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Former IBM CPO John Paterson on procurement's past, present and future

John Paterson

John Paterson, former CPO at IBM, is someone who has been there and done it when it comes to procurement. He joined the function when it lingered in the back office, but recognised it had much more to offer the business and helped move it to the very heart of many organisations.

 

That journey saw him help set up a US purchasing organisation for IBM’s PC business in the 1990s after stints in finance and engineering, before taking up the reins as CPO in 2003.

 

Paterson’s role saw him move to Shenzhen, China, in 2006 and then Budapest, Hungary, in 2012. These moves came as a direct result of procurement becoming a globalised function; a unit that was required to source goods and services from across the world.

 

He retired as IBM’s CPO in June 2014, but continued to influence the function through his chairmanship of Procurement Leaders’ Global Advisory Board. Here, he has acted as a sounding board and advised the next generation of CPOs – those who are set to take the function to the next level in its development journey.

A wealth of experience

 

Now, however, Paterson has decided it is time to take a further step back, standing down from his role on the advisory board and generally taking more time for himself. But, in typical fashion for this affable Scotsman, he has some final thoughts for the function as it moves forward without him.

 

“Over the past few years, companies have learned the value that procurement can deliver,” he says.

 

“Procurement has grown professionally over that period and it has been able to invest in new tools and applications that have taken away much of the administrative burden the function bore in years past. However, going forward, we need to capitalise on the gains we have made.”

 

To achieve this, Paterson suggests thinking about and tapping into all capabilities and opportunities the function can deliver – from demand and specification management to supplier-enabled innovation.

 

Embrace procurement with as much enthusiasm as you can. It can take you wherever you want to go - both geographically and in terms of development

Paterson also suggests the function continue its pursuit of the latest technological developments and automate as many processes as possible. This will free up time to focus on value-adding activities and capitalise on data procurement teams collect from the supply chain.

 

As for the challenges the function will face, Paterson is quick to point to start-ups and the threat posed by geopolitical uncertainty.

 

“New competitors are both small and agile – and they come to market with deep pockets. Also, they are not beholden to reporting their financials quarterly, which changes the game somewhat,” he says.

 

When it comes to geopolitical events, Paterson notes we are beginning to see some degree of reverse globalisation, partly due to increasing costs, but also because of growing nationalism, which will bring about more localised sourcing.

 

He points out that the function must to be ready to deal with such issues. And one final piece of advice for those either in the middle of a career in the function or those just starting?

 

“Embrace procurement with as much enthusiasm as you can,” he says.

 

“It’s a wonderful career that can take you wherever you want to go – both geographically and in terms of individual development. You have to be proactive, though, and learn from the hundreds and thousands of companies in the supply base that procurement touches. They have valuable insight that can open up new innovations and add value far beyond cost savings,” he says.

 

“I would encourage anyone wanting to get into procurement to get in deep and immerse themselves in it as much as they can,” he adds.

 

There is no doubt the function will be markedly different without John involved in the conversation, but having played a significant role in transforming procurement’s reputation, he has helped put it into a position where it can thrive for years to come.

 

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Career highlights

  • Paterson began his career at IBM in the early 1970s in Greenock, Scotland. After taking up posts in finance, management and engineering, he returned to procurement.
  • He set up a US purchasing organisation for IBM’s PC business in the 1990s and established IBM’s procurement services, before being made CPO in 2003.
  • In 2006, he relocated IBM’s procurement headquarters from New York City to China in order to focus on suppliers in the country. A 2012 move to Budapest challenged the way in which the global function operated.
  • Paterson was recognised by the procurement community in 2013 when he won the Procurement Leaders Lifetime Achievement Award for his services to the function. Since retiring from IBM, Paterson has supported the community as chair of Procurement Leaders’ Global Advisory Board.

 

First featured in PLQ Volume I: Issue IV, now available to members on the Procurement Leaders app, ready to download here from iTunes and Google Play

 

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

Tim Burt

Tim Burt -

Editor, Procurement Leaders

Tim Burt is Editor at Procurement Leaders and has interviewed some of the leading figures in the procurement profession.