement serving as the gateway to supplier innovation, having proximity to the CPO is sound management for almost any CEO and helps ensure that valuable innovations emerging in supply markets can be identified, captured, and fostered.
Opportunities abound for procurement leaders to execute strategies that will improve the performance of their teams in the near-term. But, the reality is, that in the years to come, CPOs will be forced to redefine, and in some ways, re-imagine their current approaches, if they are to keep pace with the fast-changing needs of their enterprises and more volatile market conditions. CPOs must work now to develop a customized Agility Agenda that embeds their organizations with agile and innovative characteristics while maintaining discipline and efficiency.
In 2015, the tried and true procurement strategies still work. But, more than a decade after the first “CPO Agenda,” was written, the procurement profession needs new, more adaptive strategies and approaches to propel it to the next level of performance. The winners in procurement will be the agile organizations that can leverage their strategic prowess and fluid resources to anticipate and support dynamic business requirements amidst the more rapid changes in industry, supply markets, and customer behaviors. Agility is the characteristic that will help procurement departments advance and thrive in this new age where innovation continues to expand beyond mere products and services to core business processes and entire business models. Agility, however, does not grow organically. CPOs must take deliberate steps to build agility into the DNA of the staff and operations and it starts with The Agility Agenda.
RELATED RESEARCH
NEW WEBINAR – July 23: User-Friendly, User-Powerful: The New Consumerization of Procurement
CPO Rising 2012: Keeping Score
CPO Rising 2011: Innovative Ideas for the Decade Ahead
The CPO’s Agenda 2009: Smart Strategies for Tough Times
