Monthly Archives: January 2015

The CPO Defined

What is a CPO? We all know that CPO stands for Chief Procurement Officer, but what is a Chief Procurement Officer? Considering that the only about half of organizations have a VP or CPO heading up Procurement and that only one in five of these allow the CPO to sit at the C-Suite table, it should be obvious that this position is still not that well defined.

Even less defined is who this individual is. Is the CPO an executive, leader, strategist, tactician, buyer extraordinaire, supply chain guru, visionary, or rouge? What skills should the CPO possess? What should the CPO be measured on, and, more importantly, how does this relate to what the CPO is actually measured on?

However, these problems are trivial when compared to the problems possessed by a new CPO (or VP) or a senior buyer or director aspiring to the CPO position. These individuals, desperately in training and guidance, have no where to turn. There is no one location where they can go to

  • find out what a CPO is
  • find out what the CPO job description means
  • find out what an organization that needs a CPO is really looking for
  • find out what qualities and skills a CPO needs
  • find out what issues the CPO should be concerned about
  • find out what strategies and tactics the CPO needs
  • find out what best practices need to be put in place
  • find out what technologies will be needed to support them
  • find out what transition management skills will be needed to effect the changes
  • … and so on …

This is because no one person, and to be honest, no one site has all of the necessary expertise in:

  • Sourcing & Procurement
  • Operations Management
  • Strategy & Tactics
  • Best Practices & Technology
  • Internal Sales & Fire Lighting
  • Education & Training
  • … and so on …

You see, it takes a lot of knowledge and ability to be a great CPO, and a lot of this knowledge can only be parted by true experts. Given the fact that it typically takes an average person ten years to become an expert in just one skill, it’s not surprising that there is no one person with all of this knowledge and capability. Moreover, given the fact that most small expert consultancies are formed by people with like interests and skills, it’s also not surprising that you are only going to get expertise in a few of these categories.

However, when the right people with the altruistic goal of fulfilling a need come together, to fill a need that would otherwise not be fulfilled, they can combine their expertise to create a curriculum and a resource that fully defines what a CPO is, the skills and knowledge the CPO needs, the strategies and tactics to get the CPO through the day, the best practices and technologies to put in place, and the transition management skills that will be needed.

And that’s what has happened. Today, the Spend Matters network launches Chief Procurement Officer. This new initiative, overseen by the legendary Pierre Mitchell, is starting off as the first collaboration between Spend Matters and Sourcing Innovation designed to fully define what a CPO is, what a CPO needs, and what a CPO should expect upon starting a new job. Over the next few months you will see a number of multi-part series on:

  • What is a CPO?
  • Tearing Apart the CPO Job Description
  • The CPO’s Agenda
  • The CPO’s Journey
  • … etc. …

the doctor has already co-authored over thirty posts with Pierre on these topics, with dozens more in the works. When you combine Pierre’s expertise on Supply Management, Operations, and Organizational Planning with the doctor‘s expertise on Supply Management, Technology, and Education with Thomas Kase‘s expertise on Strategy, Tactics, Best Practices and Field Operations with Jason “The Prophet” Busch’s ability to show you how to internally sell and light the fire — the whole gambit of what you need is covered!

So I recommend you head on over and check it out, starting with:

It’s Only Been One Hundred Years

Since U.S. transcontinental telephone service was inaugurated by a call between Alexander Graham Bell, who invented the first practical telephone, and Thomas Watson, his assistant who later used his royalties from the Bell Telephone Company to found the Fore River Ship and Engine Building Company, which would become home to one of the biggest shipyards in America by 1901.

That’s right, it’s only been one hundred years since the inaugural telephone call from New York to San Francisco was made by Bell to Watson. And yet, one hundred years later we can call, email, tweet, and message in real time not just with New York and San Francisco, but with London and Shanghai.

When you consider how many years we existed as a civilization before we even had a light-bulb, it’s simply amazing.

75 Million . . . for a Wallet!

In our recent damnation post on e-Currency, we noted that if you think trying to manage real currency exchange is bad, just wait until you have to start using non-country based e-Currency, like Bitcoin — which is going to happen sooner than you think if CoinBase, which just raised 75 Million to create a better Bitcoin Wallet, has its way.

What do you think LOLCat?

Please, take my dollars.

Is that a compelling endorsement, LOLCat — or are you just trying to hide the fact that you are a cat?

How Do You Define Procurement Success?

Cost Savings? Cost Avoidance? Value Generation? Just getting through the damned day? (It is the year of Procurement Damnation, after all.)

It’s an important question. Why? Your success depends on your answer, because it is this answer, given or implied, that guides every sourcing, category management, and procurement project that you do.

If you consider the art of the Strategic Sourcing Process, the Category Management Process, or the Contract Management Lifecycle, you see that they all start about the same at a high-level:

  • Need Identification
  • Business Case
  • Stakeholder On-boarding & Management Approval
  • Strategy Formation
  • Risk Assessment & Contingency Planning
  • Detailed Specifications and Requirements
  • . . .

And if you dive in to each of these steps, you find that a key requirement of each step is an acceptable definition of success.

  • Need Identification
    There is a reason for the need, and that reason is that it is required to achieve organizational success.
  • Business Case
    A key requirement is the results that will be achieved, which should define success.
  • Stakeholder On-boarding & Management Approval
    What will they get out of it? They are more likely to come on-board if they see a result that will enable their success.
  • Strategy Formation
    What strategy will lead to success?
  • Risk Assessment & Contingency Planning
    What are the risks to success and what the contingency plans to ensure success?
  • Detailed Specifications and Requirements
    What are the steps to get to success, and what measurements will keep the team on track?

And, more importantly, if you do not define success before you go to bid, you can not expect that any response to your tender from any supplier will deliver that success.

In other words, this unwritten rule should probably get its own step in your sourcing / category management / contract management process, which should probably start like this:

  • Need Identification
  • Success Definition
  • Business Case
  • . . .

For more details on how to achieve RFP success, see SI’s series on best practice vendor selection:

And check out Thomas Kase’s recent series on Improving RFP-Driven Technology Sourcing Outcomes over on Spend Matters Pro if you have access.

Source-to-Settle – The Sourcing and Procurement Kettle

Source-to-Settle is the end-to-end integration of sourcing and procurement, starting with spend analysis and ending at spend analysis. It is the integrated workflow that starts with sourcing event identification, proceeds through e-Negotiation and Award, and ends with the creation of a purchase order, the receipt of goods and an invoice, and the e-payment for goods received and includes everything in between.

There’s a lot involved in the source-to-settle process, and often a lot more than can be found in most sourcing and procurement modules and stand-alone best-of-breed suites. As indicated in our last post, there is the need for accuracy — to insure that savings are not lost and the right categories are identified. There is also the need for compliance — with insurance and regulatory requirements, with contracts and pricing, and, most importantly with SOX. And results only come from efficiency and performance — which requires integrated, streamlined processes, supplier performance management, and collaboration.

It’s a tall order, but an organization that doesn’t keep PACE never realizes the value that results when there’s one integrated workflow, one complete spend repository for spend analysis, and one, 100% accurate, view of the truth.

For deeper insight into how an end-to-end integrated Source-to-Settle solution can allow your organization to keep PACE and deliver value beyond what you may have thought possible, download Sourcing Innovation’s latest white-paper on how An Integrated Source-to-Settle Platform Brings Unparalleled Benefits to Supply Management and register for Ivalua’s upcoming webinar on how to Help Build Your Business Case Today on January 28 @ 11 PST / 14 EST / 19 GMT!