Check out Part 1, Part 2 or Part 3
This is the fourth post in the series I’m a New CPO; Now What?
Developing your strategic vision and plan
About 90 days into your new CPO role, it’s time to implement the final component of your launch plan: the design, documentation, and execution of your strategic vision and plan for procurement. Now that you understand the strategic imperatives of your stakeholders, you can manage their expectations as you develop the agenda to assist them in achieving their business objectives, and to measure performance. Your target in the first 90 days is to gain the executive’s approval to proceed, with as much stakeholder buy in and understanding as possible, and to be ready to implement your plan with your team on board.
Develop your agenda to achieve the business objectives. Now is the time to be defining and refining the value that your team will deliver to the organization. Determining what this value looks like to each stakeholder is essential to building out your strategic plan. The key is to link the initiatives that you believe will benefit your organization and correlate them to the business lines and how they “speak” about them. This will drive deeper collaboration and buy-in as you are now speaking your customers’ language. Your plan now becomes populated with cohesive initiatives that are business stakeholder aligned on timing, value and measurement of success.
Develop performance measures. In our third blog post we touched on identifying KPIs that identify an initiatives’ impact assessment. Now is the time to lock on KPIs that are clearly aligned to your strategic plan deliverables, measurable and defendable by you and your stakeholders, and clearly understood by the executive team. Your success or failure of your plan as a CPO depends on these KPIs. A key to having crisp KPI’s is to have a set of “SMART” objectives. “SMART” objectives have been utilized in the marketplace across organizations for many years. I have found this framework to be fundamental in procurement organizations in defining objectives that are easily measured for maximum impact in the business.
Three recommended areas to focus on in developing your KPIs will drive meaningful value to the business are:
- Quantitative P&L impact (cost savings and cost avoidance)
- Linking your procurement KPIs directly to corporate or business units KPIs/Initiatives;
- Maintaining a year over year assessment of your procurement organization’s Return On Investment (ROI).
Below is an example of the types of input to measure your organization’s ROI that has been adopted from multiple industry use scenarios:
As a note, the development of impactful KPI’s are all predicated on data and data accuracy (both inbound and outbound). The quicker you can get to a spend analytics and insight solution that can identify spend across the enterprise by your business partners is critical. Not only does having complete visibility into disparate spend become necessary, but having spend recommendations come from AI is a game changer to procurement organizations and CPOs who are serious about moving from an overhead organization to a value driven function to the business. I personally have found that Suplari is one of the best tools on the market for enabling procurement teams to function at the highest level of maturity.
Working with and alongside your CFO and finance team (often the FP&A/Controller) is critical during this development and rollout stage. Understand how they measure and track financial aspects of the business. Aligning your KPIs to that methodology will enhance your plans credibility and buy in from Finance. Managing your plans KPIs in conjunction with your organization’s overall ROI will begin to change the perspective and narrative that procurement is not just an SG&A “overhead” but is a “value adding” function.
At the end of your first 90 days and having followed these guidelines of understanding, developing and integrating your stakeholders into your plan, you are now ready to roll out and begin execution.
In Summary, here is a month-by-month approach:
By day 30:
Integrate with your team, your internal and external stakeholders and understand what value initiatives are core to your business. You will know who the players are, having assessed competency and expectations of each, and you can begin to tailor your draft plan for maximum impact while also driving some quick win opportunities.
By day 60:
You will be in full revision and fine-tuning mode of your strategy plan and gaining buy-in and confidence from the C-suite and your business stakeholders.
You are looking to build momentum through execution of early identified wins. You are winning confidence from some stakeholders by addressing business concerns they haven’t had support on in the past. Your team and external partners will be seeing evidence of an inclusive procurement support model versus that of a policy and compliance oversight organization.
By day 90:
Your vision and strategy are finalized. You have gained buy-in from your stakeholders. KPIs are tied to detailed “SMART” objectives. A communication plan has rolled out. Early quick wins have built confidence that you have the ability to carry out the vision and agenda. The gaps that you have assessed to move your organization to best in class will be funded because you are viewed as a value adding function versus just overhead. You’ve gained approval to proceed with your procurement agenda, identified training needs, have the resources you need and begun to communicate your vision to the wider business. Let the plan execution begin!
Remember, this journey of procurement transformation is a continually evolving one, especially if you are starting with a low level of organizational maturity. As the CPO, you are the one defining the strategic development of the journey through your structured, evolving plan. Your team will continue to increase their value to the business while you mentor, guide, coach and inspire them through this transformation. Work hard, have fun and enjoy your new role and all that it brings.