CPO Crunch: New model armies

David Rae

As procurement's remit grows and businesses place more demands on the function, CPOs are assessing – and reassessing – their operating models

Hands up if you’re either thinking about, have recently been through or currently undergoing a procurement operating model change. I have a suspicion – if you were to play the game – that a lot of virtual hands would be reaching for the sky right now.

Why? Anecdotally, I’ve had several conversations with CPOs recently that have landed on the issue, which is one sure indicator, but another stronger indicator was last week’s CPO community call on the subject.

Now, get 50 CPOs on a call entitled Redesigning operating models to deliver enhanced value and the chances are those 50 CPOs will hold the issue close to their heart. But even then, fewer than one in ten said their situation was stable.

The vast majority were in the midst of, had just been through or were about to embark on a transformation. Indeed, half of participants were in the middle of a rollout…

The logical question is, again, why? Some CPOs will be midway through a journey to maturity, perhaps centralising to gain greater control of spend to illustrate the savings impact procurement can make.

But others, and this is where it gets really interesting, are reacting to the growing and evolving demands that are being put on our function.

I asked those on the call to explain the factors that are leading them to explore the need for an alternative operating model. Changes in market dynamics featured heavily, as did the need for increased agility given speed and adaptability are increasingly of the essence.

But the broader remit of procurement, the growth in influence, and the evolving business landscape are all requiring CPOs to think creatively and to challenge themselves on how they are set up. Is the team close enough to the business units, local markets, and the supply base to react and interact quickly enough? Can it still deliver economies of scale? And, crucially, are the metrics that are used to measure what good looks like still fit for purpose?

As one participant explained: “We are currently in evolution to a new organisational structure. The drive behind this is to have a wider impact on top-line growth and sustainability, versus the historical need for savings. The big enabler is the ability to have improved data.”

Of course, it’s much more than data. Future-fit procurement operating models require a full rethink of the capabilities, technologies and relationships that have got us this far.

Time to celebrate

Congratulations to all who were shortlisted for the World Procurement Awards 2024 last week – getting on the shortlist is an achievement in itself. A big thank you to everyone who entered, and a bigger thank you to our panel of judges who put so much of their time and energy into the process.

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