Category Archives: CPO

It Would Be Great if Future CEOs were Past CPOs …

… since that would at least shift the focus from “Sell as much as possible” to “Save as much as possible” and replace psychopaths with short-term profit mindsets with penny-pinchers with long term corporate survival mindsets (which is is going to be critical in the future with declining birth rates in the first world — and, FYI, this is why so many old white males are pretending to be faithful Christians as they want to get rid of birth control and working women, assuming that will lead to a higher birth rates and more future consumers to rip off … but we digress).

And while this doesn’t necessarily mean that this hypothetical future generation of CPOs would do the right thing (and not do massive layoffs when sales drop [like the former Nintendo CEO who was probably the last great, human, Mega-Corp CEO on the planet], not blame the customer when a multi-million dollar implementation fails, and not completely ignore sustainability), it does mean that they will at least consider all decisions from a longer term cost viewpoint and make better decisions.

1. Former CPOs would know that the cost to replace talent is almost always greater than the cost to retain talent and would not only ensure top talent is paid market rates, but given good raises every year based on performance which would NEVER be less than a cost of living increase. Thus, if the workforce reduction is expected to be only temporary, they wouldn’t layoff anyone they’d need to replace ASAP at a higher price tag when the market bounced back. They’d only reduce their workforce by the amount they would expect to be semi-permanent (3 years or more). Thus, they’d treat their true, top tier workforce, as real, somewhat valuable, human beings. (And not cattle to be bought and sold on a whim or indentured servants, if they use the H1-B in the latter case.)

2. Former CPOs would understand the pain and hardship of NOT having their problems solved, being lied to on a daily basis by vendor reps, and paying a lot of money for very little of the promised ROI and despise those people with a passion. They would at least instill a culture of honesty in their sales and services organization as a result. They wouldn’t promise what they knew they couldn’t deliver, and would quickly fire any rep who knowingly made false claims.

Now, whatever you do, don’t confuse this with a customer value mindset! They know that the value you get out of something is relative to the effort you put in and that the customer is as much on the hook for the ROI as they are. And, frankly, they know that the best you get is what you pay for. While they wouldn’t tolerate outright dishonesty in the sales organization, they’d have no problem with the sales person selling you sh!tty service package C and then gladly pointing out when you complain about the lack of support in service package C that all the Ts and Cs were presented to you before you signed, clearly laid out in a 47 page addendum at the link provided, and that while “priority one issues will be fixed within two code cycles”, that’s from the date the issue is confirmed, which means you need to work with them in the chosen confirmation windows that are from 9:01 pm to 11:59 pm Mon, Tues, and Weds during normal operating hours of the Tier 3 issue support centre half way around the world. I.E. they’ll sell you crap service if that’s all you want to pay for, but they’d be totally open about it if you remembered to ask.

3. We’d actually start to see some big sustainability initiatives in corporate. Not because they gave a flying f6ck about it, as we pointed out in our recent article about how No One Cares about sustainability, but because they would look at 5+ year horizons again (for the first time in over three decades) and realize that there are some investments that begin to pay off in 5 years and pay off big after 5 to 7 years when certain raw material, energy, or freshwater cost keeps going up year after year after year. They’d see that the right sustainability initiative is actually a mid-to-long term corporate sustainability initiative and just do it, no regulation or incentive needed.

But alas, as we have implied and said before, when it comes to CPOs holding the top CEO spot in big corpo, THIS WON’T HAPPEN! And, like the bullsh!t sustainability push, we get very upset when we see these grand proclamations every year by Procurement “influencers” who either don’t get it or are just trying to get noticed, liked, and subscribed to.

It’s California Dreaming, and it’s very easy to explain why this will NOT happen.

Right now, roughly 15% of F1000 companies have CPOs, and the stats get worse as you go down to the G3000 and the mid-market. But 100% of companies need, and have, a CEO! That means we’re either going to lose 90% of companies in a great purge to allow this dream to become reality or it’s not going to become reality as at most 1 in 10 big corporates could have a former CPO as CEO.

Now, I like the dream, especially when you consider that the two most important roles in any organization are CRO and CPO (NOT CEO and CFO), and that the key to bottom line success in tough economies (which are about to become the norm … the golden age of pretend infinite growth is over … made clear by the fact that we are in an age of rapid decline in population growth rate in most first world economies) is the CPO, which means every G3000 should have a CPO, but that’s not the case. Thus, the dream is just a dream and, as long as we live in a capitalistic age focussed on short term profits, it’s not going to happen.

The best we can hope for is that, over the next decade, the percentage of organizations with CPOs doubles. We need more than that, but it would be a start!

Ardent Partners Steps Up Its Game — But Will the CPOs Rise Up?

Unless you’ve been under a rock for the past ten days you will have noticed that Ardent Partners — a research firm that has traditionally focussed on Contract Management, Accounts Payables/Invoice Management/e-Payables, Contingent Workforce, and CPO Advisory — stepped up their game when they hired Magnus Bergfors as VP of Research. Magnus, a former Gartner and Spend Matters analyst, possesses deep expertise on the Source-to-Contract side of the S2P equation, especially around Strategic Sourcing, Supplier Management, and the front-end of e-Procurement. With the addition of Magnus, Ardent Partners can now truly cover the Source-to-Pay spectrum.

