As Accentures Nowosel put it, CPOs, by virtue of their close connections with key stakeholders of the business, are custodians of the companys brand. 
Chief Operations Officers are laser-focused on business continuity and efficiency. Verify Credential Our conversations with leading chief procurement officers helped us consolidate our thinking around four major themes: orchestrating the ecosystem, embedding sustainability, becoming a catalyst for digital innovation at the corporate level, and providing strategic business insights.
%PDF-1.7 % Among the many organizational challenges stemming from the extraordinary events of the past couple of years, considering the future of the procurement function is one that should definitely move higher up on the corporate agenda. While the COVID-19 crisis provided a clear picture of how supply chain disruptions can affect everyday life, corporate leaders should recognize that the changes that have been underpinning the transformation of the procurement function are more fundamental in nature. Now, board members and business CEOs ask procurement for their view on the supply situation ahead of talking to investors., UCBs Bals added, Procurement has a fully transversal view of the rest of the organization and is geared to provide the best insights and services to all stakeholders, without any selfish ambition or agenda. The CPO and the function can also directly improve performance, as Heinekens Le Faou pointed out: The CPO needs to shape his or her team into an enabling function, one naturally integrated in the business, that acts as a performance accelerator of every other function and a 360-degree, end-to-end value chain federator from suppliers to customers. Lynn De Proft, Solvays CPO, added: Commercial acumen needs to be there, as well as the fundamental understanding of the P&L., Henkels Conquret summarized the complexity of the underlying evolution of the CPO role well: While traditional skills will become less important for the CPO, they will still remain important for the procurement organization as a whole.. We also use third-party cookies that help us analyze and understand how you use this website. Unilevers Ingram said, Following the evolution of the procurement function, CPOs will have to be strategists first and functional leaders second. This means that CPOs will be less focused on the day-to-day traditional procurement activities and that they will spend significantly more time on making the function a seamless bridge between their companies and the ecosystem within which they operate. Z Pt^!3FJ Resetting the role of the chief procurement officer.
This cookie is set by GDPR Cookie Consent plugin. They all agree: the traditional pyramid of value-creation drivers in the procurement function is reshaping fastif not inverting. I have seen a lot of transformation happening recently, with the procurement functions shifting from an insular, contract- and process-heavy organization to a wider, more insightful function that is connected to what is happening in the broader market, and this will only accelerate. endstream endobj 632 0 obj <>stream It is the person the CPO reports to and the one who decides on priorities, key initiatives and investments in Procurement. See The changing leadership styles of supply chain executives.). According to BTs Pourrat, procurement executives do not promote themselves well: They frequently come across as very technical and struggle to come out of their comfort zones. Clearly, the function needs a rebrand. Stay connected to our expert insights, thought leadership, and event information. Alan Holtz, managing director of the turnaround and restructuring practice at AlixPartners, discusses the role of the chief restructuring officer and the operational challenges hes been working on through the pandemic. What do these changes mean for the CPO and the procurement function, and how do they rebalance the traditional procurement value-creation model? You might be thinking "isn't the most important role in Procurement the Chief Procurement Officer (CPO)?" Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. In terms of organizational hierarchy, this reporting line is significantly less influential than other organizations where procurement reports directly to the CFO or CEO. operating vice officer chief president projects macdonald ruairi meet
Copyright 2020 Next Level Purchasing, LLC. There will also be more opportunities for collaborating alongside other departments. From our extensive client work and conversations with the 11 CPOs we interviewed for this article, we have distilled four leadership characteristics critical to success: There is a war for procurement talent today, said Heinekens Le Faou. silverstein hodges silvia procurement legal buying questions council blc Over the past five years, we have tracked a marked change in the leadership styles most often used by supply chain executives. We help our clients change the world, one leadership team at a time. It will provide you with a comprehensive view of the whole organization and also allow you to grow your external network.". antonia wanner procurecon Any unethical or unlawful shortcut will lead to long-term damages of a companys reputation and market position. nh aragones ramon officer executive chief hotel hotels ramn aragons january It does not store any personal data. 2Celine Cherel-Bonnemaison, Gustav Erlandsson, Ben Ibach, and Peter Spiller, Buying into a more sustainable value chain, McKinsey & Company, September 22, 2021. The fact that the matter is up for debate just goes to show that procurements growing influence reaches across operations, finance, and even into the CEOs office. Indeed, according to a recent Deloitte survey of chief procurement officers, only 6% of organizations have fully deployed predictive