ARTICLE
21 SEP 2015

What is causing Aussie CPOs to lose sleep?

What’s causing Aussie CPOs to be sleep-deprived? Talking-points from The Faculty Roundtable’s latest round of discussions reveal all…

Following on from the success of Tania Seary’s recent article ‘The Five Disruptive Forces that will Keep CPOs Awake at night in 2015,’ The Faculty Roundtable (a series of CPO meetings held in Australian capital cities and in Singapore) decided to put the same question to some of Australia’s leading CPOs.

The issues below are summary of the discussion that took place on this topic in the recently completed August Roundtable series.

1. Cost vs. Customer Centricity Dichotomy

In Roundtable meetings across the country, CPOs discussed the challenge they faced in finding a sustainable balance between meeting the expectations and requirements of its internal customers, while at the same time ensuring corporate cost cutting objectives were achieved. CPOs discussed how providing value-add services often flew in the face of traditional cost-saving procurement and that one of their greatest challenges was to navigate this tricky dichotomy.

One Sydney CPO highlighted creating close links with the C-Suite as the best means to achieving this balance. He linked the challenge to a business analogy discussed in the Harvard Business Review, claiming that CPOs needed to have a sound understanding of the legwork and operational challenges their team faced while stressing the importance of taking a step back and viewing the team’s performance “from the balcony” and linking every activity and strategic decision directly to corporate objects.

CPO discussions in Perth centred on the increased spotlight the procurement function has found itself under since global commodity prices started to slide. CPOs there said they had been asked to not only cut costs but also to identify and define new revenue streams.

The discussions in Perth covered the necessity for procurement teams to drop the procurement lingo and start speaking about the business more broadly. Melbourne Roundtable members suggested procurement teams need to address how we as a function can help achieve organisational success not procurement metrics. Perth Roundtable presenter and 2015 Procurement Leader of the Year, Kylie Towie has previously discussed this on the Procurious blog.

2. Developing Talent

Talent continues to be a major cause of concern for Australian CPOs. One CPO went so far as to say “Capability building is the biggest issue facing Australian procurement.”

Throughout the roundtable series, CPOs discussed the fact that as the role of procurement continues to grow and change within our organisations, so too does the required skill set of procurement teams. A Brisbane CPO claimed that attracting and retaining top corporate staff needs to remain a top a priority for procurement. He went onto to say; that while the functions image is improving the battle to attract top corporate talent is as ferocious as ever.

Another Brisbane-based CPO made gave some interesting insights into the disconnect between talent management theory and practice. He claimed that theories alone couldn’t motivate teams to do something; only actions can do that. The same CPO claimed that implementing talent management processes required constant attention and commitment. The example of a mentorship program was used to describe the challenge. The organisation had decided that implementing a mentoring program would be a great way to motivate and develop junior staff. This was in fact true. However, the challenge lay not with motivating junior staff to participate, but rather in encouraging senior staff to act as mentors. Many leaders either were unable to see the value in the project or did not feeling comfortable acting as a mentor.

3. Proving Procurement’s Worth

This fear has long been with the CPO and it seems it’s as strong today as ever. Across the country, CPOs highlighted the constant need to validate and prove their worth. There was general agreement amongst the Australian procurement leaders that this will (and should) continue to be the case.

CPOs, particularly those working in the resources sectors, mentioned that they were under increasing pressure from CEOs to not only identify savings, but to track these benefits all the way through the P&L. To this end, CPOs expressed great interest The Faculty’s upcoming research paper “Making it Stick” which is designed to ensure that CPOs and procurement teams realise all negotiated savings. The paper, which will be release on 17 September, highlights that more than 50 per cent of savings negotiated by procurement teams fail to find their way to the bottom line. The report provides a road map and points out pragmatic strategies that procurement teams can implement to ensure these savings are realised. Stay tuned to Procurious for more information about this highly anticipated research paper.

4. Managing the Rate of Change

“The pace of change is so intense, it can be a struggle just to keep up,” claimed one CPO. This sentiment was echoed by most of the CPOs we spoke to as they discussed the importance staying on top of technology trends and tried to understand how this rapidly changing environment might impact their operations.

Discussing the need to leverage new technologies, a Brisbane based CPO claimed, “its not enough to just carry on running tenders, we need corporate game changers.”

The CPOs went into some detail discussing the challenges procurement teams faced when it came to adopting new and disruptive technologies. A lot of it boiled down to procurement professionals having a strong fear of failure.

“Some of our staff are scared to fail and this impacts what we can achieve,” said one CPO. While this aversion to risk may be beneficial in many areas of procurement, when it comes to implementing new ideas or ‘game changers’ its can hinder progress.

Pulling reference from the tech and start-up sectors, one CPO stated that, “In order to take full advantage of new technologies and operating processes we need to be ready to fail fast and fail often.”

The Faculty Roundtable comprises of an elite group of Australian and Asian procurement leaders who gather to share their experiences and insights, to achieve greater commercial success for their organisations.

Meetings are held throughout the year in Melbourne, Sydney, Perth, Brisbane and Singapore. To find out more or to get involved click here.

This article first appeared on Procurious.