The meeting begins and the key participants include the CEO, CFO, CMO and the Chief Procurement Officer (CPO). In the past this might seem like an odd group for a key recurring meeting but it is becoming more common in the new economy.
Today’s CPO is expected to be involved in more and more transactions that involve strategic partnerships. In this global economy they are becoming key guardians of sustainability business practices. Their role is expanding to ensure procurement policies and procedures meet internal and external compliance requirement around areas such as diversity initiatives, social responsibility goals, and other such programs. Successful execution by the CPO not only adds to the bottom line but more importantly may impact how the public views the company, the products and the overall corporate brand.
Companies that embrace the expanded role of the CPO are in a better position to provide transparency across the supply chain and therefore manage new types of risk to the business and opportunities for substantial savings. For example, procurement can play a critical role in identifying suboptimal business practices through enterprise performance metrics. Are divisions meeting their sustainability goals? Are there opportunities to increase value through the supply chain with collaborative outsourcing and services agreements? Most importantly are geographical shifts evaluated for the impact on supply and demand?
Tomorrow’s procurement departments will require a new talent mix. Talent that understands data mining and analysis. Talent that is intellectually and geographically diverse. And talent that can find innovative solutions for working with emerging market economies.
Continued growth and profitability will require a multidimensional approach to navigate the many challenges a global economy and supply chain present. While reducing costs will remain important, avoiding the pitfalls associated with flawed procurement practices can help increase strategic position, brand equity, and profitability.