CPOs are inundated with requests and requirements from all directions on a daily basis. Not only do they have to cut costs to please the C-Suite to keep their jobs, but they have to do so while dealing with constant distress (when shipments are late), disruption (when plants go down or suppliers go bankrupt and the materials or products aren’t coming at all), and dispute (when the supplier wants to be paid for goods that weren’t up to quality standards or arrived damaged).
Plus, they are plagued with requirements from engineering to improve quality and use better raw materials, from marketing to use suppliers that will provide them with brand leverage (either due to the supplier’s brand recognition, such as “Intel Inside”, environmental responsibility, via waste reduction and/or utilization of recycled material, or corporate social responsibility, where the supplier follows fair labour practices and provides compensation and care to its employees above and beyond government mandated minimums in developing countries), and from finance to find suppliers that will either extend DPO or offer early payment discounts just for paying on time. All of this adds cost, and complexity, to the supply chain when Procurement’s prime directive from the C-Suite, which often defines the only metric they are measured on, is cost reduction.
As a result, in addition to having to constantly brush up on their skills, CPOs have a lot to worry about from day to day. That’s why a recent post over on the new Spend Matters Chief Procurement Officer site that askedWhat is Top of Mind for CPOs delved into the subject and identified what should be the top 20 areas of concern for every CPO (or every head of Procurement doing the job of the CPO without the recognition).
In this post, which is a collaboration between the doctor and Pierre the maverick Mitchell
(who soars through the buzz and the noise until he gets to the truth), we pointed out that, in addition to cost cutting, good CPOs are also highly focussed on:
- availability and on-time delivery
- contract management and spend creep
- environmental stewardship and sustainability
- quality, reliability, and safety
- reputation management
- risk management
- supplier relationship management
- working capital optimization
and a dozen other topics of significant concern because if any of these twenty topics are ignored or mismanaged, any identified and negotiated cost savings will disappear in the blink of an eye (and the CPO will be looking for a new job in the blink of the other eye given how unforgiving the shareholders and Board of Directors can be in tight economic times).
The first of these topics, availability and delivery, is addressed in detail in our post on The CPO’s Agenda Part I: Availability and Delivery in a “Hierarchy of Supply” which discusses Supply Assurance and its foundational role in Procurement. Go check it out.
The remaining 19 topics will be addressed over the next couple of months in this ground-breaking new series which will lay each and every topic bare so that you, as an up-and-coming CPO, can understand not only what the topic is and why it is important, but what you have to do to tackle it head-on and make progress while your peers get buried in the avalanche of distresses, disruptions, and disputes that will continue to increase in quantity and complexity until many of these issues are addressed and adequately solved.
Keep a close eye on Chief Procurement Officer in the months to come. This is the first of a number of series that the doctor will be collaborating on in order to help bring you desperately needed education that you won’t get otherwise!