Welcome Your Newest C-Suite Strategist: Chief Procurement Officer
I’m in frequent conversations with executives and entrepreneurs at a number of companies in different sectors, and "Where do we go from here?" is the question that seems to keep rising to the top. Of course, smart companies are always asking it, but we’re in uncharted waters now. It’s not just about the pandemic, either, but shifts in consumer culture (and culture more broadly). And yet, the pandemic is clearly a big piece of the puzzle, with how it’s forcing businesses to adjust their goals and processes and accelerating a lot of the change that was already underway.
Put together, it’s like a tsunami: From a distance, it looks cool and interesting, but pretty soon you realize it’s approaching at hyperspeed, turns out to be massive and ultimately results in irreversible change.
So, where do we go from here?
I’ve written before about the significance of procurement as well as the power of supply chains. “Where we go” is hopefully onward and forward, and “how we get there” can mean leveraging that power. In other words, I’m making a suggestion that is simultaneously subtle and practical; simple but huge in terms of its potential: Start seeing and treating procurement differently. In fact, make your Chief Procurement Officer a mainstay of the “war room” — and if you don’t have a CPO role, make one. Here are four reasons why.
1. Mission critical
Procurement often goes overlooked (how many business school graduates do you know who came out of college looking to be a CPO?), and traditionally, that hasn’t been a problem. Now, things are changing. Supply chain transparency has grown in importance, not only to business processes but to end customers. Exponential technologies have also radically altered what’s possible within supply chains and will continue to for the foreseeable future. Covid, meanwhile, has made all of this very apparent. Having the best you can get in the procurement department isn’t just about saving money; it's about having a healthy backbone for the company, one that ensures business can continue from day today.
2. Maximizing people power
Diversity and inclusion in the workplace can be a touchy subject that encompasses any number of valid opinions, ideas and criticisms. There is undoubtedly more than one way to promote D&I within organizations, but the surprising thing is how many companies treat it as a compliance issue (or worse, an afterthought) rather than an opportunity. If you want to reap the maximum benefits of diversity and to promote it in industry more broadly — as opposed to just cheerleading — then empower your CPO. How you identify, choose and interact with vendors and suppliers can have just as much of an impact on D&I, and possibly a much greater one, as your internal corporate culture.
3. Innovating at speed
Wait, innovation? Doesn’t that belong with tech and innovation specialists? Well, sure, but at the very least, your CPO should be in the mix for two reasons. One, because you can’t innovate without affecting supply chains, and two, because in the current environment, you can’t effectively manage supply chains without innovating. To that last point, technologies are emerging at a pace that drastically amplifies the consequences of falling behind in the digital-transformation race. If you want your company to stay anywhere near the leading edge, procurement has to be a big part of the conversation.
4. Secure and safe trade
Globalization has defined procurement for the better part of three decades. Now, in the midst of complex trade economics, a push for radical transparency and dynamic cultural shifts, we’re seeing new challenges in the supply market. It’s not necessarily that the pendulum is swinging back the other way, but in the interest of protecting the bottom line as well as the global commerces, companies are learning to take a measured approach that does more than just chase low prices. Meanwhile, protecting intellectual property remains a top priority. Who has the knowledge and understanding to assess and account for these mutually influential factors? You guessed it: a CPO.
The bottom line, which I’ve said before and will say again, is that procurement has evolved well past the one-dimensional profession that it once was (and at some companies, still is). The role is no longer simply meeting with vendors and typing up purchase reports; when done well, it involves a thorough understanding of internal and external business processes, deep knowledge of supply economics and market forces and genuine empathy for clients and customers. Put all those together and what do you have? Someone who you’d be remiss to not rely on as a pillar of your inner circle.