Market Dojo continues its search into transforming procurement teams in the CPO’s first 100 days. Dr Paul Joesbury has experience as a CPO at a number of organisations including Chesapeake Packaging. In this two-part series Paul explores what he believes are the most important areas that a new CPO needs to address.
This is the second part of a series discussing how to be an effective CPO by Dr Paul Joesbury. Find the first part here for the first two areas of Paul’s Procurement Effectiveness model which covers “the compelling case for change” and “competency” as the most important aspects to transform within procurement.
(Continued) #3 Effective strategy
“Effective strategy” is the third factor, which assesses the approach being taken by the existing procurement function and will include total acquisition cost, supplier relationship management, supplier risk management etc. This is an area that has traditionally been the focus of attention within transformation activity, although evidence suggests it is still an immature application as seen by the misuse of phrases such as “Strategic Partner” where the language used differs from the approach taken and this rhetoric undermines trust within the supply chain. This leads to “game playing” and poor supplier-customer relationships. It is essential that the new CPO reviews the supply strategies to ensure that these are focused on the requirements of the business.
#4 Communication, Marketing and Data
“Communication, Marketing and Data” is the fourth factor and looks at the effective communication of programme imperatives, data, stakeholder and expectation management. . Some procurement professionals face a real dilemma to get support for investment in the procurement function, as big saving numbers are often identified, without the necessary checks being implemented. This can lead to disappointment from the executive sponsors when the numbers delivered are less than initially “sold” in order to get the necessary backing. The key is to set realistic expectations, and manage accordingly with open communication and good data.
#5 Effective Governance
The final dimension looks at “Effective Governance” and relates to having an effective and independent measure of performance within the programme. It is good practice to have a direct link to the CFO, so that delivered benefits are seen as real in the eyes of the finance department and other stakeholders. It is often the case that the numbers presented from the procurement function are not believed as there is either weak governance or too much distance from the procurement activity to their own reality. This can result in a lack of credibility and poor levels of support., However by implementing strong governance into business activity, this can be resolved
As per Napoleon’s experience, much can be achieved in the first 100 days, although hopefully when the new CPO approaches this is the right way it will result in success for the individual as well as the organisation – rather than in exile to St Helena!
Until next time, Paul’s series of The CPO’s first 100 days have come to an end. Stay tuned for the next chapter, to find out more about how you can transform your procurement team as a CPO from some of the most successful experts in the industry.
Dr Paul Joesbury is a Procurement Transformation specialist having managed procurement transformations across multiple industries and sectors. He completed his doctorate programme at Aston University where he led research into the effectiveness of procurement. As part of this research, he has created the “Procurement Effectiveness Model” that is both a diagnostic tool as well as a route map to effective procurement. He can be contacted via LinkedIn or at firstname.lastname@example.org