The Analytical CPO – a new paper for download

I've been working on two papers recently that look at issues aorund the skills required by senior procurement people, now and in the not too distant future. The papers approach the topic from different angles, as you'd expect, but the first is out now, and available here. It's sponsored by BravoSolution US and is titled "The Analytical CPO" and you can download it here.

That title probably gives you a good clue as to what it is about! We look at the changing requirements for senor procurement executives over the last few years - once upon a time, what we might call the core skill set for CPOs and other senior executives focused strongly on strategy and process management and areas such as negotiation. But that is not enough anymore.

That is driven by this simple fact :

The quantity of data and information CPOs and other senior procurement executives face has exploded in the last few years.

That is true in both the breadth and depth of data - but fortunately our potential ability to analyse it is also far greater than ever.  However, to do that successfully, we need some particular skills sets in the procurement community. It doesn’t mean we all need to be Mathematicians – indeed, strong analytical skills are taught in the best Arts degree programmes as they are in the science faculties.  But that ability to think analytically and critically is more and more important.

In the paper, we look at some examples of where data is revolutionising procurement, as long as we have the ability to analyse, understand and use it.  For example, the power of “big data” and what can be extracted from spend analytics means that most procurement executives need to the ability to analyse outputs and turn that spend data into actionable, value-creating intelligence.

We’ll come back in part 2 and look in more detail at the areas where analytical skills are key, but here’s an extract from the “Introduction” in the paper.

“... in recent years procurement leaders have had to adapt, and acquire new skills, particularly as the role of technology has vastly increased in every professional role, including procurement.

It is not just technology though that has changed the focus for procurement leaders. But the end result is that we see;

  • Less focus on process and more on strategic relationships
  • Less focus on doing deals and more on business drivers  and creating value
  • Less focus on feelings and instinct and more on data and analysis

Rightly, there has been much more attention to behavioural skills recently . We have realised that the internal dimension of the procurement role, particularly the need to work with key internal stakeholders successfully, is absolutely key. But at the same time, the sheer quantity of data that is available now has driven other pressures and a need for different skills.

That development is creating perhaps the greatest change in the necessary skill set for senior procurement executives. It will be good news for some and bad news for others, but it is becoming harder and harder to succeed in these senior roles without appropriate analytical skills”.

Voices (16)

  1. PlanBee:

    I’d rather have a team where 80% of them are doing the basics right (ie not especially creative and imaginative) over one where 80% are focusing more on the creativity rather than the analysis

    1. RJ:

      If the other 20% are doing the creative and imaginative stuff then that sounds to me like the perfect balance. We’ve been discussing the role of the CPO after all and not the role of the bulk of the organisation. The conclusion I’ve drawn from some great debate above is that the numbers and analysis should form the foundation of and complement the creative.

  2. Mark Lainchbury:

    Wow…Tough Crowd.. So here’s my final word.

    The point I was trying to make is that many times some basic analysis reveals problems that have well proven solutions.

    So in a sense I want to put my cart before Dan’s horse, in that rather than “solutions supported by evidence” we need evidence to drive the need for a (often simple) fix.

    And it’s not edge of spectrum stuff…………

    What’s you organisations average order value >> who are the worst offenders ?

    Which Depts keep running out of stock ?

    Which Hospitals Trusts have the highest spend on Agency Staff ?

    What suppliers have the longest lead time vs Stock Value?

    Which commodity group has the most suppliers?

    and on & on & on

    It’s all simple stuff crying out for a fix and how many of us are going out (or staying in) looking for the problems

    1. Final Furlong:

      Just wait unitl I start wearing my undies on the outside of my trousers! Then I mean business. Fair point Mark, on all of those (very sound) examples.

    2. Dan:

      If i’m honest, I think we’re all in broad agreement on this issue, we’re just looking at it in slightly different ways.

      Yes, the data can identify the worst offenders in your examples – and this is something that was not really possible before to such an extent. The growth of data analysis gives CPO’s a powerful new tool. I agree, there is no longer any need to go by ‘gut instinct’ any more, or ‘whimsy’. Any CPO worthy of the job title should be able to be analytical, they’re going to have a hard time doing the job if they’re not.

