Over the last 20 years, the role of chief procurement officer has evolved significantly, shifting from tactical to strategic and finally gaining the attention of the Board. I was just reading an article in the Wall Street Journal by Bruce Nolop about the "Five Ways the CFO Role Will Change" and thought the categories and language were great to address from the CPO perspective as well. So what will the CPO position look like in 2025? Here are five predictions from a different C-suite role:
Strategic Partner: CPOs will become explicitly involved in developing bottom line AND top line strategies. CFOs are generally dealing with financial data after results are posted. In contrast the CPO can impact a company's cost-making decisions mid-stride versus after the fact. As more of the business recognizes the perspective of the CPO, they will come to depend on that office for strategic realignment recommendations and will be more apt to partner with the CPO throughout the year. The importance of the office of the CPO will become more widely recognized by both the CEO and the CFO as the CFO comes to depend on the CPO for guidance.
Globalization: As companies expand globally, CPOs will also adopt a more global mindset and quite often will set up Centers of Excellence in order to source from the perspective of those countries. While the CFO works to establish a favorable tax framework, it will be critical for the CPO to be aware of the limitations such frameworks can put on receiving and distributing goods as well as the taxation laws on services. In addition cyber security will still be top of mind with the CPO as well as all types of risk that the company is exposed to with the maturation of big data and the "Internet of things."
SIG Summits are known for having amazing keynote speakers…and at our Summit in Denver last fall we had a speaker who took it to a whole new peak…so to speak. In fact, our keynote Alison Levine gave us a new appreciation for the word "Summit" as she shared her experiences in climbing Mt. Everest. At first glance, one wouldn't immediately think this tiny woman had the physical stamina or grit required for this incredible journey...which is exactly why making quick judgments isn't ever a great idea. Not only did she lead a team up that most arduous of climbs, but she did it twice. TWICE. Facing extremely dangerous and life-threatening conditions within 300 feet of the Summit, she made the painful decision to turn back her first time up...but both journeys provided lessons anyone can apply as a leader. She had so many great takeaways that I'm not sure I can adequately sum them up...but my attempt and interpretation are below:
On effective teams, everyone is a leader at some point. There may be only one person with a designated leader title, but allowing people to have a voice builds trust and loyalty. And if you do, your team is more likely to look out for the people on either side of them and make sure they are moving in the right direction as well. We once had a speaker whose mantra was that you don't have to have a title to be a leader...truer words were never spoken. Think about the word "leadership" as more of a mindset than a title and you empower everyone with the ability to own it. When you give people not just room...but permission to take something and run with it, you might be surprised by the result.
How many settings does a washing machine need...or for that matter, a camera? It seems that the more settings there are, the higher the price. Of course this seems right, doesn't it? If you're emptying your pockets (or even your bank account) to get the latest and greatest device, whatever it is, you want to be sure it can do absolutely everything. You want it to handle your bed linens as well as your silk shirts (the washing machine, that is, not the camera). Most washing machines CAN do all of that, but wouldn't it be nice if you could just set them to automatic? In my household we used to have a washing machine with a dial labeled "A to J." We always put it on "E" which we decided stood for "Everything." But would we pay as much for a device that only had one button? Perhaps a big friendly button that had "Wash" written on it? Almost certainly not.
Paul Blake, Senior Manager, Technology Product Marketing, GEP
Since the New Year has arrived, it's time now for the annual onslaught of Procurement Prognostications for 2015. Of course a year from now, what actually transpires may bear little resemblance to what was predicted – and who really goes back and reconciles results with resolutions anyway? But at least in this case, an educated guess can be made as to what procurement leaders will actually be focused on in 2015, based on their responses to a recent joint survey conducted by Zycus and The Hackett Group of over 200 procurement leaders and practitioners.
Richard Waugh, Vice President, Corporate Development, Zycus Inc
What is the source of procurement's value to the enterprise? How do organizations become more effective and efficient in achieving sustainable cost savings? How can procurement deliver even greater value to the enterprise? These questions are essential to the continuous improvement of the sourcing and procurement function. They are the questions at the foundation of the IBM Institute for Business Value (IBV) Chief Procurement Officers (CPO) Study which examines the "journey to value" for procurement organizations – and details the specific procurement strategies that drive business results and bottom-line impact. The study, based on a survey of more than 1,000 procurement executives across more than 40 countries, takes a deeper look at "procurement role models," the 100+ companies in the study that achieved the most impressive revenue and profit performance relative to their industry peers. The research identifies three common attributes that tend to separate these procurement role models from the pack. These high-performing procurement organizations:
Matt McGovern, Market Segment Manager - IBM Procurement and Contract Management Solutions
In all my years attending SIG and similar sourcing conferences (often from the outside looking in), I have never observed this degree of nervousness around a new innovation as that surrounding Robotics Process Automation (RPA). Speakers struggle with how much development background they should share before launching into the topic. Conference attendees eagerly lap up nuggets of information that can add to their meager understanding of the topic. And the few who "get it" seem to be oblivious to the general discomfort of mainstream sourcing professionals whenever robotics is mentioned.
Recently, during a trip to visit suppliers in India, I similarly noticed a strange awkwardness surrounding the marketing of both RPA and analytics. When developer/programmers are asked to explain product offerings, they trip over themselves a bit cautious that buyers may not be able to grasp the computer science, statistics or mathematics of the product offering, and consequently resort to demonstrating actual end-user applications without ever really saying, "We have a miracle here, and we want to share it with you! And there is so much more we can do each week!"
