Editor’s Note: Over the next few weeks on CPO Rising, we’re publishing some “best of” 2020 articles as we reflect on the year and prepare for the new year ahead.
In ten years’ time, the procurement profession and the role of the Chief Procurement Officer (CPO) has changed in many unique and profound ways. Yet, just like 2010, CPOs and other procurement leaders are entering the new decade grappling with intense challenges (some old, some new) and driving forward to achieve aggressive goals and objectives.
On that front, I’m pleased to continue with our exciting, new series on CPO Rising – “20 for 2020” which examines a broad range of CPO-driven topics. Today we continue with 20 for 2020: Key Themes for the Modern CPO’s Agenda (#2 – Agility), which is designed to help procurement executives set their organizations’ course for the critical months and years ahead. Enjoy!
20-for-2020: Theme #2 for the Modern CPO’s Agenda: Agility
The speed and complexity of business continues to accelerate, forcing procurement departments around the globe to adapt to new market conditions and react to new opportunities while maintaining discipline and efficiency. Dependence upon supply chains continues to rise and procurement has never been more critical to overall success. There is no doubt that procurement’s ability to impact business processes, relationships, and results will continue well into the future, but the depth and breadth of that impact will depend on each organization’s ability to master its processes and technologies and upon the ability of its leader, the CPO, to maintain the department’s focus and ensure fast, but assured, decision-making and crisp and agile execution.
The drive for innovation that has collapsed most product lifecycles means that the sourcing needs of a company are more apt to shift dramatically within a business cycle than in any previous time. Finding savings remains the top priority of the CPO in 2020, but missing a sales window because of short or poor supply can shake an enterprise from the top down to its core. And, in a business world that is increasingly focused on the short-term, sourcing results are under much greater scrutiny by executives and in some cases, external analysts, media, and investors. The perception that a business cannot execute hurts its reputation and ultimately its overall value which in turn means that an enterprise’s “sourcing agility” is now directly linked to a company’s brand and overall value.
Don’t just take our word for it – consider the experience of a Chief Procurement Officer of a Fortune 100 Co. that discussed the changes afoot within his department.
“Our customers are demanding more responsiveness so we need to make sure that our suppliers are part of the solution and not part of the problem,” said the CPO. He believes his team is ahead of the game in its engagement with the business because it has been able to support all of their sourcing needs with a robust and efficient sourcing operation. “Our ability to quickly re-source a category or add a requirement based on some change in the business is something we pride ourselves in. We use our expertise to stay on top of market changes and we use our tools to capture and re-use the work we’ve already done.” This sourcing agility puts the department in a better position to tackle corporate initiatives.
Final Thoughts
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. Chief Procurement Officers and other procurement leaders must take deliberate steps to build agility into the DNA of the staff and operations, or they risk being left in the dust as more nimble and versatile organizations find value and opportunity before they do.
RELATED RESEARCH
