Three things CPOs should stop doing… NOW.
Every sourcing team has limited bandwidth, and a Chief Procurement Officer’s work is never done. So it’s worth examining what is NOT required of the job. As procurement’s role becomes more strategic and AI tools enter the daily life of sourcing professionals, avoiding the wrong activities can be just as important as doing the right things. Below are three classic mainstays of procurement that are candidates for the chopping block.
STOP #1: Stop Being the Policy Police
For too long, procurement has played the role of the rule nerd: Get more bids… Buy this brand of software… Don’t use that airport… Fill out those forms. These orders comprise the only interaction with procurement for many employees. It’s no wonder then that procurement is viewed as tactical (and annoying).
It’s time to stop the nagging. But thanks to AI-driven technologies, that doesn’t mean procurement can’t still guide policy. Here’s Nordstrom’s approach to managing ground transportation, using Suplari’s insights tool:
Every week a report is generated using expense reports, credit card statements, and outside data feeds. The system compiles all taxi, limo, and car service expenses. It groups by business units, and sends to the department heads, highlighting the number of transactions and percentage of spend that appear to be outside recommended policy.
Users aren’t scolded; they are provided information. Their own P&L and travel budgets motivate them to adopt policy correctly.
STOP #2: Stop Hiring Data Analysts
Good sourcing will always need good data, but that no longer means every procurement team needs a deep bench of data analysts. Vendor usage and billing outputs are becoming more standardized, and AI engines can save untold hours by importing, cleaning, and assembling those data fully automated fashion. If data wrangling is still a primary activity on your team, a tool upgrade is probably in order.
At the same time, procurement leaders are realizing that the critical steps to success are not technical but organizational and interpersonal. The Deloitte 2018 CPO survey confirms research by Google and others on high-performing teams: it’s the soft skills that bring results.
An individual with a background in change management or cross-organizational selling will have a positive influence on team culture.
STOP #3: Stop Chasing Perfect Data
Procurement doesn’t need full visibility into corporate expenses. (Step back slowly from the spend cube…) The notion that procurement must present a bulletproof and complete taxonomy was probably never fair, and it certainly doesn’t help efforts to modernize and become more procurement.
If marketing, sales, product development, and even financial planning can operate without perfect information, why is it needed for procurement? Yes, accounting must be complete, but accounting is backward-looking. Too much of procurement’s energy, budget, and political capital has been allocated to collecting, categorizing, and presenting data.
Perfecting the spend cube doesn’t save any money in itself; it theoretically paves the way for the real work to begin. But beyond the time spent on getting ready, a “robust” taxonomy can even detract from innovation and savings by forcing categories that are much more rigid than the rapidly changing marketplace. Are we missing opportunities for outsourcing, new technology, or disruption because the world doesn’t fit into our three-dimensional slices of company spend?
Getting to the Core
Sculptors say that every block of marble contains a beautiful statue waiting to emerge. By adopting AI technology, we can eliminate the least essential procurement activities. What remains may be the transformed, strategic function that we’ve been aiming for.