A CFO-CPO relationship, like any other, is not perfect and is often rooted in a lack of trust and miscommunication, which, at times, makes it seem beyond repair. The CPO promises savings and talks about adding value, but the CFO only sees costs and finds the P&L showing increased spending. This obvious gap between what procurement claims and what finance sees deepens further because the language and terminology used are not aligned. As a result, misunderstanding and communication breakdowns happen.
Before exploring how to make the relationship between procurement and finance work, it is crucial to note how procurement has evolved from having the penny pincher reputation to becoming the heart of supply chain management. Organizations are now starting to see it as a key driver for competitive advantage. With various value-adding superhero functions, it has emerged from being just a cost-cutting function to having its own voice with a newfound organizational influence and corporate visibility. Mastering its potential and knowing its strategic and critical contribution will ensure a competitive advantage in today’s dynamic global business landscape.
Procurement has evolved to become more strategic and collaborative and has moved from an isolated, back-office function to a boardroom partner. While the procurement function must continue to drive hard savings, manage suppliers and mitigate risk, it must also pivot to look for opportunities to deliver future savings and innovation.
“Procurement is at an inflection point,” said Dr. Marcell Vollmer in an interview with SIG CEO Dawn Tiura. “Procurement needs to transform into a value-added function focusing on strategic tasks.” How can procurement teams do this?
For all the great advancements that technology brings, it requires people to manage the technology. Oxford Economics’ survey among procurement executives and practitioners found that the top three investment priorities include new talent recruitment, training/upskilling programs and procurement/supply-chain technology.