THE BUSINESS REVIEW FOR PROCUREMENT LEADERS
Welcome to the second issue of CPO Agenda. Judging by the positive response we’ve had to our launch issue, both in terms of comments and subscription orders, there is clearly strong demand for a high-quality global publication of this kind. (If you didn’t receive a copy of issue one, click here for a list of contents and to read some of the articles.)
The theme running through this issue is one of engagement. Procurement’s success as a function now depends to a large extent on the quality of its relationships with suppliers, internal stakeholders and, in a growing number of companies, with customers.
As an important facet of modern business, strategic alliances present CPOs with an opportunity for stardom, argues business thinker René Carayol. But to seize it, they need to be more than simply masters of process: they need to show leadership. “In my book, the best leaders are the best collaborators,” he writes.
One of the reasons for entering into strategic alliances is to access innovation. But when innovation is taking place among companies that are unfamiliar to the buying organisation – “beneath the radar”, as it were – the net result can be a serious competitive threat. To counter that, suggest Professor Richard Lamming and colleagues, purchasing strategists may need simultaneously to “flirt” with these suppliers while maintaining long-term relationships with existing partners. Managing this kind of “strategic dalliance” is far from easy and calls for a high level of relationship skills.
An alternative is a merger or acquisition. Lack of engagement with senior management is one of the reasons procurement has traditionally had a low profile in M&As, argues consultant Theo Theocharides. He believes procurement can get involved much earlier, but, as with strategic alliances, a willingness to step outside the comfort zone and take risks is essential.
Corporate purchasing initiatives are often derailed at a functional or business unit level. When two Dutch academics carried out an experiment among a group of senior purchasing executives, they were fascinated by the range of blocking tactics that participants came up with.
Low-cost country sourcing is one high-profile initiative at the moment. But the key issue is often not finding capable suppliers, it’s getting buy-in from senior stakeholders, say Denis Kenny, Marc Debets and Matthias Daemmig.
While the urge to dictate policy can be great, it is dialogue that achieves the best results. As John Paterson, CPO of IBM, puts it: “You can’t terrify people to comply over multiple years. We have to make it easy and intuitive for them to engage with us and see the value we can bring.”
And that value is not just about lower costs and more efficient processes: Paterson is also expected to spend an increasing proportion of his time on revenue growth, through talking to prospective IBM customers. It’s what you might call an end-to-end supply chain.
Geraint John
geraint.john@cpoagenda.com