      Where I’m coming from is that once you’ve used the data to identify the worst offenders, you then have to convince them to change their behaviour – and with some people all the analysis in the world isn’t going to help with that. Look at all the seeming impossibility of getting police forces to collaborate on uniform procurement. Everyone agrees it needs to be done, yet no-one ever seems to accomplish it. There’s a difference between knowing what needs to be done and actually making it happen.

  3. Mark Lainchbury:

    “”creativity and imagination supersede ‘analysis’”

    = House built on sand, or in this case, business case built on whimsy

    1. Dan:

      You misunderstand me (perhaps I could have worded it better).

      I never said analysis wasn’t needed. Indeed, its crucial. Any solution that isn’t supported by evidence has a high risk of failure.

      The point I was trying to make is that analysis on its own is of limited usefulness. For example, the numbers might tell you that a supplier is charging a higher price for one department than another. They’re not going to tell you how to resolve the situation, and probably not why the situation has arisen.

      At the end of the day, procurement people are not purely number crunchers, despite the amount of time we spend looking at them. We deal with other people – supplier reps, stakeholders, customers. Human beings defy analysis.

    2. Final Furlong:

      Hi Mark, there you go again, with your extreme (edge of spectrum) examples. You must be an ‘analyst’…

  4. bitter and twisted:

    Rather than split hairs can we agree that ‘Looking at the evidence and deciding what to do’ is what is valuable in our ‘people in charge’, not the ‘Inspirational’ ‘Enpowering’ ‘Leadership’ type bullshit.

    And while im at it, this ‘Talent’ thing is nonsense too. If the sausage machine is rusty and leaks oil, upgrading the pork from eyelids and arseholes to organic loin still wont get you a decent sausage.

  5. Dan:

    Having the data is all well and good, but its useless unless you can do something with it. It can highlight a problem, but how do you solve it? It can highlight opportunities, but whats the best way to exploit it?

    Being analytical is fine, but but its better to be creative and imaginative.

    1. Mark Lainchbury:

      Hi Dan

      Sorry but couldn’t disagree more

      It’s very rare these days (in procurement) to face a problem requiring a whole new solution.

      Drill Downs, Discovery and Diagnosis are the challenge. Solutions are 10 a penny (though their application still leaves managers scope to be dynamic & creative).

      1. Final Furlong:

        Hi Mark, analysing what Dan stated:

        – he never said that analysis wasn’t important – only that it was useless unless you know how to use it to arrive at a solution

        – he never mentioned ‘whole new solution’ (that was what you read into it) but that he proposed that ‘creativity and imagination’ supersede ‘analysis’

        – “there is little worse than a crisp image of a fuzzy concept”

  6. bitter and twisted:

    Its better to stumble acrimoniously in the right direction than cheerfully and efficiently march the wrong way.

    1. PlanBee:

      That depends……..you’ll be happier in the second scenario, at least in the short term!

      ‘How sweet to be an idiot’

  7. Kim Godwin:

    Agree wholeheartedly about the importance of analytical skills but I don’t see those as being different from behavioural skills. So with analytics I would link judgement, because it’s the inferences and conclusions that you draw from data and patterns (and other non-data sources) and the decisions that you make from them, that matter. This is I think what differentiates the data analyst from the informed leader.

    And while influencing & communication and relationship management are the most cited behavioural skills needed by folk in procurement, to that list I would be inclined to add analysis & judgement, strategic awareness, and tenacity & determination (includes planning). All of which shape the overall leadership profile of the individual.

    The key thing is that these capabilities are not given the focus that they need to in the education, selection and development of people in procurement today – and arguably analytics is viewed in an even worse light as being tactical and dull as dishwater, and not a leadership trait by many.

    1. RJ:

      Couldn’t agree more. Analysis of itself is worth very little: the best leaders are not number-crunchers but those who understand what the data tells them and ask the right questions about what it doesn’t. In the current world it is all too easy to become lost in a forest of information when we need to understand which trees to dig under to find the truffles, if you’ll excuse the dreadful metaphor!

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