2008 brought many issues to the procurement table such as supplier risk, resource constraints, and diffusing uncertainty. In an Aberdeen report, Andrew Bartolini offers several procurement strategies that will help organizations streamline their processes in comparison to the goals and initiatives being employed by Best-in-Class.
- Perform spend analysis on a regular basis- Departments with limited or no level of visibility into spend unknowingly restrict their strategic contribution to enterprise performance.
- Develop and track a pipeline for spend under management- This pipeline should include a detailed plan that targets specific categories and devises an approach to engage specific budget-holders. This pipeline should be revisited on a regular basis.
- Incorporate savings quotas in the staff’s incentive plan- Target behaviors and results should be clearly identified and justly rewarded and, should also be quantifiable and measured.
- View strategic sourcing as a holistic process and leverage process automation wherever possible- While e-sourcing solutions provide the key capabilities required to automate the sourcing process, contract lifecycle management and spend analysis systems should be viewed as a part of a comprehensive strategic sourcing approach.
- Enhance supply risk management capabilities- Aberdeen recommends the development of a program that establishes clear ownership of supply risk within the enterprise and incorporates training for those involved in it.
- Conduct regular contract compliance audits- Higher contract compliance rates usually translate into greater implemented savings, improved spend control, and a higher percentage of spend under management.
- Lead your team and defend it- While an effective CPO must be a strong leader and a highly capable manager, in times of duress, the staff will seek, and ultimately prize, leadership above management.
- Engage the CFO to develop case management strategies- Cash or liquidity is valued in today’s market since it provides greater assurances to investors, employees, customers, and supply chain partners of on-going solvency and an ability to perform against current and future contracts.
- Hire category experts from industry (i.e. energy, steel, chemicals, services)- Many enterprises are being forced to make deep cuts in a labor market that is both volatile and soft. This presents a unique opportunity for CPOs to reach out and hire seasoned professionals with deep category expertise.
Although the role of Chief Procurement Officers (CPO’s) is becoming more widespread, the challenges they face in maintaining consistent execution and transformation is increasing. “…two-thirds of this study’s participants believe that the economic downturn has positively impacted the role of the CPO within the enterprise.” The CPO’s who succeed during these tough economic times are those who formulate strategies that aim to achieve procurement transformation and competitiveness.
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