If you've been to the grocery store in the last couple of months, you may have noticed that your total costs are far higher than before. Prices on items like food, housing, gasoline, and utilities have risen by over 9.1% over the last 12 months – a 40-year record, according to the U.S. Consumer Price Index.

Why is everything so expensive?

A lot is working against the global economy: 

• Covid-19 continues to affect manufacturing and logistics around the world. 
• The war in Ukraine continues to have an impact, especially on grain production for much of Europe. 
• The U.K. is facing unprecedented increases in energy price caps.

These combined events are the perfect recipe for supply chain shortages and drastic price increases.

All eyes on procurement

Businesses are facing uncertainties unlike ever before, causing CEOs to look closely at what is happening behind the scenes. Procurement is under scrutiny with central purchasing being pushed into organizations' spotlight.

One such question being asked of procurement is, "Do we have approved alternative sources of supply in place?" Building a diverse supply chain is key but not always easy. 

You might source goods or ingredients from various vendors for a product you manufacture. Still, all it takes is one ingredient to be delayed because of rigorous testing, approval processes, or even that supplier's supply chain for the whole operation to halt.

Recently, SIG had the pleasure of hosting AArete experts Tyler Higgins, Gaurav Joshi and John Marchisin and Duane Elmore, Chief Procurement Officer at The Pennsylvania State University for the July CPO & Executive Virtual Series. It was a very engaging discussion that lasted nearly two hours with tons of excellent takeaways. Let’s get into it!

Adapting Your Supply Chain for Diversity and Sustainability

The team kicked off the day discussing what has driven the rise of corporate ESG priorities. There are seven areas that they highlighted to explain this increase:

• Company Culture
• Employee Engagement
• Investor Activism
• Policy & Regulation
• Access to Capital
• Financial Benefits
• Consumer Demand 

These competing priorities oftentimes lead to many different approaches to accomplishing ESG initiatives. The Aarete team then walked through different approaches and experiences of ESG initiatives. They also shared successful diversity & sustainability programs. From Starbucks to The University of Penn, there are numerous ways to have success.

How to Transform the Buying Process 

Companies across all industries are setting ESG goals, and procurement leaders are at the forefront of executing those goals. Procurement leaders must balance these goals along with supply chain continuity during an inflationary environment. Having a ESG framework and a supplier diversity strategy is fundamental to transforming the buying process. Most organizations are challenged to find the right suppliers that can meet sustainability and supplier diversity goals. By incorporating KPIs for procurement, suppliers and adoption, you set the ESG goals up for long-term success.

Have you ever heard the old saying, "when everything is said and done, there is more said than done?"

How about “everyone talks about the weather, but no one does anything about it?”

The common theme through the above examples of observational wisdom is the suggestion that talking about something is not the same as doing something about it.

Based on experience, I would not be off base in suggesting that this same theme applies to the subject of supply chain resiliency. In other words, in the world of procurement and strategic sourcing, the importance of resilient supply chains has been a point of discussion for some time.

However, what the COVID-19 pandemic and today’s increasing geopolitical instability have taught us is that our fruitful discussions in the past did not necessarily translate into meaningful actions and outcomes today.

Didn’t See It Coming?

When considering the significant disruptions in our global supply chains over the past two years – the most recent involving baby formula, we must ask ourselves how we got here. Didn’t we see it coming?

Let's face it, before COVID-19, how many of us would have predicted that our supply chains would, in some cases, snap like a rubber band stretched beyond its level of tolerance. Sure, we knew there were potential vulnerabilities in our supply and demand networks, but who expected such far-reaching, universal failures? By the state of things today, very few saw what was coming, and even fewer believed that we weren't ready for it.

Why were we so confident?

The problem wasn’t a lack of awareness regarding the importance of having resiliency and agility in our supply chains. We knew it was important. The issue was in our approach, or better yet, our interpretation.

SIG University Certified Supplier Management Professional (CSMP) program graduate James Hamlin breaks down the knowledge he's gained while building a supplier management program.

My first Op-Ed, Open Letter to the C-Suite, appealed to the C-Suite to hold Procurement accountable for not investing in technology.  The blog referenced a Gartner perspective that only 22% of procurement leaders have a long-term digital strategy.  I touched a nerve, invoking comments from a few readers suggesting there are procurement leaders - the Magical CPO - that understand how to navigate the C-Suite to get the budget for technology investments.

To give credit where credit is due, Nikesh Parekh, CEO of Suplari (Now Microsoft), is the source for the term Magical CPO.  It describes a procurement leader that understands how to build business cases and secure budgets for technology investments that improve their department's efficiency and effectiveness while supporting the needs across all business disciplines. The Magical CPO persona, by definition, is juxtaposed with the technology laggard. If you saw my first Op-Ed, I noted that 78% of procurement leaders are technology laggards without any digital automation strategy.

The Magical CPO persona

Let’s unpack the Magical CPO persona to agree on common qualities. My views are based on my observations and experiences over a 30+ year career in procurement. There is no Wikipedia page for Magical CPO nor a Google search that prompts any relevant hits - I checked.  While I understand there are more sources than Wikipedia and Google, the point is that there is generally no standard persona for the Magical CPO. Here’s my interpretation of what the Magical CPO must possess: