This is part 6 in our "CPO job description" series, which examines in-depth the role of the chief procurement officer. You can read our last installment of the series here, which talked about managing the skills and development of the procurement staff.
In our last few installments of this series, we have focused on how the CPO is responsible for improving the effectiveness of staff members within the procurement function. However, given the inherently highly matrixed nature of procurement processes with other functions, the CPO must also increase procurement influence through numerous cross-functional organizational structures and execute the responsibility of:
Leadership of cross-functional teaming across other business functions and initiatives
First, starting at the top of the organization, most successful CPOs have some type of cross-functional steering committee (which can be called may things) that help ensure that procurement, finance, IT, legal and most of all, the business units, have governance structure to make sure that procurement is aligned with the other stakeholders. This ensures that senior-level budget owners will give procurement the top-down support that it needs in driving a major transformation in the procurement processes at an enterprise. But it also helps push through obstacles and conflicts that invariably occur across these stakeholders. Finally, it also holds procurement accountable for its role in providing supply management services to the enterprise – especially as procurement outsourcing providers are becoming increasingly capable of “co-opetition.”
The CPO must also work at a process level with upstream process participants such as engineering, sales, marketing, operations, etc., to ensure that procurement is “baked-in” to upstream processes where it can initially add value (even if limited to a small set of procurement services) and then increasingly expand the services being delivered as credibility and business results are delivered. This type of alignment is something that the CPO must ensure is delivered through an internal “customer management” process as well as a cross-functional sourcing process (and broader category management process) that gets delivered by various procurement staff. The procurement service expansion will happen at different rates across different stakeholders and spend categories, and as such, a CPO must prepared to manage this level of complexity and to push procurement staff, internal stakeholders and external stakeholders to continually broaden this service portfolio and level of influence.
The final responsibility that we will highlight in this area is the extent that the CPO works with other enterprise groups of various forms that are tasked with key enterprise responsibilities:
- IT leading information security
- R&D groups leading innovation activities
- Chief technology officers leading digital business strategies (with IT & R&D supporting)
- EH&S groups leading sustainability efforts
- Chief risk officers leading enterprise GRC efforts (or at least the “R” part) that can include supply (and supplier) risk management
- Third-party management and governance (beyond just suppliers as third parties)
- Lean/Six Sigma Groups leading quality improvement
- Various strategy and PMO organizations leading transformational change
- Any groups performing strategic collaboration/co-creation activities with customers – or any revenue/innovation producing programs in general.
You get the idea. The CPO must help extend various enterprise efforts out to the supply base in a coordinated manner. By doing so, procurement can not just increase its influence on those internal stakeholders (to dovetail the efforts with other procurement-led activities), but also increase its influence on suppliers by demonstrating its level of enterprise coordination and also by using those mandated enterprise initiatives to help re-engage suppliers on a broader platform of change and value creation then just purchased cost savings alone.
This ability to perform “organizational judo” is a crucial change management strategy for a CPO to master. The CPO should opportunistically use the weight of such “burning platforms” and initiatives du jour to help support (and fund) current or planned procurement initiatives that might struggle individually on their own. Building up a few of these success stories in addition to the usual cost savings “quick wins” helps the CPO be able to “sell” the procurement service offering as much as the CPO helps the firm “buy.”