Even though they only have three (3) senior analysts, at the very least, given the slew of departures over the past few years from the top firms, Ardent Partners can now attempt to go head-to-head with these firms in confidence and possibly be more valuable to their clients than those firms. While the doctor doesn’t expect that they will be able to introduce a new market map (or even want to try given the technology dominance of the Spend Matters map), as every up-and-coming market firm is want to do these days, he does expect that, given the vast network of CPOs they have built up, Magnus will be able to draw out some fairly interesting insights from that group. Likely deep insight into the typical technology landscape, average Procurement department proficiency, key concerns of today’s CPOs, and so on.

But the question is, how will Ardent Partners make use of that knowledge, how will their clients, and what will Magnus do to disrupt the space in his new role? the doctor will be watching.  In the mean time, the doctor suggests keeping an eye on Magnificent Magnus Mondays for some hints into what might be coming.

Outside-In Issues are Shaping Modern Procurement — Is Your Organization Ready?

Last year, the doctor and the maverick identified twenty issues that were occupying a CPO’s mind in our post on “what is top on a CPO’s mind” on Spend Matters, from overarching issues affecting the organization — such as economic instability, globalization, innovation and corporate reputation — to value creating methods that can increase the overall value of Procurement — like category management, supply base redesign, lean and six sigma and total cost modeling.

The reality is that if Procurement’s value is ultimately derived from the extraction of value from supply markets, then, by definition, the CPO Agenda is driven heavily from an outside-in perspective. This value starts with assurance of supply, and continues with innovation, market penetration, reputation, and regulatory compliance. In other words, the days of focussing on supply assurance, cost reduction, and demand management from a pure supply standpoint alone are long over for any company that wants to survive the 21st century and the many damnations it brings to Procurement (see the 100 Damnations index).

One has to remember that stagnant GDP growth, rising inflation, steady or increasing unemployment, rising inequality between the rich and poor and an increasing need for resources in greatly limited supply are creating a perfect economic storm that will sink any company not ready to compete in the global marketplace that has taken hold in most large economies. Value chains are becoming bifurcated and turned on their heads. Consumers want local and they want global on demand. Products need to come from everywhere and go to everywhere, be compliant with local and foreign regulations, be produced in a socially responsible fashion and be sold through the appropriate digital channels. And this all has to be done by Monday morning at 9 am.

Because, today, a CPO has to deal with half-a-dozen overarching issues that are shaping the course of supply management before she can get to the nine (or so) issues clouding her agenda and the dozens of value drivers at each layer of the hierarchy of supply. Over the next few months, over on the Spend Matters CPO site, the doctor and the maverick will be chronicling these issues, agenda items, and value drivers in three 10+ part series that have been in careful development for a while now, to, finally, give a CPO a complete overview of the mad, mad world they have to survive in.

The first post, on “CSR, Environmental Stewardship, and Sustainability” is up and ready for your reading pleasure. Check it out.

What Does it Take to Be CPO?

The short answer is, fulfill the CPO Job Description, even though the order is as tall as it is wide. Use their skills, education, and experience to execute the primary responsibilities efficiently and effectively.

However, this doesn’t help you understand how to

  • define the organizational Procurement strategy
  • create and manage short, mid, and long-term goals and objectives
  • create and leverage on-going value from the supply base
  • manage BPO activities
  • identify, realize, and maintain cost-saving and cost-reduction opportunities
  • etc.

So what do you do?

First of all, 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 staff and develop staff.

Then, be sure to practice good budget management and align procurement with the other business functions.

And, finally, don’t forget to focus on continual learning and self-improvement. While the maverick and the doctor covered a lot in our series on the CPO job description and what it takes to succeed as a CPO, one thing we didn’t spend a lot of time on was the importance of continual learning. Nothing about Procurement and Supply Management is static. Everything changes, and everyday provides a new challenge that must be death with. New disruptions. New innovations. New opportunities. New threats. That’s why SI and the new spendmatters.com/cpo site exist. To help you identify new practices, process, technologies, and ideas that will help you deal with all of the change to come but yet get through it.

How Many Procurement Myths Have You Fallen For?

As a Senior Buyer or Procurement Leader, you probably feel you’re doing almost everything right, or at least right enough to get great results. Maybe that’s true, but maybe you’ve fallen for a handful, or two handfuls, of the procurement myths that still plague even leading Procurement organizations to this very day.

If you think you’re at the top of your game, I urge you to follow the new series on Procurement Myths that the maverick is running over on the new Spend Matters CPO site. While the doctor isn’t co-authoring this particular series, he did work with the maverick to identify the most common myths and outlined what he saw as the most common symptoms, and these inputs are shaping the 25-part series to come.

Myth I and Myth II are already up! Check them out and see if you’ve fallen for any of them. (And if you have, as you are the leader, there’s still plenty of time to fix your perspective and lead the organization into a new era as they will never figure it out without you.)