analytics systems, 15% are scaling them, and a further 36% are piloting such tools.3 Getting an edge on data use throughout an organization can prove a critical competitive advantage, and the procurement function sits in the right place to facilitate that learning. In organizations where supply-chain continuity is a major priority (and we can expect to see more of this after the Covid-19 supply shock), procurement may find itself reporting to the head of Supply Chain (who reports in turn to the COO). People and relationship considerations will therefore be most important, given the massive transformation that is happening., Sebastien Bals, CPO at UCB, noted that procurement will have to manage the ecosystems and play a larger role in M&A and partnership discussions and, where it is relevant to their organization, build and play an active role in broad coalitions that can lobby governmental and non-governmental institutions. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc. Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. As the role of the CPO expands, some experts believe its natural evolution could lead it to become a member of the C-suite, reporting directly to the CEO. ", CPOs need to hold high ethics and moral standards, have a strong sense of corporate responsibility, and make sustainable decisions regarding their suppliers. The upsurge of new, data-powered technologies, the ensuing accelerated digitization of work, and the evolution of supply chains into highly networked ecosystems where sustainability and risk management have become critical topics have significantly elevated a role that not long ago was primarily focused on process efficiencies, cost control, and compliance. Not quite. 629 0 obj <>stream In most organisations the Chief Financial Officer or CFO is the key decision maker if it comes to Procurement. But this is nothing new for CPOs who have been on the front line of implementing sustainability measures, as Cyril Pourrat, CPO at BT, clearly explained: When it comes to ESG implementation, it is often down to procurement to make it happen with suppliers, which involves significant effort and resources.. Their strategies for the procurement function must reflect and support the positioning of the brand in the market.". It varies across organizations and industries and there isnt necessarily a right or wrong answer. No longer solely focussed on cost savings, it has become a strategic player by supporting long-term business goals, driving sustainability, ensuring supply chain transparency, and mitigating risk. It's leading to friction and disappointment of Procurement leaders, eager to make a difference. No matter who you report to, the top priorities of procurement will always be to save money, time, and effort. 3 Jim Kilpatrick, Jennifer Brown, Ryan Flynn, Aaron Addicoat, and Pierre Mitchell, Global 2021 Chief Procurement Officer Survey, Deloitte, April 23, 2021.
As a result, theyll gain greater insights into the inner workings of the organization, have an influence on major decisions, and expand procurements offering way beyond cost savings. A procurement team is a specialized team of professionals that provide a multitude of services to all involved or interested parties involved in procuring goods and supplies necessary for project execution. By submitting this information you are agreeing to our terms of participation. Many organizations have thousands of suppliers in their networks, which makes scrutinizing them a challenging but necessary task. Fabrice Lebecq (flebecq@heidrick.com) is a partner in the Brussels office and the regional managing partner of the Industrial and Supply Chain & Operations Officers practices. The CEO expects the procurement function to achieve sustained cost-reduction, Finding ways to positively impact the brand through, When procurement is aligned with finance, the overriding focus will be on. My 2 cents thought . Meet the Team As another generalization, in manufacturing, we see Purchasing more commonly reporting to Operations/Supply Chain Management, and in service, industries Purchasing more commonly reporting to Finance. Angela Qu, CPO at Lufthansa Group, brought the point home: CPOs need to hold high ethics and moral standards, have a strong sense of corporate responsibility, and make sustainable decisions regarding their suppliers. This cookie is set by GDPR Cookie Consent plugin. v Rethinking the focus and structure of the chief product officer role will help asset management firms better connect with customers, innovate more effectively, and operate more nimbly. natalye paquin current title
Instead, it can broaden both internally and externally to a wider set of profiles and functional backgrounds. For example, the ability to procure masks had a huge impact, and procurement has earned a bigger license to act. Questions like these have led us to write the article, What Is Supply Chain Management, Anyway? thyssenkrupp cio prepares upgrade massive wsj hardy klaus officer chief chartrand robert team management cpa executive officer chief Sales and Operations Planning What Is It, and Why Should You Care? As orchestrators of the business ecosystem and relationship builders with suppliers, CPOs canand mustacquire a comprehensive understanding of emerging technology trends and be able to provide informed views on which companies offer the best solutions. The CPO is becoming more of a connector; the role is not about competition anymore but integration and collaboration, explained Kai Nowosel, CPO at Accenture. These cookies track visitors across websites and collect information to provide customized ads. How is your organization aligned? This will be managed only through collaboration in the ecosystem. The cookie is used to store the user consent for the cookies in the category "Performance".
