Procurement’s Role in Investor Relations: Part 3

In Part 2, I covered what investor relations means for the CEO and CFO. In part 3, I will cover how procurement can fully understand the objectives of a investor relation strategy. Click here to read Part 1 and Part 2.

The CPO on Capital markets Day
The CPO must ensure they understand fully the objective of the investor relations strategy. Is it to manage existing investors, attract new investors or to control damage? Either way, communication is key so the CPO must spell out clear messages for what investors want to know to help them make better, more informed investment decisions. The CPO also needs to elaborate on the strategy designed to achieve its procurement objectives and how this is aligned with the corporate strategy. Key issues are likely to include:

1.    Leadership
a)    Vision
b)    Targets
c)    How
d)    Critical success factors

2.    Procurement Strategy
a)    Organisation design
b)    Governance and alignment
c)    Building capability
d)    Processes
e)    Enabling technologies

3.     Procurement Challenges
a)    Internal & External
b)    Input cost management
c)    Risk Management

4.    Management Quality
a)    Management credibility
b)    Management’s ability to generate sustained value

5.    Performance Management
a)    Functional
b)    Category
c)    Individual
d)    Benefits capture

The benefit of the CPO’s presence in investor relations can only be fully realized when it is clearly identified how procurement secures competitive advantage, plans and executes it’s strategies as a strategic management function. Procurement then fulfills four essential IR roles:

1.    Ensure that the investment community has a timely and accurate picture of the company’s supply side activities
2.    Help the investment community comprehend how supply markets impact senior management’s strategic decisions and activities
3.    Delivering shareholder value by maximising opportunities and minimising risk in supply markets
4.    Support senior management in making strategic decisions based on valuable feedback from the supply markets

The supply chain is the engine for company growth. So given the highly competitive environment in which companies must compete for the supply of investment funds, adding the CPO to your Investor Relations team could prove critical in distinguishing yourself from the pack of other organisations.

The CPO must be capable of translating procurement and supply chain activities into meaningful metrics such as EBITDA, Cash Flows and EPS etc and demonstrate how they support expansion into new markets, managing supply chain risk, and leading the organisation’s corporate social responsibility agendas. Encouragingly, we are now seeing CPO’s at many leading organisations taking up the challenge.

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