Get Buy-in From Your CEO

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Conversations about Procurement typically revolve around “savings”. And ironically enough, savings is what the Chief Procurement Officer (CPO) needs to prove to justify.

It is the CPO who can help the CEO sleep at night.

You might say, “John, you make some good points. But how could I possibly sell the CEO on your audacious vision?” Well, it’s easier than it looks.

Imagine you are the CEO of a large multinational organization. Your third party spends is a huge percentage of your expenditure; some suppliers even deliver front line services on your behalf. And looking good in front of your customers is the key to sustainable profits.

Knowing that your extended enterprise (the supply chain base) is made up of large and small organizations, knowing they have all undergone some kind of environmental assessment, knowing that they have all promised to play nice and report bribes, uncompetitive behaviour and validated their own supply chain against slavery and human trafficking — only the CPO can guarantee the knowledge and certainty that these checks and balances have been done. Indeed, it is the CPO who can help the CEO sleep at night.

Your CPO has just told you about a supplier who has just invented something that will replace the leading product in the market with an innovation that no one yet knows about. Chances are, you will jump at the opportunity and provide a big Thank You to your CPO for giving the company an enormous competitive advantage over its rivals.

Procurement as an essential function had been unfairly squeezed under the weight of Finance.  Why was it that Procurement seemed to sit under the cover of Finance? All of these questions seemed to rear up once again when I heard the procurement professional of fortune organization disconcerting views on the Future of Procurement. Procurement, he prophesied, would soon enter a doomsday scenario wherein its very existence would be under threat if we, as procurement professionals, carried on what we were doing, and did not correct our course.

A vital link between organizations and their suppliers, Procurement could, at once, enable suppliers to develop innovations to meet the needs of these organizations, and ensure that the organizations leveraged these innovations.

Conversations about Procurement typically revolve around “savings”. And ironically enough, savings is what the Chief Procurement Officer (CPO) needs to prove to justify. There is literally no other corporate function that needs to justify its existence on the basis of how much money it saves the company.

Capitalize on Risk Management

Risk, a loosely defined buzzword, has, to some extent, allowed Procurement to redefine its role. Procurement has capitalized on various social agendas such as Small Medium Enterprises (SME), Environmental, Anti Bribery and Corruption (ABC) and now the Modern Slavery Act, along with the usual issues associated with supplier probity. Corporate risk mitigation sits so well on the shoulders of the Procurement function. We, in Procurement, have the ability to defend the business against some serious reputation risks as well as financial and operational risks. This has given the Procurement function a higher platform upon which to build its sphere of influence. We really should be seizing this opportunity as a stepping stone to dominate the corporate space.

 

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