This cookie is set by GDPR Cookie Consent plugin. As procurements status within the organization grows, its reporting alignment becomes all the more important. As a result, we see a new breed of procurement executive that is externally focused, able to bring the outside in and advise the CEO on how to win better.. cpo audits procurement schgroup They also wish to thank Nick Parfitt for his contributions to this article. Surely the role of procurement is the same, no matter who your Chief Procurement Officers (CPOs) boss is, right? So, how can companies attract, develop, and retain best-in-class CPOs of the future? procurement ai You also have the option to opt-out of these cookies.
Digital innovation is yet another area where CPOs have a unique opportunity to evolve from being ad hoc contributors to taking on leadership roles. If not directly to the CEO, the CPO could very well report to a chief transformation officer, providing a new orientation to the role, one outside of the traditional links to either supply chain or finance officers, suggested Solvays De Proft. This field is for validation purposes and should be left unchanged. 1State of Supply Chain Complexity 2020 Report, Krber, 2021. This means two things for procurement: CEOs tend to be time-poor, which means procurement can help by keeping their communications and reporting as concise as possible. The answer lies in the reporting structure. CPOs should bring market intelligence information to business leaders, helping them to make informed decisions with foresight, said Lufthansas Qu. This approach created collaboration and trust, and accelerated our digital transformation., Some of the new technologies that are notoriously difficult to master for organizations across sectors are data and predictive analytics. The cookies is used to store the user consent for the cookies in the category "Necessary". To whom the purchasing function reports can be different from company to company, and thats OK. To simplify it, if the company sees Purchasings primary role as delivering cost savings, the company generally positions Purchasing under Finance, reporting to the Chief Financial Officer. _=M|WF1dm9\Tpi"]2O%`1]`}0bc|MfWU No, not exactly. Construction Delays Analysis Un-understandable Question. They encompass everything from internal employees, technologies, and functions to external partners and suppliers. A logical next step in the evolution of the role could arguably be a move into the drivers seat when it comes to embedding sustainability into the broader company strategy. Accentures Nowosel said, The CPO of the future should work with start-ups, sit on select boards, scout new talent, and influence the technology development road map. Heinekens Le Faou added: While the chief technology officer (CTO) would also participate in introducing new technologies, the CPO supports him or her in the sourcing process, helping validate solutions., As the topic of supply chain risk management moves up on the executive leadership and board agendas, CPOs need to be able to help inform any relevant strategic decisions. But opting out of some of these cookies may affect your browsing experience. If not directly to the CEO, the CPO could very well report to a chief transformation officer, providing a new orientation to the role, one outside of the traditional links to either supply chain or finance officers. It will provide you with a comprehensive view of the whole organization and also allow you to grow your external network. Indeed, companies have a huge opportunity to make procurement leadership roles more attractive by framing them in a more appealing way for ambitious, talented, up-and-coming executives. ", Jane Liang, CPO, British American Tobacco, Predictive procurement can help build a much stronger negotiation position by using all available information and data. Leaders with the profile matching the requirements of the CPO of the future are currently very scarce and in high demand. Both roles require superior influencing and networking skills. Indeed, companies such as Diageo and Givaudan went as far as rolling supply chain, procurement, and sustainability into one executive role. ", Klaus Staubitzer, CPO and head of supply chain, Siemens, CPOs must live up to the values of care, respect, and humanity. The value proposition of a well run, technologically enabled Procurement team is usually buried to deemed nonexistent in an environment where most spend is Indirect. Prior to CPOPartner he was Head of Procurement Advisory at PwC Switzerland, New York and Amsterdam. By clicking Accept, you consent to the use of ALL the cookies. The CEO expects the procurement function to achieve sustained