“Yes, there are two paths you can go by, but in the long run
There’s still time to change the road you’re on.”
From Stairway to heaven
by Led Zeppelin
This line from the classic track can be applied to CPOs everywhere who continue to battle with purchasing’s own “chicken or the egg” dilemma
Without a top level mandate, the CPO’s ability to prove procurement’s strategic value depends in part upon the degree of successful procurement integration that can be achieved with other stakeholders. But other functions will only truly integrate when the benefits resulting from such integration can be verified.
The continued focus and pressure to deliver cost savings will never provide the desired breakthrough. As the saying goes, you can’t cut your way to success. So the search for value must rise up the CPO’s agenda. This nicely defines the two paths available to the CPO. The ‘here and now’ approach will deliver incremental benefits, but never the killer punch. But the alternative longer-term perspective is capable of delivering the radical breakthrough required for procurement to reach its strategic zenith.
CPO’s must carefully balance managing short-term concerns, and at the same time shape the strategy and capabilities for the future. Purchasing chiefs must both continue to focus on and develop core capabilities and be strategic and break new ground in order to connect with the broader business agenda to innovate and drive growth.
To do this successfully, they must bring a new perspective on how to introduce plans to boost corporate growth into the work of their teams, how to measure and reward execution on the present priorities while building the future, and how to align behaviours to specific growth initiatives.
There must be a shift in strategic focus to support deep procurement integration across all business departments, as well as ensuring procurement’s integration in the strategic planning process. Real success depends upon the ability of the CPO to gain senior management support at the business planning level, where they must help shape the vision, develop capacity and capability to influence strategy.
This approach sits contrary to the current business focus on cost cutting, but as Zeppelin sang, there's still time to change the road you're on.