The CPO Mindset at the Start of the Downturn

A few weeks back at the Emptoris Empower event, I had the chance to facilitate a panel discussion with Mitch Plaat, VP Procurement at Con-Way, Kim Reed, CPO at Ralcorp, Bruce Kilkowski, VP of Strategic Sourcing at JC Penney and Bernie Donachie, a lead managing partner for Accentre's Supply Chain Practice in North America. It was one of the better panels I’ve sat on or ran in the past year, in large part because the state of the economy and the widening credit crisis served as a catalyst to get everyone talking. One point about the event which I mentioned in an earlier post -- well worth reiterating here -- was the focus that panel participants placed on improving the quality of information available to make better decisions. Be it spending data to drive sourcing strategy, supplier performance data to drive supplier development or joint cost take out initiatives or risk/credit information to monitor the health of suppliers, everyone agreed that gaining better supplier, spend and market intelligence was key to delivering results in today’s economic downturn.

Aside from this basic -- and essential -- observation, what else was on the minds of the participants and other procurement leaders at the event? Many talked about the need to go beyond first level savings initiatives (e.g., pursuing new spending categories and areas). Others mentioned the need for closing the compliance loop with the business, suppliers and key stakeholders. After all, if an organization identifies savings that do not drop to the bottom line -- or if a supplier is invoicing at a higher than contracted price -- what good have all of the upstream savings identification efforts done for us anyway? Just the other day, I heard yet another example of an office products company that a large organization caught over invoicing (which was most likely intentional, as so often is the case with office supplies). In my view, the more suppliers and the internal organization get smart to the fact they’re being watched, the more likely it is we’ll get more mileage out of our existing initiatives rather than simply having to find new saving journeys to embark upon.

- Jason Busch

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