cost-reduction, drive supplier innovation, and effectively mitigate risk. So businesses need to look for young talent with expertise where they are, which can be in unconventional spaces like start-ups.. tdcj mcginty jerry finance business director hunstville termination unit division The future CPOs profile emphasizes strong business acumen and leadership competencies rather than technical skills or depth of procurement experience. To view or add a comment, sign in. A focus on short-term saving can distance the profession from the organizations long-term business goals. Today, customers and investors alike demand transparency when it comes to ESG performance, and therefore a companys reputation can be severely affected by any transgressions, regardless of whether or not the company is aware of any wrongdoings. nasir kenea tolgoi oyu appoints directors What does this decision mean in terms of risk? Typically, procurement leaders will report to one of three C-suite executives: Reporting lines are determined by several factors, including: There is no overall consensus as to whom procurement should be reporting, though. How to Communicate the Value of Procurement to the C-Suite, How to Use Group Purchasing as a Cost Reduction Strategy, Group Purchasing Organizations vs. Purchasing Cooperatives. baldachin larry uhn officer chief business meet When procurement is aligned with finance, the overriding focus will be on driving savings for the organization. If Procurement want to be a Strategic BP to Business, I believed Procurement are not suppose to report to CFO nor COO nor Supply Chain, but really to the CEO. ", In truth, I cant think of a better place to form a future CEO than procurement. Copyright 2022 Next Level Purchasing, LLC. After all CFO priorities will be &, COO priority is productivity and Supply Chain is Distribution and Logistic, thus Procurements are the BP for Finance, Production and Supply Chain. This creates a direct link between business priorities and the focus of Procurement. It helps the CPO to finally fulfil its ambition to deliver true business impact and move beyond savings. Become a member of one of the worlds largest procurement associations today. We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. sustainable procurement officer chief organization perspective leaders series lessons guardian It is self-organized and self-motivated and generates ideas that are evaluated by the procurement team. ", Now, board members and business CEOs ask procurement for their view on the supply situation ahead of talking to investors. A new breed of CPO is needed, as the scales continue to tip in favor of greater emphasis on inclusive, purposeful leadership, board-level impact, acceleration of sustainable innovation, and the ability to work collaboratively and efficiently with an increasing number of diverse stakeholders in highly networked, digitally enabled ecosystems. Think Again! By building that kind of acumen, they can become obvious advisors for strategic decisions involving digital innovation, as Jane Liang, CPO of British American Tobacco, said: The CPO can become a key partner to many parts of the organization by bringing digital innovation to the businessfor example in the form of platform buying and advanced data analytics. Because many organizations still dont have designated chief digital officers, digital has become part of some leaders remit, and CPOs now have the opportunity to share some of those responsibilities. andrea ford exec altair officer chief former names This will stress the supply chain immensely, said Klaus Staubitzer, CPO and head of supply chain at Siemens. Privacy Policy The ones that succeed in making Procurement a more strategic function understand that a CPO should therefore report to the Chief Operating Officer (COO). Their views are personal and do not represent those of the companies they are affiliated with. The organization at large wouldnt trouble itself too much with the profession because it didnt appear to be delivering a huge. How can we close the gap and help the CPO to fulfil his or her ambition? CEOs are ultimately responsible for brand reputation. Analytical cookies are used to understand how visitors interact with the website. All rights reserved. Certainly, todays challenge is to think about the CPO of the futurebut tomorrows will likely center around the future of the CPO. So the question is: how can we change this? The role is more and more anchored in connecting networks and ecosystems rather than in running processes and competitive tenders., Geopolitical events and tensions act like wild cards on ecosystems. officer chief responsibilities cco commercial cfo roles financial
