6 imperatives for CPOs: Intent on driving business performance improvement

8/12/2019 6 imperatives for CPOs: Intent on driving business performance improvement

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6Imperativesfor CPOsintent on driving business performance improvement


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Procurement

A

t Zycus, we believe that well equipped procurement and supply management or-

ganizations have the power to drive business performance on both the profit and

revenue lines. But procurement can only succeed as an explicit driver of business

performance by,

Thoroughly understanding the spending needs of the business,

Extracting the greatest possible value from global supply markets,

Building collaborative relationships with high-performing suppliers,

Minimizing supply risks,

Obtaining both collaboration and correct behaviors from the people who spend, and

Aligning every strategy and activity that procurement undertakes with such business per-

formance measures as cost of goods sold, working capital, cash flow, profit, shareholdervalue, market leadership and innovation.

Becoming that well-equipped procurement and supply management organization means re-

cruiting the right talent into procurement, adopting proven best processes and using technol-

ogy strategically to: overcome human limitations for processing information; remove physical

obstacles to collaboration; ensure efficiency and maximize return on investment in procure-

ment. To get to this vision, CPOs must focus on the six imperatives outlined in this paper.

at the heart of the high performing business


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Visibility

W

hile the past decade has seen many companies make enormous progress in

establishing spend visibility, the coming decade will see companies taking more

holistic approaches to procurement visibility. The most competitive procurement

organizations will become capable of connecting information generated both

internally and externally from many sources, systems, locations, languages and formats to

create 360 visibility that supports a full range of strategic procurement activities (not just

spend management and strategic sourcing). Near-term objectives for procurement executives

are to:

Fill holes in their solution and information infrastructures,

Ensure that information can always flow easily from one solution to the next,

Ensure data is accurate, complete and structured so it can be broken down, recombinedand combined with external information, on the fly, in meaningful ways,

Adopt global standards for structuring proprietary information so it can be paired with ex-

ternally generated information (market, supplier, legal and so forth), and

Begin imagineering the possibilities that such capabilities might yield for formulating in-

novative/competitive procurement, sourcing and supply-base management strategies.


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Procurement/FinancialPerformance Management

SpendAnalysis

SupplierPerformance

Management

e-Sourcing

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manageglobalsupplynetw

ork

sContract

Management

Global marketIntelligence

Global supplierIntelligence

Global marketIntelligence

Global legalIntelligence


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SpendAnalysis

SupplierPerformanceManagement

sourc

ing

e-Sourcing

FinancialPerformanceManagement

pla

nt

Fail!

ContractManagement

CPO


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Alignment &Collaboration

T

he strategic imperative for procurement is to become the hub the function that

can capture knowledge and information effectively and efficiently from many sourc-

es, transform and redistribute it where needed. So, for example,

Supplier performance data captured from operations might be used to predict and mini-

mize exposure to supply risk,

Information extracted from contracts might be used by finance to improve cash flow,

Forecasts and other qualitative input captured from sales might be used to generate intel-

ligence about future demand and sourcing requirements, and

Information about supplier innovation captured through sourcing RFIs and RFPs might

be passed along to R&D and used there to inform a companys long-term technology and

product-development roadmaps.

When procurement deploys solutions that enable knowledge capture and collaborative deci-

sion making, the possibilities for achieving competitive advantage and driving business per-

formance increase exponentially.


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Templates

Utilizationtracking & metrics

Automated/semiautomatedprocesses

WorkflowAudittrails

Versioncontrol

Presets

Projectmanagementtools anddashboards

Permission

control

Configurabledecisionsupporttools

Collaborationsupport

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Compliance

D

riving business performance from procurement means convincing employees to

line up with and adopt preferred procurement processes, strategies, standards

and decisions. A recent in-depth Zycus study covering some 600 procurement

organizations worldwide finds compliance in general growing from a platform that

combines alignment of objectives, communication, collaboration and consistent technology

adoption.

Well-engineered procurement solutions drive compliance by empowering procurement execu-

tives to codify corporate objectives, standards, workflows and strategies. So, for example, a

contract authoring tool with templates that incorporate preferred commercial terms and legal

protections creates a powerful platform for managing legal and financial risk exposure. Con-

figurable filters in a spend analysis tool make it easy for procurement executives to promotespecific strategies. One year, for example, the analytics tools may promote supply-base ra-

tionalization while the next year they promote supply base globalization. Likewise, a decision

optimization tool for e-Sourcing might be weighted heavily in favor of suppliers who perform

best on the product quality metric, preventing sourcing professionals from overemphasizing

cost in a business enviroment that values product quality more highly. Of course, relying on

solutions to promote compliance assumes people can easily adopt and use the solutions.


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Adoption

P

rocurement needs technology both to standarize and accelerate processes and to

overcome human limitations for processing information in a highly complex, global

economy. But simply investing in technology is not enough. Successful procure-

ment organizations must also be capable of driving broad adoption and consistent

use of procurement technologies at all levels of business enterprises and supply networks.

