A chief procurement officer (CPO) typically is the executive of a corporation who is responsible for the management, administration, and supervision of the company's acquisition programs. He may be in charge of the contracting services and may manage the purchase of supplies, equipment, and materials.
How does one decipher a successful CPO in real sense? The traits of a successful CPO whose sphere of activities far exceed the traditional operational responsibilities are manifold. A successful CPO has a profound influence on shaping business policies and driving value through strong stakeholder relationships.
In short, a successful CPO has moved from being reactive to being far more progressive and forward-thinking. The ever-changing dynamics in the market require CPOs to not only possess a diverse set of skills and capabilities but also the ability to demonstrate strong leadership.
A successful CPO must have certain key qualities that empower him to deliver flawless performance.
The foreseer/Ability to foresee:
To begin with, an ideal CPO:
- Must be able to foresee a recurrent crisis
- Devise the ability to devise appropriate strategies within the stipulated routine
Result:
- Either the crisis is prevented before its occurrence or
- Easily managed by the co-workers.
Successful CPOs not only accept the evolution of analytics and reporting, but also incorporate the positive gains from analytical capabilities into their decision-making. Top-tier CPOs are sharp enough to understand the future implications of their investment, as well as the possibility of various risks in their supplier base, and can utilize knowledge gained today to make better decisions tomorrow.
The relationship Builder/Willingness to relate with other Stakeholders:
A successful CPO is well aware that in order to grow at corporate level, working closely with the organization’s internal stakeholders is a must to deliver new sources of value.
It is unthinkable even for the best of CPO’s in the current fast-paced, complex, and globalized market to tackle commerce without collaborating with finance, human resources, IT, operations, or treasury. Supplier collaboration according to several survey respondents, is directly linked to:
- Improved responsiveness,
- As well as market awareness.
This is no surprise because suppliers often work across many companies and industries, and are, therefore, more closely in touch with customer preferences. By improving their relationships with these well-connected suppliers;
- Leading CPOs effectively extend their reach
- Deepen their insights into markets
- Understand the needs of customers
The Talent Foster/Recognition and the Retention of Talent:
One of the major traits of an ingenious CPO is the ability to recognize and retain the top-tier talent.
Sometimes, merely outlining your required specifications for a product does not guarantee an informed purchase that is best suited for your organizational needs. Be it the purchase of a projector or a heavy machinery tool, there may be better alternatives out there in the market which you’re probably not familiar with. Who better to ask than vendors themselves as they too keep themselves updated with the latest market trends, right?
Keep the communication with suppliers open so that they can suggest newer innovations in the market that may be more worth your while. Even if you’re aware of what you’re looking for, be sure to encourage inquiries and clarifications to ensure that the vendor delivers exactly what you need without any misunderstandings.
Infact, this attribute carries a lot of weightage. Why?
There is limited investment in training and skill development. Organizations all around continue to see procurement functions either stand still or stagnate with time.
Hence, it is very important to close this gap between the procurement department & the available talent. A visionary CPO must necessarily look for creative talent sources & facilitate an advanced technology environment. Fostering the right talent with automated tools is a big attraction which leads to the development and future progression of its staff.
The Technophile/Flexibility towards emerging Technology:
Technology has travelled a long way from its ancestral counterparts and is still evolving. There has been a tremendous progress in:
- Business networks to mobile applications
- From data analytics to management technologies
These new solutions can help significantly in procurement process. An evolved CPO makes the best use of these tools for the progressive development of organizational programs.
By being open to adopting, implementing, and utilizing emerging solutions, CPOs can use innovation to improve the inner workings of their programs.
Besides the above mentioned traits, a successful CPO must have the right leadership qualities to lead as well as withstand crisis. A calm graceful approach to discussions and negotiations creates a positive environment and keeps everyone motivated.
Moving on to the practices of a successful CPO, it can be safely assumed that a successful CPO has to perform many roles at the same time. One of the top priorities for a ruling CPO is to focus on risk management as mentioned above. This is so because he is aware of the increased risk associated with global supply chains.
Hence, CPOs from both top-performing and low-performing organizations expect an increased focus on risk management over the next three years. Well thought out risk-management capabilities often result in cost efficiencies and give competitive advantage to the firms they serve.
Some CPOs relate the analytic strength of their organization to:
- The systematic identification of savings opportunities within a category or department
- Proper use of analytics to maximize demand forecasts
Benefits
- Helps them to secure more favourable long-term contract terms with suppliers.
- Helps create a more efficient procurement ecosystem within the organization.
It is usual for a smart CPO to identify non-traditional, and non-price led methods to deliver value. In addition, he analyzes critical spend data to help the department in making better decisions. An ingenious CPO introspects:
- The currently accessible data
- Their respective accuracy,
- The existing level of team competency to use the data
- The tools adopted by the team,
- The mood of the people
- The approach of the organization towards the technology
- The ways and means of integrating the technology & analytics in the prevailing system.
The optimistic market sentiment presents the best procurement leaders with an opportunity to achieve greater value through growth focused innovation along with the capacity to deliver cost reduction and manage risks. More and more CPOs are thinking of implementing e-sourcing solutions along with focusing on systems and process controls that increase transactional compliance.
To sum up, a successful CPO will continue the company’s evolution in best practice procurement capabilities and organizational development, transforming the organization from one that is locally-driven to one with a centre-led, global construct while incorporating the best practices already in place within certain parts of the organization and providing the thought leadership to adopt new best practices.