Ardent Partners recently published my annual CPO-themed report, CPO Rising 2015: The Agility Agenda (click to download, registration required). It is drawn from the responses of more than 300 chief procurement officers and other procurement executives (as well as 26 CPO interviews) and presents a comprehensive, industry-wide view into what is happening in the world of procurement. As we do each year, we like to discuss the research report in a series of articles that examines some of the key findings and major takeaways from the study.
What is an agility agenda?
Before we discuss the Agility Agenda that is presented in the report, it is important to first answer the question:
Why is agility important to CPOs?
The speed and complexity of business continues to accelerate, forcing procurement departments around the globe to adapt to new market conditions and react to new opportunities while maintaining discipline and efficiency. Dependence upon supply chains continues to rise and procurement has never been more critical to overall success. There is no doubt that procurement’s ability to impact business processes, relationships, and results will continue well into the future. But the depth and breadth of that impact will depend on each organization’s ability to master its processes and technologies, and on the CPO’s ability to maintain the department’s focus and ensure fast, assured decision-making and crisp and agile execution.
The drive for innovation that has collapsed most product lifecycles means that the sourcing needs of a company are more apt to shift dramatically within a business cycle than in any previous time. Finding savings remains the top priority of the chief procurement officer (CPO) in 2015, but missing a sales window because of short or poor supply can shake an enterprise from the top down to its core. And in a business world that is increasingly focused on the short-term, sourcing results are under much greater scrutiny by executives and in some cases, external analysts, media, and investors. The perception that a business cannot execute hurts its reputation and ultimately its overall value, which in turn means that an enterprise’s “sourcing agility” is now directly linked to a company’s brand and overall value.
CPO case study on agility
“Our customers are demanding more responsiveness, so we need to make sure that our suppliers are part of the solution and not part of the problem,” begins the chief procurement officer of a Fortune 100 company when discussing the changes afoot within his department. This CPO believes his team is ahead of the game in its engagement with the business because it has been able to support all of their sourcing needs with a robust and efficient sourcing operation.
“Our ability to quickly re-source a category or add a requirement based on some change in the business is something we pride ourselves in,” he continues. “We use our expertise to stay on top of market changes and we use our tools to capture and re-use the work we’ve already done.” This sourcing agility puts the department in a better position to tackle corporate initiatives.
The CPO’s agility agenda
Ardent Partners’ CPO Agility Agenda is designed to help procurement organizations operate predictably in the face of uncertainty, complexity, and constant change. It does this by expanding the level of agility across critical areas that drive procurement operations and performance. CPOs and other procurement leaders can use the agenda to assess their organizations’ relative strengths and weaknesses as it relates to agility and take action to improve those areas in need.
We believe that an Agility Agenda will help procurement departments drive to the next level of performance. As such, we believe that CPOs must work now to develop a customized Agility Agenda that embeds their organizations with agile and innovative characteristics while maintaining discipline and efficiency. Ardent Partners has created “The CPO’s Agility Agenda” for CPOs to use as a foundation for the customized agenda that they should be developing (The agenda and a much deeper discussion can be found in the report. Click here to download.). The critical areas in the agenda are discussed below.
- Organization – An agile procurement organization is one that has a fluid organizational structure and prizes skills over experience. Above all, an agile organization has fluid resource allocation, enabling it to get the right talent focused on the right opportunities at the right time.
- Processes – Agile procurement processes are standardized, automated, streamlined, and scalable, but they are also managed in a cohesive and holistic manner by a procurement team that is continually looking to improve them by reducing and/or eliminating complexity as well as any barriers that impede progress.
- Strategies – Agile procurement strategies focus on regular and proactive management and operational improvement. These strategies interlink planning with execution to ensure that the procurement organization’s decisions and practices are responsive to the changing needs and requirements of the business’ customers, stakeholders, suppliers, and partners.
- Technology – Agile supply management technology is cloud-based, easy to use, and easy to adopt. The solutions are robust but also intuitive, adaptable, and easy to deploy.
- Performance – Agile procurement performance takes a balanced approach to measuring and evaluating metrics.
Agility is the characteristic that will help procurement departments advance and thrive in this new age where innovation continues to expand beyond mere products and services to core business processes and entire business models. Agility, however, does not grow organically. CPOs must take deliberate steps to build agility into the DNA of the staff and operations and it starts with the Agility Agenda.
Andrew Bartolini is the chief research officer at Ardent Partners. Follow Andrew on Twitter.
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