We spend months preparing for each Summit...and then a week getting ready for the arrival of our delegates...and then a few days with them...and then in a blink of an eye it is over and we start again. It goes by too quickly but the lessons learned are vast and permanent. Over the next few blogs, I'll share some insights I gleaned from our keynote speakers at the last SIG Global Executive Summit. The first was retired Colonel Anthony (Tony) Wood, best known for his heroic role in the evacuation of Saigon in April 1975. Colonel Wood addressed SIG in a general session and also spent time with our most senior delegates in an exclusive CPO Roundtable. These were my key takeaways from his two presentations.
Moral courage is knowing what to do, even when you know it may cost you. Colonel Wood shared a story of leading civilian volunteers through the most unimaginable circumstances. Risking their own lives, roughly 100 American civilians in their 50s and 60s, volunteered to help evacuate 5,300 people from Saigon, a city that was collapsing. In the face of an advancing enemy army, this incredible group of people put the lives of others before their own. In a business context, knowing what to do and actually acting on it, even though it may not be in your own personal interest to do so, is difficult...but having people with that attitude on your team is enormous. Moral courage is a critical piece of business leadership.
You go to the three-day SIG Summit to learn new practices, solidify standards and make business connections. The Denver Summit will be my seventh. The speakers are uniformly excellent, the first-class entertainment on Wednesday night is always a surprise, and the Thursday night event is fun-filled and relaxing. But it's Tuesday's Speed Networking event that tops my list for an informative and high-energy way to make new colleagues. If your goal is to meet as many Summit attendees as possible, then attending Speed Networking on Tuesday afternoon is a must. And no, I'm not just tooting SIG's horn here. There is a sense of camaraderie that you get at Speed Networking. Sure, it is a bit like speed dating at first...but once the buzz fills the room, the air is electric. Speed networkers are trying to broaden their connections by increasing their exposure – and this venue is the perfect opportunity to accomplish that. SIG used to host Speed Networking on Wednesdays during the Summit, and I was always a bit frayed by that – why wait for the second day, when everyone can meet on the first day?! Because what we do best at SIG is to brainstorm ways to continuously improve, we changed the venue to Tuesday, the first official day of the Summit. For those who have not attended, we fill the largest ballrooms with huge rounds of tables and place chairs on either side. Nearly everyone attends. The corporate buy-side attendees move around the perimeter. The sell-side attendees stay put. SIG staffers happily serve beer and wine to help break the ice. And as if we couldn't make this event more fun...there are REALLY great prizes for the buy-side attendees – just put your business card in the bowl that is passed around prior to the event beginning. The din that ensues is lively, productive and fun. You have a few minutes with each person, introduce yourself, your company, even your kids if you must.
I recently dropped off my oldest son at college. It was a momentous time sending my first child out the door. Not only did it bring a flood of my own college memories back, but it also made me realize that we often wait until the last minute before we impart the pearls of wisdom that might be most helpful in a new setting. I took the opportunity to write an article (if you call a Facebook posting an "article") to him, chock full of advice on washing clothes, changing sheets, using good judgment and much much more. As I reflect on that moment, it makes me realize that often when we approach the Summit, we assume people don’t need our advice on how to make the Summit a great experience...and you know what they say about assumptions. With three new SIG employees, it occurred to me that perhaps some Summit pearls of wisdom might be in order, so here goes:
Don't miss the networking events. Most people come to events for two reasons—the first, education is what gets the approval for the plane ticket, but it's the second, networking that often gives you the most bang for your buck. One conversation can help you solve a problem...or create a lifelong resource...or even identify a potential vendor or partner. Because of that, we factor in a lot of time for networking. Our breaks are long and our evening events are lively and fun. For real energizing networking, our Tuesday evening Speed Networking is not to be missed. Even if networking is not something that comes naturally, this "speed dating" style of networking makes it easy to meet people quickly, exchange business cards and move on. On that note...
One-on-One is a new Q&A series with leaders in the SIG community. Cost savings. Process efficiencies. They're synonymous with procurement and among the terms most used to describe its role within the enterprise. And with good reason. Over the last decade, procurement has transformed itself from a back-room function to a strategic capability by delivering them. But a new term has entered the lexicon: innovation. There's no doubt that procurement today is a different game. It's more connected, informed and some might even say "social" than ever. Just as consumers tap into personal networks to learn, share and shop better, procurement is beginning to tap into business networks. To learn more on how these digital communities are transforming the function, SIG sat down with Dr. Chakib Bouhdary, President of Business Networks for SAP.
SIG: Social tools much like those used to manage our personal lives have infiltrated the enterprise. How is this changing procurement?
Bouhdary: There are officially more mobile devices than people in the world. More than a billion of us participate in social networks. Over 15 billion web-enabled devices connect us to the people and information we need to manage our daily lives. And data is exploding—doubling about every 18 months. So we are mobile, and apps on our phones and tablets give us new ways to discover and collaborate with our peers and trading partners. Just as consumers tap into social networks to keep tabs on their relatives and friends, procurement is now leveraging business networks to manage trading relationships and commerce activities.
SIG: There seems to be a complete shift in the way trading partners communicate, transact and collaborate. How are business networks driving this?