Category Archives: Market Intelligence

Have the Requirements To Be a CPO Changed in the Last Decade?

A decade ago we published What Does it Take to be a CPO? While we stand by our claim that Procurement Hasn’t Changed (even though the world has), we should make sure that the requirements for a CPO haven’t changed, because businesses have changed with the world (and maybe we missed something).

Instead of creating a laundry list of skills, we kept it short and sweet (because we co-authored a very long series on the CPO job description that ran on Spend Matters; it’s too bad that it disappeared in the site refresh of ’23).

  • first become a Procurement Leader
  • then understand the primary responsibilities
  • support these responsibilities with the right Procurement technology
  • use your leadership skills and technology platforms to both manage and develop staff and
  • be sure to practice good budget management and align Procurement with the other business functions
  • while focussing on continual learning and self improvement.

In other words, it’s about:

  • leadership
  • problem identification
  • solution identification
  • technology identification
  • fiscal management
  • continual learning and improvement

Moreover, as pointed out in the dialogue of a recent LinkedIn post, that’s what good Procurement leadership all comes down to: visibility into the problem, gaining an understanding, identifying a solution, finding the right technology to implement it, and having the leadership to make it all happen.

So the answer is the core requirements for being a good CPO haven’t changed in the last decade. You may approach the problem different, find a better solution, and use a different technology, but the fundamentals are still the same.

Simplifying the Procurement One Pager – Procurement Techie Translation!

In our last post we noted that the purpose of Procurement, which is at least the world’s fourth oldest profession, hasn’t changed since the first handbook was written 138 years ago (even though the world has changed), is not hard to figure out or explain, and can be put forward with an explanation so simple that even a hillbilly building a moonshine empire could completely understand it.

We published this because we want to cut the trend of the Procurement One Pager off before every consultant AND influencer does their own version, with their own jargon and KPIs up and down the ying-yang, that isn’t going to help anyone when plain language will suffice for getting someone started and at least 80% of the way to best-practice, if not best-in-class.

To demonstrate this, we are going to translate our hillbilly one-pager into techie and procurement speak so you can see we got it right.

Purpose:

Git ‘R Done!: Support the Organization In What They Need When They Need It

Objectives:

  1. Pinch Those Pennies: Avoid Unnecessary Costs
  2. Don’t Run Out: Supply Assurance
  3. Don’t Be Evil: Sustainability and Human Rights
  4. Stay Classy: Quality, Corporate Social Responsibility, and Supplier Development

Initiatives:

  1. Follow the Money!: Spend Analysis and Category Management
  2. Get Haggling!: Strategic (e-)Sourcing and Contract (Re)Negotiation
  3. Hunt Those Rascally Coons!: Process Analysis, Stockout Analysis, Disruption Analysis, etc.
  4. Regular Barn Dances & Hoedowns: Customer Feedback and Workshops, Supplier Development and Innovation, etc.

KPIs:

  1. Pennies Counted: Spend Under Management
  2. Pennies Saved: Savings and Cost Avoidance
  3. Raucous Reductions: Stockout Reduction, Disruption Reduction, Sourcing Time Reduction, Invoice Processing Time Reduction, Straight Through Invoice Processing, etc.
  4. Supplier Improvement: Defect Reduction, On Time Delivery Improvement, Year-Over-Year Cost Reductions, etc.

Getting to Work

Penny Pinching:

  1. Spend Analysis
  2. Market Intelligence
  3. Category Management
  4. Strategic Sourcing and Procurement
  5. Contract Negotiation Management

No Running Out:

  1. Inventory Planning and Management
  2. Contract Execution
  3. Procurement Automation
  4. Supply Chain Visibility
  5. Risk Monitoring

Not Being Evil:

  1. GHG Carbon Management
  2. Energy and Water Sustainability
  3. Recycling and Waste Minimization
  4. Equality and Equity in your Company and Supply Chain
  5. Human Rights and Worker Wellfare Assurances
  6. No Pollution, including Noise Pollution

Staying Classy:

  1. Quality and Safety Focus
  2. Constant Push to Improve Performance
  3. No-Profit Supplier Development and Customer Workshops
  4. Charitable Donations and Community Building

Simplifying the Procurement One Pager!

Let’s cut this trend off before every consultant AND influencer does their own version, with jargon and KPIs up and down the ying-yang (which you definitely need for system selection, which is something we will discuss in series to come, and partially need to appease management, but need very few of to actually do your job).

