THE FACULTY INSIGHTS
15 APRIL 2016

“Procurement to Go” is about building a fast, reliable and flexible function that’s always one step ahead of changing business needs.

In her recent article, PASA’s Jeni Christensen shared her concern about the region’s “shocking” lack of Professional Procurement. The target, Christensen writes, is to have a CPO at every boardroom table, and she shares a series of very valid steps about how to get there. New-York based Justin Hughes (PA Consulting Group) has also recently written an article about how a seat at the top table is “something procurement has to earn”.

But is board membership really the answer? We’d like to present an alternative view. 

You don’t need a seat at the table if you have the right level of influence

Let’s face it – getting a seat at the boardroom table has been a recurring theme amongst procurement professionals for nearly a decade now. It’s a consequence of procurement’s historical back-room role, and a perceived fix for a host of procurement frustrations, including organisational compliance. Chris Lynch, Global CFO of Rio Tinto, told delegates at the 2015 Asia-Pacific CPO Forum that the focus on board representation wasn’t the answer: “Forget reporting lines – just put procurement in the ‘winner's circle’”.

Getting into the winners circle is all about influence. According to The Faculty Roundtable member and leading CPO David Henchliffe, “Business leaders need to get the value good procurement practises can deliver, and be strong advocates for the function.  It’s our job to make sure they get it.” In Henchliffe’s opinion, the preoccupation with board or senior leadership team membership is misguided. Deliver value to the business and CPOs will be invited to join in broader business-level planning and decision making.

The situation may not be as dire as PASA and Christensen suggest. Procurement has made enormous progress from its formerly transactional, back-office position to become strategic partners in the business, predominantly through strong performance and better communication of the value it brings to organisations. According to The Faculty’s recent Benchmarking Review, procurement’s influence continues to grow, with managed spend at an average of 72% this year, up from 68% in the previous review. CPOs are regarded as “highly influential” by surveyed procurement teams, stakeholders and suppliers, again pointing to improved communication and articulation of value to the C-level.  

How to ensure board members and senior leadership team members “get” procurement

Relevance through flexibility and agility is key.  Henchliffe has seen his own organisation shift dramatically from an emphasis on growth and delivery to a critical focus on reducing the total cost of the business.  Procurement’s role, therefore, is to always be in step with the business’s requirements and to make sure the function can rapidly respond to the constantly changing business environment.  

To flesh out the “table” metaphor, the boardroom/senior leadership team menu itself never remains static.  Procurement needs to position itself as an ultra-flexible function that’s always ready to deliver – at top speed – anything that is required.  Think of it as “Procurement to Go” – fast, reliable, flexible, and a world away from the old, glacial speed of delivery.

Ron Brown, highly experienced CPO across the Resource and FMCG sectors, says that the importance of nurturing capability cannot be underestimated if you want to stay relevant. “Hiring for and building capability around flexibility, driving value and managing risks is now integral”, Brown says. “If you want procurement to remain relevant, focus on capability and relationship building to ensure you’re a key part of the business strategy and performance”.

In summary, CPOs should focus on staying relevant by offering the business “Procurement to Go” through flexibility, adaptability and concentrating on ensuring board members “get” procurement. Once this is achieved, CPOs can use this influence to achieve their goals and enable the profession as a whole to move on from the unhelpful fixation on boardroom representation.

The Faculty Roundtable comprises of an influential group of procurement leaders who gather to share their experiences and insights, to achieve greater commercial success for their organisations. Through The Roundtable, members have access to leading-edge thought leadership and commentators, a ready supply of valuable expertise through exclusive market intelligence, as well as networking and professional development opportunities for themselves and their team members.

The Asia-Pacific CPO Forum is the region’s premier procurement event dedicated to accelerating commercial leadership at the highest level. It is a once-a-year opportunity for leading Chief Procurement Officers to engage with peers and like-minded business leaders in an intimate and interactive setting. The Forum is designed for delegates to facilitate the sharing of best practice strategies, develop innovative and responsive procurement approaches, and hear from a compelling speaker line-up of influential thinkers, eminent business leaders and commercially creative minds.

In 2016, The 9th Annual Asia-Pacific CPO Forum will held on 18th and 19th May in Melbourne, Australia. For more information contact Program Manager, Belinda Toohey, on +61 3 9654 4900 or via email.​