CPOs - becoming Board-relevant and building stronger relationships with senior execs


BillCrothers.jpgEven though the Procurement function is becoming critical to business success, it all too often remains seen as driving cost savings rather than being worthy of a seat at the Board table in determining and helping to drive broad corporate value.

However, working on the Board of Greensill Capital, a global supply chain finance specialist company, Bill Crothers, a former UK Government Chief Commercial/Procurement Officer, has seen how Chief Procurement Officers (CPOs) can make a dramatically positive contribution to the balance sheet, work with their Treasury, Finance, and IT colleagues, and be much more Board relevant.

In this month's SmartProcurement, Crothers writes about how CPOs can build stronger relationships with senior executives and make a dramatic impact on their businesses.

CPOs and the role of Procurement should absolutely be on the mind of the Chief Executive Officer (CEO) and other senior executives, and they should be working to drive business value in much broader ways.

Considering that 60% or more of a typical company's cost base lies with their third-party suppliers, it is regarded both an opportunity and a challenge for CPOs to demonstrate their relevance and that they can be at the heart of truly adding value.

I believe that the Boardroom beckons for those willing to take up this challenge.

The role of the CPO has evolved beyond assuring supply and managing purchasing costs: CPOs need to handle numerous new challenges, including regulations such as Prompt Payment and the Slavery Act, legislation around fair procurement practices, and the need to manage reputational, ethical and operational risks posed to the business by suppliers.

All, of course, whilst keeping costs down.

Despite its critical role in maintaining relationships with suppliers, procurement is viewed mainly as a means of driving cost savings, rather than as a way of improving working capital and driving benefits to the supply chain.

How can CPOs do more than 'just' make cost savings? Supply Chain Finance (SCF) is an example.

SCF programmes involve work across Treasury, Finance and Procurement functions, though it seems that the Treasury team generally takes the lead instead of Procurement.

However, this offers an opportunity for an enlightened CPO to be at the intersection of physical goods and services and the financial supply; an opportunity to broaden their sphere of influence and shape the future of their careers.

However, key to enabling this new potential impact is having a good understanding of what has changed.

Advances in technology, together with more efficient legal processes and the increased availability of a wider range of capital sources mean that newer SCF programmes can have less 'friction' than SCF programmes of the past.

Traditional bank-run SCF programmes would typically involve only the largest suppliers, since bringing smaller suppliers on board was time consuming, difficult and often not cost effective.

New advances in invoicing and payment technologies now make it possible for companies to extend these programmes to the 'long tail' of the supply chain, for the first time reaching all a company's suppliers.

As a result, the scale of impact can now be much more dramatic and material to a business, which can be a fundamental improvement in how Procurement can contribute business value - from simply driving costs to helping to improve the balance sheet (as well as perhaps profit and loss), reducing supplier risk and being a good corporate citizen.

Taking all of this together, you can see that there are clear reasons why CPOs should take a leadership role in pursuing trade financing programmes. However, in my experience of SCF so far, it seems that procurement teams tend to have more of 'a veto' during SCF decisions and are rarely the people driving the initiative.

CPOs could take the initiative to get smarter on the financial supply chain and collaborate with Treasury on exploring these programmes, as well as understand the business strategy, accounting and operational elements involved. Such expertise and facilities will be invaluable in furthering the potential of the CPO role -- and CPOs themselves.

CIOs have faced a similar battle

While some CPOs may feel frustrated by the current state of affairs, they should be heartened to know that the issues they face today are like those faced by Chief Information Officers (CIOs) five or 10 years ago. Back then, many CIOs felt pigeonholed as 'the IT guy', rather than as someone with an important role to play in business-critical decisions.

This has changed - a CIO is now one of the most respected, and indeed, in-demand roles on a company's executive leadership team, with responsibilities ranging from cyber security, analytics and big data as but a few examples.

The advances made by CIOs in recent years suggest that CPOs could follow a similar path in making more of a strategic-level impact and move up to the C-suite.

To do so, however, CPOs need to broaden their results beyond simply reducing the cost of goods sold and Selling, General and Administrative (SGA) expenses.

