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This point in the year, when CPOs’ thoughts turn to the challenges and opportunities ahead, is the perfect time to reassess and challenge what you’re doing and, more importantly, why you’re doing it.
I’ve spent the past year talking to CPOs, helping them identify areas in which they can be more agile. In every case, the conversation has always come back to purpose. When I probe further and ask why the answer is always: “That’s the way we’ve always done it”. Procurement chiefs have not considered the purpose and found themselves in a complacency trap.
As we’ve gone deeper into the whys and we’ve learned more of the context in which those functions operate, we have started to connect the dots. One thing has become clear in each and every case: reporting lines matter. Some further thought and Remko Van Hoek’s thought leadership article, Building a structure to fit your organisation, helped confirmed this.
CPOs tell me there is a burning platform to innovate, leverage smart technology and build a team capable of challenging norms and solving problems – all with the aim of delivering value. As we discuss how to best do that, the conversation quickly moves beyond procurement and shifts to the organisation, which is encouraging.
We look at the organisational strategy and how it translates into a functional strategy and structure that can best support it.
Often, we come to the conclusion there must be a set of shared objectives and outcomes and, as such, this should be the bedrock of any category strategy or sourcing process. With that, I’ve tried to make sense of the impact that reporting lines can have on a function’s ability to mature, grow and truly enable the business to move forward.
You need to consider your reporting lines for four reasons:
Reporting lines matter, especially if you don’t want to be beholden to cost savings forever.
There will be a point of diminishing returns and, at that time, procurement chiefs must have a plan B.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.