In episode 50 of the CXO Minute, Joanna Martinez explains why now is the time for procurement teams to capitalize on the goodwill that came about as a result of the pandemic.
This episode of the CXO Minute is sponsored by Acceleration Economy’s Digital CIO Summit, taking place April 4-6. Register for the free event here. Tune in to the event to hear from CIO practitioners discuss their modernization and growth strategies.
Highlights
00:46 — Joanna recently spoke with Acceleration Economy analyst and 4x CEO, Tony Uphoff. The two discussed the relationship between CEOs and Chief Procurement Officers (CPOs). A key focus of the conversation was how CPOs have the unique opportunity to capitalize on the goodwill that was generated by themselves in their organizations during Covid-19.
01:19 — During the pandemic, procurement teams “rose to the occasion,” shifting inventory as demand changed and capabilities changed in facilities around the globe. CPOs got creative with tackling supply chain issues and disruptions. Joanna notes that Covid-19 created a “burning platform” for procurement teams that “energized hearts and minds in a single direction.”
02:21 — When thinking of frontline workers, the general assumption is those that are working in hospitals. However, Joanna highlights that there were frontline workers in various industries. Today, procurement teams should have a much higher profile within their companies than they did pre-Covid-19.
02:40 — Joanna explains what a procurement hierarchy is. At the top of the hierarchy is the need to “assure supply.” Certainly, this was the focus during the pandemic. Second in the hierarchy is to “cost right.” McKinsey reports that 46% of businesses across the globe changed their cost reduction expectations during Covid-19. Procurement teams are being asked to pivot and focus on cost reduction as inflation runs high and recessionary fears strike.
04:34 — Now, in order to bring value to organizations from the supplier community, procurement teams must “look again at reengineering processes,” but doing so for the long run. Additionally, they must consider “redesigning products using technology to enable them to take costs out of the system by using artificial intelligence, RPA, or other elements of technology.” All CPOs and procurement teams have to do “something that we haven’t always had to do in order to deliver cost reduction.”
05:17 — Joanna explains that this likely means asking for capital. Procurement teams can put together a proposal, clarify what the team needs and define how it will benefit the company, and go to the “decision-makers” for approval. She explains that the good news is procurement teams now have a relationship with the decision-makers. After their efforts during the pandemic, procurement professionals now “have a profile” after demonstrating their competence.
06:26 — Now is the time to capitalize on the goodwill. Joanna explains that “every week that goes by is another week where your heroic efforts during Covid-19 are fading into people’s memories. Before those are way, way back and people don’t remember it anymore, remember you brought great value to the firm,” and procurement teams have the opportunity to bring more value to the organization.
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