For those looking to make a difference in their businesses and their own careers, understanding and capitalising on the financial supply chain could bring significant potential benefits.

The Boardroom beckons!

Leave a comment

SmartProcurement Newsletter

Please enter your details below to receive the SmartProcurement Newsletter for FREE on a regular basis.

As part of the SmartProcurement Newsletter you will be receiving World Class Procurement News, Tools, Tips, Tactics, Procurement Training updates, Upcoming Events, and the latest Procurement Career Openings.

* Email Address:
* Title:
* First Name:
* Surname:
* Company:
* Country:
* Public / Private:


Career opportunites

Demand Planning Manager

  • <500 000 Gauteng Operations, Planning & Inventory Projects / Category Management
(Total Cost to Company R750k - R900K) excluding ...More

Global Category Manager: CONTRACTS

  • <500 000 Buyer Commodities Contract Gauteng
Total Cost to Company R1mil - R1.2mil excluding

Project Manager :12-18 MONTH CONTRACT

  • <500 000 Contract Procurement Officer / Specialist Projects / Category Management
Description:A well-known retail organization is looking for an ...More

Procurement Analyst

  • <500 000 Analyst Gauteng Permanent Procurement Management
Description:A leading infrastructure development group with strong presence ...More

Commodity Manager: Fuels and Lubes

  • <500 000 Commodities Gauteng Permanent Strategic Sourcing
Description:Ensuring continuity of supply in line with business ...More

Senior Facilities Manager

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
(Total Cost to Company R800K - R900K) Description: ...More

Supply Chain Analyst

  • <500 000 Analyst Permanent Supply Chain Western Cape
(Total Cost to Company R350K - R550K) SOUTHERN ...More

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Supply Chain
(Total Cost to Company R450k - R550k, dependent ...More

Procurement Specialis

  • <500 000 Gauteng Permanent Procurement Management Procurement Officer / Specialist
(Total Cost to Company R700k - R800k including ...More

Solutions Architect

  • <500 000 Analyst Gauteng Operations, Planning & Inventory Permanent
(Total Cost to Company R1.3Mil - R1.1Mil including ...More

Engineering Manager

  • Gauteng Industrial Engineer Permanent Procurement Management
Total Cost to Company R850k - R950K including ...More

Country Head of Procurement

  • Permanent Procurement Management Procurement Officer / Specialist
https://careers.peopleclick.com/careerscp/client_gsk/external1931/gateway.dofunctionName=viewFromLink&jobPostId=359235&localeCode=en-us CBS Procurement,Hub Head of Procurement To lead, ...More

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Planning/Demand%20Planner/TP2005490/MSe Category: PlanningPosition Title: Demand PlannerSalary: R600 000 ...More

Head of Procurement

  • <500 000 Gauteng Permanent Procurement Management Procurement Officer / Specialist
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Procurement/Head%20of%20Procurement/TP2005488/ZBuCategory: ProcurementPosition Title: Head of ProcurementSalary: R1.3 million ...More

Warehouse and Distribution Manager

  • <500 000 Gauteng Logistics & Warehousing Permanent Supply Chain
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Logistics/Warehouse%20Distribution%20Manager/TP2005455/TMa Category: Supply ChainPosition Title: Warehouse and Distribution ...More

Supply Chain Manager

  • <500 000 Mpumalanga Permanent Procurement Officer / Specialist Supply Chain
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Mpumalanga/Supply%20Chain/Supply%20Chain%20Manager/TP2005448/LMa Category: Supply ChainPosition Title: Supply Chain Manager ...More

Industrial Engineer

  • <500 000 Gauteng Industrial Engineer Operations, Planning & Inventory Permanent
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Consulting/Continuous%20Improvement%20Manager/TP2005489/SNh Category: ConsultingPosition Title: Industrial EngineerSalary: R900 000 ...More

Operations Manager

  • >500 000 Gauteng Operations, Planning & Inventory Permanent Supply Chain
Our client within the FMCG industry with a ...More

Warehouse and Distribution Manager

  • >500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Permanent
An exciting opportunity awaits for a Warehouse and ...More

Demand Planner

  • <500 000 Permanent
Get an opportunity to be part of one ...More