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The role of the CPO: Top 10 priorities for C-Suite success in turbulent times
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- Summary
The historical view of what is expected from a Chief Procurement Officer is changing. Economic challenges, complex geopolitics, pressing sustainability issues, fast-evolving technologies, and changing people needs mean a CPO can make all the difference to a business’s sink or swim.
Your CPO must be a multi-dimensional leader who sets and executes the vision that aligns with the organization-wide strategy, minimizes risk to the organization, and drives value creation.
Based on Efficio’s work with hundreds of clients, we have compiled a summary view of what your CPO should be focusing on to give your business a strategic advantage in uncertain times.
A CPO with a vision
What to look for
Your CPO will articulate a bold vision, secure a strong Exec mandate to deliver, and rally the team with a united purpose that propels the organization’s teams beyond convention.
They will be able to articulate the function’s strategy, as well as risks and opportunities, to all stakeholders, engaging them through strong communication, robust measurement, and performance.
Actions for your CPO
- Understand what matters most for your organization.
- Anticipate market developments, both risks and opportunities, which matter to your organization and industry-leading performance.
- Build the skills and strengths you can use to drive progress and differentiate yourself.
- Know where the business would like to be in one, three, and five years and define a plan to achieve this.
Data-driven decision making
What to look for
Your CPO will arm the team with fit-for-purpose tools that yield high-quality data and insights.
Actions for your CPO
- Clarify what questions you need your data to answer.
- Assess the quality and completeness of the existing data.
- Make sure your team understands how to use data effectively. Working with external partners can help to fill a skill gap.
- Embed a practice of consistent and regular measurement in your team.
Building true supplier partnerships
What to look for
Your CPO will recognize that suppliers are more than just vendors: they are partners in your progress.
Your business’s supplier relationships will be characterized by fact-based collaborations, not confrontations, that foster value, improvement, growth, and innovation.
Actions for your CPO
- Segment the supply base and classify suppliers by their importance to the business.
- Understand what matters to your key suppliers.
- Define the end-to-end supply chain goals, as supplier purchases are your costs.
- Identify the gap between your supply base’s current capabilities and the capabilities needed to stay future-ready.
Cost optimization
What to look for
Your CPO will juggle increasingly broader and more nuanced responsibilities, but they must remain grounded in the reality of procurement: every penny saved adds to enterprise value.
Actions for your CPO
- Ensure a true procurement performance management culture is embedded.
- Track projects and measure KPIs consistently.
- Regularly check in on performance using external benchmarks.
- Consider using partners to augment your current capability and capacity, using as and when needed.
A Diversity, Equity, and Inclusion champion
What to look for
Diversity does not guarantee inclusion – and inclusion comes from the top. Your CPO recognizes the varying viewpoints that teams and suppliers bring and encourages ideas from everyone.
Your CPO will champion diversity with an understanding that its benefits stretch far beyond compliance into an ecosystem of teams and suppliers that can bring varying viewpoints and ideas to foster innovation and resilience.
Actions for your CPO
- Champion diversity and implement proper training to eliminate bias within your teams, supply partners, and customers.
- Seek feedback from your team on how your function can become more inclusive.
- Spend time with internal and external stakeholders to discuss changes and ensure that different perspectives are regularly acknowledged and considered.
- Lead mentoring initiatives for underrepresented groups.
Invest in people
What to look for
The realm of procurement is fast-changing; your CPO will lead their team with empathy and clear communication.
On a practical front, they will set the procurement team up in good stead to adapt and evolve as procurement changes to best meet business needs. They should also be able to ascertain quickly and decisively what is best done internally and what capabilities are best sourced externally.
Actions for your CPO
- Conduct a regular review of capacity and capability.
- Communication is key. Be specific about the tasks and competencies you need from each role and how they interact cross-functionally. In addition, be clear on the specifics of future skillset needs.
- Have a plan to retain your best people through structured development plans and good-quality training; valued employees are successful ones.
- Build up the brand of your organization and highlight the strategic value of your function so that you can attract the best people in the market.
A forward-looking supply chain
What to look for
Your CPO will be equipped to deal with more than just the now. In an increasingly risk-filled world, your supply chains must anticipate disruptions, weather storms, and pivot flexibly to help the business survive and thrive.
Actions for your CPO
- Understand the issues you have had over the past 18 months and evaluate their impact.
- Map out your current supply chain and identify potential failure points.
- Invest time in analyzing this information and execute a timebound plan to mitigate these risks.
- Ensure the right team and tools are set up for continuous execution and reporting against the plan.
Technology beyond the buzzword
What to look for
A technologically adept CPO doesn’t just dish out the AI, RPA, and P2P alphabet soup. Staying ahead requires harnessing the right technology and ensuring that implementation turns into effective adoption – and adoption and benefit realization depends on a well-managed change journey.
Actions for your CPO
- Identify what you need by understanding:
- The business requirements
- The big gaps (e.g. few contracts signed or invoices matched)
- The business case for investment
- The balance between your vision for where you want to be (and budget) versus world-class systems
- Define the tech and systems landscape for D2P (demand to pay) enablement. Map short-, medium-, and long-term targets and changes along with relevant implementation plans and benefits. Continuously track status, benefits, and usage
- Work closely with your CIO to understand the organization's tech architecture and the options available.
A leader of ESG action
What to look for
Your CPO will understand procurement and supply chain’s key role in delivering business-wide ESG impact, and so they will embed this understanding and best practice into the function and its processes. They will set clear, prioritized objectives to drive focus, and this will promote performance to meet these.
Actions for your CPO
- Your team will work with ESG leadership to clearly define opportunities and measurable goals.
- Category strategies will be aligned with these goals.
- Your team will focus on and develop these opportunities with supply chain partners.
- Measuring and tracking are key to showcasing improvements – benchmark progress against meaningful metrics.
Time optimization
What to look for
Your CPO will see time as a valuable currency, and they will have an ‘open mind’ to invest in people and systems that can help to deliver benefits faster.
Actions for your CPO
- Track projects to make sure that delays don’t reduce savings.
- Consistently measure KPIs against time to ensure you have a view of any delays.
- Consider using external partners to augment current capability and capacity when suitable.
A holistic approach to supply chain management is critical to achieving success.
With procurement increasingly becoming a critical enabler for competitive advantage, value delivery, risk management, and cost improvement, we encourage C-suites to approach their CPOs with an understanding of the significant strategic impact they can bring.