The majority of CPOs are still reporting three levels down from the CEO. Enrico Rizzon, Partner, Procurement & Analytics, A.T. Kearney Australia outlines how procurement can build a strong business case!
Procurement leaders in large corporations face a tough business environment. Facing low growth, disruption, increased competitive pressures from well-funded private equity firms and nimble technology-focused innovators, the demand is growing for creative procurement services to deliver not only on cost improvements but also create new solutions that help the overall business strategy.
However, more than 50% of procurement functions are still seen as a service rather than business functions with only a small proportion of CPOs reporting into CEOs – the majority still report three levels down.
The need for procurement leaders to be able to build strong business cases that proactively influence and challenge CEOs is greater than ever. The overall goal is to make the CEO understand that what you provide can help solve business challenges, not just the procurement issues.
To deliver on these business challenges there are three key skills that all CPOs must adopt if they’re to succeed.
1. Herding cats
Herding cats is a challenging and vital skill when it comes to engaging the c-suite. Those with experience will understand that, at that level, there are individual agendas and incentives that drive different, and not always helpful, behaviours especially when the levers and areas being utilised to deliver value are less commonly associated with procurement.
One needs to be politically aware, and know how to navigate this to ‘corral the cats’ and drive the change that is necessary to unlock the value for their businesses.
2. Speak their language
The c-suite are not interested in what you want, but they are interested in what the business needs. A simple language change through framing conversations with the c-suite differently can have a dramatic impact. Think of this as, ‘same, same but different’.
To put this into practice, Chris Sullivan from CCA, who now reports directly to the CCA Group CEO, suggests structuring procurement’s role along dimensions that mater to the business and are clearly aligned with the business strategy. It is especially important to ensure that all in the procurement team understand and learn this.
3. Build trust
One of the quickest ways to burn trust is to talk about procurement and not the business. Building trust is not easy and it takes time, but once achieved it will transform Procurement from a services function to a business partner whom the CEO relies on.
This can only be built through delivery, and more importantly consistency of delivery. There is no point in over-delivering one year, only to not deliver the following year. This extends to numbers and metrics that Procurement use to report delivery. In a recent A.T. Kearney survey, CFOs consistently felt that metrics used by Procurement were less robust than other service functions. If what you report is not credible, then your trust will also quickly be eroded. Overhauling delivery metrics is a sure-fire step to building trust with the CEO.
Mastering these three skills will stand you in good stead to engage the c-suite to not only improve the overall Procurement function, but to truly impact the business so that it can grow and prosper.
My final piece of advice is to be bold.
As George Bernard Shaw famously said, ‘the reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.’ In these times of low growth and disruption, being reasonable may not deliver the result for you or for the organisation you serve. So back yourself, be bold, help lead the change that the business needs.