Since the purpose of Procurement, as one of the world’s oldest professions (and while a specific instance of sales is claimed to be the world’s oldest profession, which would make Procurement the second oldest, this overlooks the fact that all early societies had astrologers and religious leaders often before they bought and sold, which means it might only be the world’s fourth oldest profession), hasn’t really changed since it started thousands of years ago, and definitely hasn’t changed since the first handbook was written 138 years ago (even though the world has changed), it’s really not that hard to figure out or explain.

To drive this point home, we’re going to capture the core in an explanation so simple that even a hillbilly building a moonshine empire could completely understand it.

Purpose:

Git ‘R Done!

Objectives:

  1. Pinch Those Pennies
  2. Don’t Run Out
  3. Don’t Be Evil!
  4. Stay Classy

Initiatives:

  1. Follow the Money!
  2. Get Haggling!
  3. Go Hunting for those Rascally Coons! (that mess with the systems)
  4. Regular Barn Dances and Hoedowns

KPIs:

  1. Pennies Counted
  2. Pennies Saved
  3. Raucous Reductions
    (because a smooth still is a productive and profitable still)
  4. Supplier Improvement

Getting to Work

Penny Pinching:

  1. Sum the Pennies by Supplier-Product and Supplier-Service Pairing
  2. Eliminate those pairings where there is a contract
  3. Ask Cletus, Earl, Sadie, and Mabel how much they are paying
  4. Eliminate those pairings where you are paying what everyone else is (or less)
  5. Order what’s left from biggest to smallest and get haggling
    1. Get Cletus, Earl, Sadie, and Mabel to share their information at the next trailer park BBQ
    2. Call up the vendors and get those quotes
    3. Set up a few cookouts and meet with the best suppliers
    4. Shake on the best deal

Not Running Out:

  1. Track the inventory utilization by day
  2. Use the curve to plan what you need when
  3. Based on the suppliers lead time, Joe’s delivery time, your order costs, and your supplier’s production costs, figure out the right order size and frequency and plan your orders

Not Being Evil:

  1. Make sure you ain’t wastin’ any water (it’s precious and you need it for your stills)
  2. Make sure you ain’t wastin’ any energy (you need that wood for your barn and that coal for your BBQ)
  3. Make sure everyone is treated the way you treat your trailer park crew
  4. Think about your neighbors (and keep the noise down)

Staying Classy:

  1. Regularly test your product for quality, safety, and performance
  2. Regularly invite your customers to hoedowns to get their feedback and suppliers to barn dances to help them develop their buck dancing, flat footing, clogging, and square-dancing
  3. Give generously to the orphan’s fund and the alligator preserves

It’s stupid simple to get started on good Procurement. Don’t over-complicate it!

Cutting Edge Tech Is NOT Defined by the C-Suite, …

… Financiers, or the Marketers pushing hype (from the A.S.S.H.O.L.E.) at you 24/7.

Nor is it defined by the algorithms it uses, the software stacks it runs on, or the hardware stacks it makes use of.

Cutting edge tech is ANY and ALL tech that

  • solves one or more significant problems that not being solved by your tech today and
  • does it by automating at least 90% of the tactical data processes that can be automated

It can be based on the latest AI algorithm or twenty year old RPA. It doesn’t matter if it shines a light using a LAMP stack, if it is an edgy MEAN stack, an Austin Powers inspired Grails stack, or even a .NET stack (though the doctor personally shuddered typing those last three caps out). The entire point of enterprise software is to solve your problems.

The point of software is NOT to provide

  • an excuse for a C-Suite to cut his tech-bro buddy a fat check,
  • a new Tulip Market for greedy financiers who think they can score big and get out before the crash, or
  • marketers a platform to pump out pompous poop on a daily basis.

As Mr. Koray Köse penned in a recent piece on LinkedIn on how you are in need of cutting edge technology, the last thing you want to do is take your direction from the VC-pumped C-Levels who do nothing but repeat the marketing garbage they are fed, sometimes changing the baseline of the garbage mid-sentence!

You have to remember:

  • All the VCs and most of the PEs want to create the next unicorn and get rich quick overnight. So most of these VCs and PE firms are pumping huge amounts into companies with little to no product (to support their grand vision that even SAP and Oracle haven’t managed to achieve after 5 decades and trillions of dollars) and directing the majority of that to be spent on buzz-creating sales and marketing (and not real product development). After all, you don’t actually have to create anything beyond buzz to get rich — market crashes throughout history have proven that since Tulip Mania. (What was created there of value? Nothing. But hype made a few men rich and many men poor.)
  • Even though today’s LLMs are dumber than a doorknob (and demonstrate more than any previous generation of the tech that AI should stand for Artificial Idiocy), with performance degrading every iteration (because there is no more data to steal, and the AI engines are now training each other on regurgitated digital garbage), marketers are still taking storytelling to a whole new level (and we mean storytelling because ALL the claims are fake) with a spin that even the Spin Doctors of old would be envious of. (Little Miss Can’t Be Wrong now, right? They want to Make You A Believer so you hand over all your Money when you should Exit … Stage Left and Run To The Hills!)
  • This copy is being pushed onto the C-Suites of all of the other investments in their portfolio with assurances that it’s all true, and being similarly echoed to all of the CXOs that attend the conferences they speak at, the golf outings they are invited to, and the exclusive social gatherings they arrange.

