The following is an extract from the cover story of the Mar/Apr issue of Procurement Leaders Magazine, titled ‘The End of the CPO’. For the full article, click here.
Nasdaq’s [Strategic sourcing and operations chief, Steven] Hrubala points out that what’s being asked of a CPO may always be cost-cutting, but there are natural limitations to the remit, particularly in certain industries. “You might get to the point where you’ve wrung out the cost savings in your supply base – your bag of tricks is a known one – how then can you take it to the next level?” he asks.
Having seen the development of the role, particularly in terms of what businesses are looking for in their procurement chiefs, [Procurement and supply chain executive search consultant at Odgers Berndtson, Lucy] Harding feels that the role will evolve. “Where it has a raised standing internally, dyed-in-the-wool procurement types and CPOs begin to have a natural split.
“The senior roles have a broader agenda and I think it’s interesting to note the companies where that’s meant the top role has fewer procurement capabilities and experience associated with it, and is even a progression role for internal moves. You need a leader, and someone that is respected and can contribute to the discussion at board level, but that doesn’t necessarily mean it’s a procurement person.”
Ian Bolger, principal at Efficio and former head of supply chain at Thames Water, agrees that not only is the role changing as it gets more developed, but also that the distinction between leaders and managers is important for procurement to understand.
“One of the things you hear about is ‘occupational hobbies’,” he says. “That means resisting temptation to indulge in hobbies – which, in this case, might be the purchasing process – and focusing on delivering to business goals.”
Perhaps the actual procurement part of the chief procurement officer’s role could go the way of the dodo.
One of the reasons for that change is the notion that when procurement develops to a certain point, it doesn’t necessarily need the influence of a procurement manager in the same way as it once did.
[Professor] Richard Lamming, in a book he co-authored, Strategic Supply Management: Concepts and practice, talks about the future of supply and specifically about the ‘black box’ – a concept that was going to redefine the musty old role of the purchasing manager.
The black box does all the purchasing, argued Lamming. “It interprets the requirements from everyone in the organi-sation who requires supplies, products and services, commodities and bespoke items. It deals with designers and specifiers, it selects sources, it negotiates, it runs online auctions, accesses portals and conducts relationship management, including performance measurement of its own organisation [...], of suppliers and of each unique customer-supplier relationship,” he wrote.
The allegory doesn’t aim specifically at technology, rather it’s Lamming’s way of suggesting that a combination of people and processes are conceivable that automate what procurement does.
“It’s an indication of redundancy,” says Lamming today. “This idea is something that’s been around for a while, but it’s something we’re really starting to see and it makes you wonder what procurement’s going to be asked to do. It’s perfectly possible that versions of the black box exist already, and while they may not be perfect, there are big implications for how procurement behaves; does it simply look after ‘the machine’ or are their other models for the function to follow?”