Just because the chief procurement officer’s title carries the word “chief,” doesn’t mean he or she has always had a seat at the executive table. For years, the CPO plugged away in the back office, charged only with acquiring global services at the cheapest possible price.
Now, executive peers recognize the CPO as the go-to expert for advice on forging meaningful vendor relationships. And with the CPO’s new respect comes increased responsibility. Featuring data from the 2017 ProcureCon Indirect West survey, the following Slideshare explores various roles procurement leaders take on in successful operations.Download The Strategic Shift here and the ProcureCon study here.
How do global organizations perceive procurement’s value?
Procurement teams have aligned more comfortably with the businesses they serve as their mission becomes more widely valued. A tactical focus on cost reduction used to be CPOs’ modus operandi, but in recent movements to strategic procurement, they’ve sidestepped the negative stigma around cutting back and given other business leaders incentive to cooperate.
For CPOs who have regularly consulted with other executives for a while, now might be a good time to check in on the perception of procurement’s value in supporting the larger business strategy. At ProcureCon Indirect West 2017, a benchmarking survey gathered the data from 98 executives.
“If you’re seen and perceived as a value-add, your leaders will invest in you. If you’re not, you’re less likely to get that investment.”—Darren Lynch, VP Consulting, Europe, GEP
Procurement’s value relies heavily on strategic transformation…
According to the survey’s results, cost control and saving creation are still the prime factors by which 40% of CPOs are judged. Another 21% of procurement leaders occupy a primarily tactical role. On the other hand, a quarter of respondents have managed to redefine their roles to focus on high-end strategic concepts, and 15% are advisors on developing greater efficiency.
…and the attitude of the C-Suite.
The study also asked respondents what metrics are being used in the C-Suite to assess procurement’s value. The prominence of ROI suggests that most organizations prioritize a simple way of looking at performance. But with ROI as the bedrock of value measurement, stronger forms of analysis—which would naturally be pursued in more advanced departments— are also being explored.
“Organizations in which procurement has moved to using a COGS percentage contribution or SG&A percentage contribution to evaluate performance are providing much higher value. They have stood up and defined a value proposition that is broader than a purely third-party cost and cost-reduction focus.”—Darren Lynch, VP Consulting, Europe, GEP
What if your organization doesn’t yet support procurement’s vision?
Successful globalization requires commitment and coordination across the entire organization. But after a long history of enlisting procurement late in the process, some business units are still in the habit of leaving CPOs out of strategic decisions.
In these cases, CPOs must up-level the discussion, educating internal customers about the many benefits of engaging them earlier. This means demonstrating the tangible value of strategic procurement, sharing insights for mutual success, and ultimately forging partnerships that will help all stakeholders reach your brand’s globalization goals.
Our recent whitepaper, The Strategic Shift: Localization’s Fast Track to Driving Greater Business Value, was written with localization buyers in mind—but contains a myriad of usefultips applicable to engaging stakeholders instrategic procurement.
Alternatively, download the full ProcureCon CPO Studyfor more on how CPOs arealigning their work with larger business goals.
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