Not one of these groups knows what you need, and two of these groups have absolutely no interest in giving it to you — their interest is all about getting your money, building the hype, inflating the value, and, hopefully, cashing out big before the next hype cycle and/or the inevitable market crash that’s coming.

The technology you need is the technology that is:

  • built with real world problems in mind,
  • tested on real world problems in real companies and proven to deliver, and
  • scalable and extendable to your operations and needs.

This type of tech is built over years and doesn’t use unreliable probabilistic AI at the core. (It runs on traditional, configurable, RPA that is 100% reliable and auditable. Now, this tech might employe AI to help with the configuration by analyzing your systems and processes and self-assessed gap analysis by recommending configurations for you to approve, and that’s okay, because it’s not randomly making decisions, its recommending options and letting you confirm or deny. It might also use SLMs for specific problems where they work a high percentage of the time to jump-start searches, documents, and processes for you, and as long as you retain full control and can accept, modify, or reject, that’s okay too. But everything is built on a solid core, with 100% dependable automation for all key data intake, processing, and pushes that is done without any manual intervention, appropriately calibrated to your business rules, processes, and goals.)

It’s also built slow, rolled out to a small group of beta customers or development partners, and hardened in the field before being rolled out en masse.

And, most importantly, it’s built by a company that is boot-strapped or frugally running on a shoe-string budget from minority SEED investors to get that first version up-and-running successfully in its first 10 customers before that company goes for any VC funding to scale up. A company that has the time to get it right before being under constant pressure to make demanding, if not impossible, sales targets.

Moreover, to have any chance of getting this software, you need to know three things:

  1. how to identify what you need that will form the heart and soul of the RFX,
  2. how to write a good technology RFX and analyze the responses, and
  3. how to identify the right companies to invite to the RFX.

What You Need

For Supply Chain, as Mr. Koray Köse points out, if you need help identifying your true needs and cutting through the noise, he can help you out with that with the eyes of a hawk, the skill of a surgeon, and the wit of a Williams (a Robin Williams). For Procurement, Joël Collin-Demers can slice through your organizational landscape like a hot knife through butter and let you know exactly what you need in priority order.

The Technology RFP

Every consultancy and their mascot claims they can help you here, but you need to be very, very careful.

  • many of their consultants are not technology experts and tend to prioritize features over functions, as that’s all they know
  • many of these firms have partnerships with the (mega) suite players, and you don’t maintain sycophant, sorry, Gold/Platinum/Diamond, status unless you direct a LOT of business their way each year, so they tend to try to fit everyone into one of these buckets
  • many follow the old consulting model of “give the client exactly what he thinks he wants” and don’t take the time to figure out what you actually need and educate you, leading to an RFP that is no better than what you would have written yourself, as they spend half their time questioning you, and the other half writing down your responses

For true success, you need someone who is simultaneously:

  • an expert in the domain,
  • an expert in technology, and
  • not incentivized to help any vendor whatsoever and, preferably
  • an expert in project assurance (but not always necessary)

If you need help writing that ProcureTech / Direct Sourcing/Supply Chain RFP, feel free to reach out. This is my expertise. And for some tips, feel free to start with our recent series on How Do You Write A Good RFP?

Vendor Selection

Very few analysts and consultants know more than a handful of vendors. The big firms focus on the big vendors who cut big cheques, which are the 20-ish same vendors you see in their maps year after year after year. They don’t know about the other 700. Only a few of us independent analysts go far and wide and actually know what is out there and how it can help you.

For ProcureTech, SI should be your first stop. It’s the site that gave you the mega map to open your eyes as to just how wide the playing field is. Moreover, if you need something really niche where the doctor doesn’t have the expertise, he’ll find the right expert to refer you to.

For SupplyChain, Mr. Köse knows a lot of the players. But don’t overlook Bob Ferrari of The Ferrari Group. As one of the original supply chain analysts, he knows all the players and what their platforms can and can’t do inside and out.

And if you reach out to the right experts and get the right help, maybe you can get true cutting edge tech that actually helps you!