A Chief Procurement Officer (CPO) that can align long-term plans with the goals and priorities of the enterprise has the opportunity to maximize sustained results. When the CPO is also able to motivate a team of practitioners to execute those plans, and when they have the relationship building skills to make business unit stakeholders into active supporters of the plan, he or she becomes a leader. Accomplishing these feats is not a matter of title or rank, but effort and vision.
Alan Veeck, Vice President of Sourcing Services at Denali Group often asks clients about their vision for Procurement and gets different, but indicative, responses. Too many companies don’t have a clear vision for their Procurement function. Without that vision, it is difficult to lay the framework for the program as a whole. “One of the biggest factors challenging the Procurement industry today is a lack of visionary leaders who emphasize Procurement’s importance and can develop a robust strategy to take advantage of what Procurement can do,” said Veeck. “It’s essential to elevate the work that Procurement is doing through executive-level sponsorship. For most of my clients, that means setting up monthly meetings with the CFO and having him or her talk to the organization about Procurement’s achievements -- really stressing the importance of Procurement to the overall performance of the enterprise.”
A well-managed Procurement program ties together people, processes, and technology as well as the supporting framework to build and manage a sourcing pipeline. Each sourcing project is a unit of value within the overall program; running more projects results in more value creation. Alan and his team work with clients to outline Procurement programs along the following lines:
Goal setting and long range planning
Team organization and incentives
Efficient processes and metrics
Technology and reporting
Executive sponsorship and communication
The ability of any CPO to work productively with other functions is directly connected to the past experience the members of the executive team have working with Procurement.
When that experience is limited, Procurement needs to take a proactive role in working with those executives to communicate and collaborate. Any opportunity to increase the rest of the organization’s visibility into Procurement’s resources and capabilities should be taken. "An imperative for CPOs these days is to have relationship-building abilities," said Peter Nero, Senior Vice President of Denali Sourcing Services. "They need to be charismatic and be able to build stakeholder relationships and trust at the highest level of the enterprise, as well as at the line management level where the budgets are owned and managed. It's only through building and nurturing relationships with the right business stakeholders that Procurement can demonstrate how we can help drive value."
While working with executives and line management, it is important for Procurement to establish its brand, which is usually part of a broader change-management program that needs to occur within the enterprise to promote the value of the Procurement. A Procurement organization must communicate directly to their business stakeholders what it does and how it can help them succeed. Just like a product on the shelves in the market, Procurement has to have a recognizable value proposition and be able to promote itself to internal stakeholders to build credibility, increase visibility and encourage participation.
Positive interaction with multiple levels of the organization also needs to be reflected in Procurement’s organization and planning.
The CPO owns the vision and the rest of the Procurement team executes the plan, and a review process is needed to make sure the two stay in alignment. At these review points, the CPO and the team should find an opportunity to provide feedback to each other, keeping the vision rooted in the realities of supplier capabilities and stakeholder expectations, and the execution driving towards what is needed to build and maintain a world-class organization. While the execution team regularly works with suppliers and stakeholders, CPOs also need to take regular opportunities to collaborate with their peers.
Conferences and forums can be great opportunities to find inspiration and objectivity, but finding one with the right focus is a challenge. Large events include so many participants that it is hard to make lasting connections and usually include solution vendors as well as practitioners. More ideal is a situation where a facilitator provides a spark, gets conversation rolling and then steps aside and allows the dialogue to continue.
“People passionate about their work have a lot to offer one another,” continued Veeck. “Every Procurement professional has a different perspective and, when sharing information among peers, relationships get better, ideas are enhanced, and everyone can benefit with something they can take back to their organization. This is why Denali Group hosts annual Sourcing Forums to bring Procurement executives together in a collaborative setting to encourage interaction and sharing of ideas among peers. This year our focus is Accelerating Sourcing Results and Building Sustainable Capabilities. We’re thrilled to have special guest presenter Jon Hansen, author and radio host, to help facilitate collaborative interactions.”
Having productive opportunities to collaborate with other CPOs provides visibility into how similar organizations handle issues like managing stakeholder relationships and creating value over the entire supplier lifecycle. The CPO’s ability to build relationships inside and outside of the organization is directly tied to their potential success. Charismatic leaders are needed to make sure Procurement organizations continue to exceed expectations and contribute sustainably to the success of the enterprise.