Procurement in Practice recap: Being the CPO — the view from the top (Part 1)

CPO Pixabay

Last year we began a foray into the everyday life of the CPO. We talked to (and will continue to speak with) the heads of procurement from industries as diverse as Eastern European public sector rail, US humanitarian organizations, UK academic press, and large, well-known private corporations from all over the world. Their stories differ in many ways — about their CPO journey, their transformation and ESG efforts, their talent or supply issues, their role and relationships, their daily challenges — but they all have something in common. Each CPO is not only delighted, but feels it imperative that CPOs share their experiences with other procurement professionals to learn from each other.

As one long-term CPO put it:

“So that they don’t have to step into the same holes I’ve already stepped in.”

And as another believes:

“You may have great learnings, but they are only useful if you successfully apply them and also know where to find them. And that’s why what the people at Spend Matters do is so important — sharing better practices.”

With this as our core driver, we’ve spoken candidly to numerous senior procurement professionals so far, and we’ve amassed some open and honest commentary for our readers. Here are some highlights of our Procurement in Practice columns.

CPOs share their learnings

Tom Nash, CPO, The American Red Cross

For a story detailing some great insight and advice about a CPO’s first few days in the role at a new organization — and this is a real early-learnings story — read what Tom Nash, CPO of The American Red Cross, does to prepare and to set the right expectations right from the start, with both his team and other parties across the business that his role touches.

This is Nash’s fourth role as a CPO; he has left a trail of "procurement-profile-changing" success stories behind him. He has learned his skills through hands-on experience, as both CPO and CSCO (Chief Supply Chain Officer) in the Global Fortune 500 and large non-profits, and still believes that “talking” to people and gaining mutual understanding and respect is the key to success. He says:

“An experienced CPO knows that you have to become good at this (communication), because it doesn’t matter how senior you are, what matters is how well you are perceived by your stakeholders. Being honest with each other and working well together is vital — and that all starts with relationships …”

Read Procurement in Practice, part 1 about a CPO’s early requests for each stakeholder.

Read part 2 about how he crafts a ‘shared vision’ with his team.

 

Thomas Udesen, CPO, Bayer

One of the most front-of-mind topics for CPOs at the moment, while they are going about the day-to-day of cost, talent, risk, supplier, and myriad other management duties, is ESG and particularly sustainability. All CPOs today must have a sustainability agenda, not just for their own conscience, but for the good of the organization, the customers and public they deliver to, and the planet.

Exemplifying this commitment is Thomas Udesen. He is CPO of Bayer, a life science company with more than 150-years’ renown in the healthcare and agricultural industry. In order to commit to sustainability, he says: “It is vital that we share our experiences, learnings and opinions, and the tools to help make that happen.” Hence the role of the Sustainable Procurement Pledge, which Udesen helped to found alongside Bertrand Conquéret, President of Henkel’s Global Supply Chain B.V. and Global Chief Procurement Officer of Henkel AG & Co. KGaA.

“Sustainability is an amazing business,” he says, “but there is an underlying misconception that becoming sustainable incurs a cost, which, if you think about it more comprehensively and with a longer-term view, it doesn’t. It is fundamentally about eliminating waste and converting it into a resource, which of course caries a value — less waste, more efficiency, better business results.”

Read his view on how we interpret sustainability in the workplace, how we get the commitment to do something about it, how we ‘walk the talk’ once we do, and how, as a CPO, we embed the sustainability message in the procurement agenda. He also touches on how we can use technology to help us do all of that (and our chief research officer replies to his interpretation that the tech landscape is difficult for CPOs to navigate).

Procurement in Practice: Sustainability — Getting from the pledge to action at Bayer can be read here.

 

Sergii Dovgalenko, CPO, JSC Ukrainian Railways

In this story, we hear from the CPO of an organization that has transformed through the merger of a state agency and a state-owned enterprise into a public joint stock company owned by the state. Ukrainian Railways is now one of the biggest organizations in Europe in terms of the size of its network with a procurement spend of over $1.2 billion.

CPO Sergii Dovgalenko (until January 2021 and now independent consultant) is an experienced procurement strategist and transformation executive; he is also a licensed tutor and author who has also been head of procurement for Etihad Airways in the UAE, where he headed up indirect procurement and P2P operations.

In his latest role he was involved with the strategic turnaround of the legacy procurement and supply management of the state railway, overseeing the development and implementation of a new strategy, a Target Operating Model based upon 4 functional verticals (Strategy & Transformation, Planning & Control, Category Management and Sourcing).

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What’s interesting about JSC Ukrainian Railways is that legacy has issued it more than rolling stock and railway; unlike many very modern Western European organizations it also owns and manages billions of dollars’ worth of land and buildings used as hospitals, sanatoriums and domiciles for the people working within the railway.

“The business of procurement transformation is complex,” he says. “The interesting aspect of this (transformation) is that we find ourselves working within parts of the business you wouldn’t normally expect for procurement. For example, we have to buy the natural gas not only for our production purposes, but for all the heating of the houses connected to our gas distribution network, the same applies to water and energy, and we have the social responsibility of looking after the many staff who work for us countrywide, including their welfare and recreational facilities.”

This not only makes for an extremely complex procurement environment, but the responsibility supports social value in its truest sense. “Everything we do is a hard mix of social and business values,” he said. A concept which many Western firms and governments have relatively recently started to embrace.

Read his key learnings from managing a procurement function with a mandate that many CPOs will not have to contemplate.

Procurement in Practice — best practice can simply mean following the basic ground rules.

 

Spend Matters is grateful to Tom Nash and The American Red Cross, Thomas Udesen and Bayer, Sergii Dovgalenko and Ukrainian Railways, for such candid and helpful insight. Look out for more CPO stories in the rest of our series: Procurement in Practice.

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