You Surely Can’t Beat These Four Traits of a Successful CPO
First and foremost in this article, you’ll learn about the traits of a successful CPO whose sphere of activities far exceed the traditional operational responsibilities. A successful CPO has an increasing influence on shaping business policies and driving value through stakeholder relationships. In short, a successful CPO has moved from being reactive to being far more progressive and forward-thinking. The change requires CPOs not only to possess a diverse set of skills and capabilities but also the ability to demonstrate strong leadership. A successful CPO must have some key qualities that empower him to deliver superior performance.
Four Traits of a Successful CPO
Trait One: The Real Business Partner
“A recurrent crisis should always be foreseen. It can therefore either be prevented or reduced to a routine which clerks can manage.”
The opportunity for procurement to participate more comprehensively in creating strategic advantages for businesses is unprecedented. But with this opportunity also comes an urgency: an urgency to innovate and deliver new sources of value. This source of value can only originate from working closely with the organization’s internal stakeholders. The internal stakeholders require procurement’s expertise, experience, and engagement to add value to their work. The scope includes-
- Spend consolidation
- Specification rationalization and improvement
- Supplier collaboration and building on existing supplier relationships
- Demand profiling, reduction, and management
- Creating a competitive advantage
- Enhancing innovation &
- Reducing inventory
But any of these changes cannot be performed in isolation. It requires a real partnership to make things happen. It isn’t about procurement sitting by itself, trying to figure out how to improve the business’s top and bottom lines by working in silos. A CPOs must have a clear emphasis on identifying non-traditional, and non-price led levers to deliver value. He should embrace analytics to provide more predictability, visibility, and insights into the business, which would further empower them to support their ideas and suggested strategies with facts.
CPOs can also help supercharge the business by driving self-sufficiency for specific activities. For example, with self-serve assets such as RFx toolkits and templates, targeted market intelligence on critical category areas, as well as ongoing intelligence to understand, assess, and manage suppliers more proactively. This will help the business to quickly, efficiently, and seamlessly manage daily procurement activities, which will free up the function’s time for more strategic tasks.
Trait two: The Digital Leader
CPOs should look to take advantage of digital procurement and data analytics as they boost functional performance and deliver higher value to the organization. Their ability to analyze critical spend data helps the department in making better decisions. But, at present, only a few functions use spend data in the right way to drive their decision-making. This is because CPOs do not ask or answer the right questions when it comes to data analytics. Leaders should ask themselves:
- What are the data sets that are currently accessible?
- How clean and accurate are they?
- What is the current level of team competency and proficiency to understand and manipulate these data sets?
- What tools does the team currently leverage to analyze data? How do they run sourcing events?
- What is the cycle-time for each procurement activity?
- Have people adopted the existing technology? Has the organization accepted it?
- Going forward, what should be the plan to drive the adoption of technology and analytics?
By asking these questions and finding the answers, CPOs can put themselves and their functions on the path of becoming more progressive and proactive to meet the demands of the future.
Trait three: The Innovation Enabler
CPOs are uniquely positioned to help drive the innovation agenda in their companies. They directly influence the supply partners with which the organization works and, as such, the ideas and capabilities these suppliers bring to the table. The right partners can help jumpstart product and process innovation while buying organizations can tap into these suppliers’ capabilities to expand the depth and breadth of R&D activity. This, in turn, helps the buying organization accelerate the development of new and better products and services.
Supplier-led innovation not only improves relationships but also drives revenue growth, which calls for increased cost savings in both organizations. It fosters greater cross-functional collaboration, which helps build procurement’s credibility throughout the company.
Procurement chiefs who want to enable innovation should focus on the following activities:
- Clearly articulate the organization’s innovation goals.
- Evaluate and assess developments within the supply market as well as suppliers’ capabilities.
- Identify potential innovation partners. Although CPOs should start by exploring the supply base, the right partners may not be in the company’s existing pool of suppliers.
- Build the right resources to support and promote this supplier innovation.
While companies tend to become insular when it comes to innovation, more businesses recognize the impact that broader and deeper supplier partnerships can have. As a CPO, an individual needs to tap into that recognition.
Trait four: The Talent Enabler
The biggest challenges faced by CPOs today include attracting, training, and retaining talent because of limited budgets and uncompetitive salary. These factors prevent them from investing in talent and additional resources. The reality is that there has been limited investment in training and skill development. So, across the board, organizations continue to see procurement functions either stand still or worse, shrink in size. At the same time, however, the breadth of responsibilities and ambitions increase.
Finally, what is needed is a change in approach to close the talent gap: procurement organizations must be creative in their pursuit of talent. Progressive CPOs are using tactics that include:
- Looking for creative talent sources- The most significant source of expertise is within the business. Procurement should recruit talent from IT, marketing, and operations, because of strong business knowledge, excellent stakeholder relations, and a better understanding of demand.
- Facilitate a digital-friendly environment- Investment in talent should focus on delivering the digital agenda. Procurement talent is attracted to companies that empower employees with cutting-edge technology adoption. Whether it is e-auctions, advanced spend analytics, enabling the right talent with automated tools is a big draw.
- Create account executives- Talent development starts with putting in a program to identify, nurture, and grow individuals.
Furthermore, nearly every Chief Procurement Officer has the potential to grow. By embracing the traits above, today’s procurement executives can truly drive value as their organizations continue to grow and evolve in the globalized marketplace.