Philips CPO – busy sorting out his predecessors’ failings?

An interesting story in Supply Management last week about a speech from the Philips CPO.

“Fredrick Spalcke told the ProcureCon Europe conference in Amsterdam, when he arrived in the post in 2012 there were 2,300 people working in procurement across 40 business units. “Within a short time we reduced that by 400 people,” he said.

Spalcke added there were “40 people doing things their way” and “23 people calling themselves CPO”. There were 256 different job descriptions, which has now been whittled down now to 23.“Going forward we can maybe reduce the headcount by three to four hundred people,” he said. “Not because we’re merciless, but because we don’t need them…”

Wow! He really did inherit a mess here – obviously the previous CPO at Philips, the huge Dutch electronics firm,  must have been pretty incompetent to have all this confusion, shocking over-manning, a lack of clear structures...

But hang on a minute.  The previous CPO was Maarten de Vries, who then was promoted to become CEO of a Philips joint venture, TP Vision.  So he made that rare transition we aspire to as a profession, moving on from procurement into senior general management.

Before de Vries, Philips had Barbara Kux, who left Philips for the huge job of Siemens CPO, and is a member of the Managing Board of Siemens AG, as well as one of the best known women in European business, not just procurement.  And going back even further, to around the Millennium, Neil Deverill, well known procurement guru, led the function. (Interesting too that Deverill’s LinkedIn profile says he “reduced the total procurement headcount from 2500 to 1800” whilst at Philips).

So all these super high flyers, and yet Spalcke took over a function in such a bad state?  That seems to suggest a couple of possibilities. One is that Spalcke may be simply managing expectations and positioning his own performance, as business people and others frequently do – the football manager who comes in and comments on how “surprised” he is to find such low levels of motivation and fitness in the squad, for instance.

Or perhaps you can be very high profile and apparently successful - like this string of previous CPOs - without really creating a high performing and effective function. Can a CPO have a strong personal reputation without actually strong achievement to back that up? Our recent paper – “A Seat at the Top Table”  (download it here) suggests that you need a track record of consistent delivery to make it to the top. But are we being naive in thinking that - can personal credibility and charisma sometimes be enough?

Voices (6)

  1. Info:

    I know all 3, the new guy is the only real CPO who will push performance. This concerns spend and organizational efficiency. The purchasing organization has never been stronger and more empowered than now. The pressure is tremendous.

  2. Jan:

    Having worked directly for two of the CPOs above, I can only say that things are less straightforward as presented here. Philips is not different from many big corporates: strategies are the results of rather autistic negotiations and derogations, not of a formal strategy development and deployment, garnished by inspiring leadership, focused on (future) customer demand. Mr. Deverill was a very inspiring leader, and based on those assets (qualities) never accepted by other stakeholders, dinosaurs making a (successful) career from negotiation and derogation, i.e. exploitation of the status quo. Mrs. Kux was far more politically shrewd and simply managed on results (and left the naysayers with the challenges). Both Mr. Deverill and Mrs. Kux left more or less in anger, down to the continuous challenge of their mandates by an huge army of budget holders. As a consequence, the position got heavily contaminated. Established names in the CPO community kept their fingers off. A close confidant of the Board, Mr. de Vries took on the job next to his main assignment as CIO. Thus, the procurement activity at Philips lost momentum or, if you will, the previous gap between ambition and reality was closed by limiting ambitions instead of improving reality (as was attempted and to a substantial level successfully done before). In that light, Mr. Spalcke’s playing field is evident and the room for improvement he postulates is existing. Whether it is smart to open the discussion as Mr. Spalcke does: I would not be sure.

  3. Uzi:

    Having worked directly for two of the CPOs above, I can only say that things are less straightforward as presented here. Philips is not different from many other big corporates: strategies are the results of rather autistic negotiations and derogations, not of a formal strategy development and deployment, garnished by inspiring leadership, focused on (future) customer demand. Mr. Deverill was a very inspiring leader, and based on those assets (qualities) never accepted by other stakeholders, dinosaurs making a (successful) career from negotiation and derogation, i.e. exploitation of the status quo. Mrs. Kux was far more politically shrewd and simply managed on results (and left the naysayers with the challenges). Both Mr. Deverill and Mrs. Kux left more or less in anger, down to the continuous challenge of their mandates by an huge army of budget holders. As a consequence, the position got heavily contaminated. Established names in the CPO community kept their fingers off. A close confidant of the Board, Mr. de Vries took on the job next to his main assignment as CIO. Thus, the procurement activity at Philips lost momentum or, if you will, the previous gap between ambition and reality was closed by limiting ambitions instead of improving reality (as was attempted and to a substantial level successfully done before). In that light, Mr. Spalcke’s playing field is evident and the room for improvement he postulates is existing. Whether it is smart to (re-) open the discussion as Mr Spalcke does: I would not be sure.

  4. The Plumber:

    Is the announcement of reducing headcount by three or four hundred meant to motivate the team?

  5. Paul Wright:

    Another input: given that this post is apparently a route to the top Mr. Spalcke might be an ambitious man. Does he get on by saying “everything is brilliant, all I need to keep it on track”, or by changing things? You tend to get promoted by changing things rather than for keeping things exactly the same. Or so they tell me.

  6. bitter and twisted:

    CPO success <- Company success <- Other Buggers Effort / Sheer Dumb luck .

    Or, are there star CPOs out there being lauded for keeping otherwise useless organisations alive through brilliant purchasing?

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