Ten years ago, the chief procurement officer (CPO) was an executive role that didn’t even exist in most companies. Moreover, most procurement leaders didn’t even report to the C-suite, let alone have an executive representative with a seat at the boardroom table. Yet, when you fast-forward to the present day, the CPO role has rapidly become one of the most strategically oriented C-suite roles as a direct result of the strategic importance that procurement has garnered during that timespan.
It is a task of the CPO to ensure that executives and the rest of the organization understand the value delivered by procurement. But aside from that, what are the specific ways in which CPOs can collaborate with the rest of their C-suite peers in order to accomplish the goals of the company? According to a recent Deloitte survey, the five strategic business areas prioritized by most CPOs as being either “strong priorities” or “somewhat of a priority” are Cost Reduction, Managing Risks, New Product/Market Development, Increasing Cash Flow and Expanding Organically. With so many priorities that overlap with the interests of other executives, there are copious opportunities for practical collaboration between CPOs and their peers.
Because marketing is a major source of indirect spend for most businesses, CMOs are under constant pressure to demonstrate the underlying value of the marketing teams’ efforts, and for justifying the ways in which they are actively spending their companies’ resources. Fortunately, the data-based approach to procurement can assist CMOs when it is time to prove their case.
CPOs can help their marketing peers to focus on delivering value to their organizations while closely monitoring costs. Marketing projects are able to generate a significant return on investment, provided they are managed properly and grounded by substantive data. However, without proper oversight, the unpredictability of some marketing efforts can lead to undisciplined, wasteful spending. CPOs’ control of marketing procurement activities can ensure that marketing decisions are guided by valid data, and unrestrained spending is kept to a minimum.
CMOs can also help CPOs to make better use of resources. Because of the speed with which large volumes of information can be collected and organized, CMOs can make use of real-time customer feedback to tailor consumer messaging according to data, while CPOs can use that same data to fine-tune the purchasing decisions that are linked with marketing efforts.
The quickest path to a CFO’s heart is through their wallet, or more specifically, the company’s budget, and how well procurement is able to help the company stay within it. The CPO and CFO should be natural allies: Both are dependent upon numbers to define their successes, and both are on an eternal quest for money-saving (and occasionally money generating) opportunities. Because of this commonality in approach, there are myriad ways for CPOs and CFOs to collaborate with one another on ventures that will benefit the organization and conserve its resources.
Not only does automation accelerate low-skill processes and liberate staff to devote their time to more thought-intensive tasks, but it also results in the rapid aggregation of meaningful data. Access to structured financial and spending data permits both finance and procurement to thrive, and generates an instant opportunity for the two departments to get on the same page before purchases are made, meaning the consent of the CFO can be granted to the CPO on the front end before any purchases are made, thereby minimizing the likelihood of any back-end surprises and repercussions.
As a result of their natural affinity for saving money, the CPO and CFO also stand to benefit mutually by working together to create and enforce new policies and processes within their companies in the interest of compliance and savings. By doing so, both the procurement department and the finance department will be able to work from the same set of statistical performance metrics. This will increase the ease with which the two departments can communicate and cooperate, ensure that the two like-minded sets of employees are reading from the same playbook, and minimize any friction that might occur when the groups are asked to work on projects alongside one another.
The CIO and CTO deal almost exclusively with the domain of technology, but the CPO is also required to wade into technological waters in order to furnish the procurement team with the essential tools to effectively fulfill their responsibilities. Because these technologically minded executives will have prioritized where technology resources should be allocated, the CPO can focus on other concerns, like budgeting, existing suppliers, and the present software portfolio.
Despite the fact that the actions of procurement teams over the last two decades have been largely responsible for the retention of savings that have funded the proliferation of technology throughout the organizations they serve, many procurement teams are still in desperate need of being equipped with the latest technological tools to aid their own efforts. Communicating the importance of such upgrades to the CIO will ensure that procurement teams begin leveraging the latest technologies such as automation, RPA, machine learning, and artificial intelligence to optimize their efforts.
With efficiency improvements in mind, the CPO can guide the CIO toward adopting a technological strategy that enables procurement to make improved decisions that will further fund the CIO’s quest to boost the organization’s technological competency. Likewise, the CIO can administer guidance to the CPO on the sorts of spending that will assist with sustaining company-wide improvement efforts.
While the three aforementioned offices of the C-suite represent components into which business activities are frequently partitioned, opportunities to influence what are commonly the most powerful officers of an organization—the CEO and COO—should not go overlooked. Developing strategies for collaborating with the other officers if obviously beneficial to the organization, and such opportunities should be capitalized upon whenever they present themselves.