And, while alignment and collaboration may go a long way to supporting adoption of procure-

ment disciplines, processes and technologies, a technologys usability seals the deal. Usable

procurement technology solutions will,

Be cognizant of how people prefer to work and the ways in which ubiquitous desktop appli-

cations have already trained them to think,

Mimic common user experiences (such as B2C e-commerce),Minimize time and effort required of users to perform tasks,

Represent the easiest ways to perform tasks and obtain desirable results (such as closing

deals, obtaining needed goods or services quickly and getting paid),

Offer simple solutions to complex problems, enabling organizations to start from wherever

they are without undergoing massive training or knowledge acquisition, and

Be capable of growing with end users as they expand their abilities incrementally and seek

to push past their own boundaries.


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fewer clicks

templates

presets

dashboards

1-screen views

autofills andsuggestedinputs

advancedcapabilities

easy download/uploadto/from desktop apps

User shouldexperience... ...while the

businessbenefits

from...

built-in bestpractices

Wow...getting this work

done is so much easier

than it used to be! Finally

someone is paying atten-tion and giving us tools

we can really use.


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Contribution

P

rocurements core performance focus - minimizing costs - can often feel at odds

with other business objectives. A companys financial and senior executives may

become distracted from the cost line when revenues are growing fast. Meantime,

the people responsible for driving innovation or building a companys brand may

feel that too much focus on costs undermines creativity and style. People responsible for

operations, quality and customer satisfaction can be quick to blame procurement when prob-

lems originate in supply chains. Even when corporate and functional leaders back procure-

ment 100%, it can be still be exceedingly difficult to transform theoretical cost savings and

other procurement achievements into facts that show on a companys financial statement.

Procurements imperative is to make sure the results of its work materialize either on the top

or bottom lines of the business in highly quantifiable ways. Until very recently, this need hadbeen ill met from a procurement technology perspective, but the situation is changing rapidly.


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Procurement/FinancialPerformance Management

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We want to get

much faster at

discovering and bringing

high performing and

innovative suppliers

into our new

product intro

processes.

Our percent of spend

with high risk suppliers

has been creeping up in

the past month. Wed

better do something

about that and fast.

There has been a huge

amount of innovationand restructuring in this

market. We can exploit

it, but need to rethink

the way we group

our spend categories.

Our rationalization

opportunity is essentially

exhausted. Time to start

focusing more on demandmanagement.

Weve got our

payment terms

standardized.

Now, its time

to start movingsome other

cash flow

levers.

Were going to

make big changes

in the way we write

contracts with ourcritical suppliers

this year.

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Innovation

B

usiness enterprises are full of smart people with great ideas and its always the

unique ideas executed rapidly and well that yield competitive market leader-

ship. That is why procurement technology solutions, while incorporating proven

best practices, must also be engineered for flexibility and ongoing innovation in

procurement strategies and approaches.

When its time, for example, to shift strategy from supply-base rationalization to globaliza-

tion, it should be easy to add a spend analysis filter that redirects discovery of performance

improvement opportunities in favor of the new strategy. Or, perhaps some bright sourcing

professional discovers a market opportunity that involves bundling spend in an unusual way.

It should be easy to see what a revised categorization of spend might look like without wait-

ing days, weeks or months for a companys core spend classification model to be rewrittenpermanently.

The best procurement technology solutions will deliver best processes and practices without

any of the constraints or sameness that might stop a procurement team from surpassing

their competitors with the next big idea in strategic supply management.


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About Zycus

A

t Zycus we are 100% dedicated to positioning procurement at the heart of busi-

ness performance. For more than a decade we have been the worlds most trusted

leader in Spend Analysis. With our spirit of innovation and a passion to help pro-

curement create even greater business advantages, we have evolved our portfolio

to a full suite of Procurement Performance Solutions Spend Analysis, e-Sourcing, Contract

Management, Supplier Management, and Financial Savings Management that is finely tuned

to the strategic procurement imperatives and activities discussed in this paper.

Behind every Zycus solution stands an organization that possesses deep, detailed procure-

ment expertise and a sharp focus on being responsive to customers. We are a large 600+

and growing company with a physical presence in virtually every major region of the globe.

We see each customer as a partner in innovation and no client is too small to deserve ourattention. With more than 200 solution deployments among Global 1000 clients, we search

the world continually for procurement practices proven to drive competitive business perfor-

mance. We incorporate these practices into easy-to-use, flexible solutions that give procure-

ment teams the power to get moving quickly from any point of departure and to continue

innovating and pushing business and procurement performance to new heights.

Introducing The Complete Zycus Procure Performance Solutions Suite


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iAnalyze

iContractAuthoring

iContractRepository

CPO

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6 imperatives for CPOs: Intent on driving business performance improvement