CPO Rising 2016: The Art and Science of Procurement

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CPO RISING 2016:
THE ART AND SCIENCE OF PROCUREMENT
Andrew Bartolini
Chief Research Officer
Ardent Partners
May 25, 2016

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Copyright © 2016 - Ardent Partners Ltd.
OUR MODERATOR
Christopher J. Dwyer
Research Director
Ardent Partners

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HOUSEKEEPING SLIDE
 Copies of today’s presentation will be sent to all attendees
 Submit your questions in the Q&A tab on the Control Panel (we
encourage questions, so send them in!)
 To view in FULL SCREEN mode, click View Menu on the Control
Panel and select “Full Screen”
 If you experience technical issues, call GoToWebinar support at +1
805 617 7000 provide the event ID 155-784-675 or send a direct
message to Chris Dwyer for assistance

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CPO RISING 2016 TITLE SPONSOR

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OUR HOST

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Visit www.cporising.com today!
CPO RISING: THE SITE FOR GLOBAL CPOS
#CPORising2016

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OUR PRESENTERS
Andrew Bartolini
Ardent Partners
abartolini@ardentpartners.com / @andrewbartolini
Emily Rakowski
Global Vice President, Audience Marketing
and Demand Management
SAP Ariba

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AGENDA
 Introduction
 The State of the CPO
 The State of Procurement
 Procurement Benchmarks 2016
 Strategies for Success

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REPORT AUTHOR
Andrew Bartolini, Chief Research
Officer
Analyst firm focused on supply
management
Research, news, & analysis for
CPOs and procurement
executives
www.cporising.com

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Research Report
 Goal (I): Capture the strategies, performance, and intentions of Chief Procurement
Officers in 2016 (and beyond)
 Goal (II): Present a clear and comprehensive view of the “State of Procurement”
 Goal (III): Identify the strategies and levers that drive Best-in-Class results
Approach
 Utilize a web-based survey to capture responses from 331 CPOs and other procurement
executives
 Interview 30 leading CPOs (and ex-CPOs) to add context and understand critical and
emerging trends
 Leverage experience and orientation of a leading analyst team
RESEARCH PROCESS

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TODAY’S PRESENTATION
Report Demographics
331 Respondents
o 68% VP or Director-level
o 89% work in procurement
o 77% from large enterprises
o 65% North America; 27% EMEA
o 25 industries
o Interviewed 30 CPOs

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THE CPO’S MANIFEST DESTINY
“The path we have taken isn’t the one I
intended. Every time we reach a new
platform, we realize that the next
journey is out there.”
~ Global CPO, CPG company

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THE CPO’S VIEW OF 2016: MORE CHALLENGING

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THE CPO’S TOP TWO PRESSURES IN 2016

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REDUCED PRESSURE TO DELIVER MORE SAVINGS
(2009 – 2016)

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TOP CPO HURDLES OVER THE NEXT 2-3 YEARS
39% - STAFFING &
TALENT
CONSTRAINTS
33% - ALIGNING
PROCESSES &
SYSTEMS
43% - BUDGET
CONSTRAINTS

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THE CPO’S TOP PRIORITIES (2016 – 2019)

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ALIGNMENT BETWEEN PROCUREMENT’S FOCUS AND
OVERALL BUSINESS OBJECTIVES
66%

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VISIBILITY INTO SAVINGS & SPEND

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PROCUREMENT WITHOUT SPEND ANALYSIS
 CPOs who manage their
operations without spend
analysis….
 Sourcing leaders who build
strategic sourcing pipelines
and run sourcing projects
without spend visibility….
Are Committing
Procurement Malpractice

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SUPPLY MANAGEMENT TECHNOLOGY USAGE

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IS PROCUREMENT AN ART OR A SCIENCE?
“Procurement is a blend of art and
science, combining business, category,
and supply expertise with leading
technology, data analytics, and
associated value-based decision support
capabilities.”
~ CPO Rising 2016: The Art and Science of Procurement

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MODERN PROCUREMENT COMPETENCY MATRIX
 Goal: To help CPOs and their staffs understand the needed
skills to execute well and how to improve
• Define each skill
• Discuss its importance to procurement and career
• Highlight the “CPO Grade” for each skill
• Suggest ways to improve in these areas

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COMPETENCY MATRIX - SOURCING SKILLS
The Sourcing
Process, 3.02
Supply Market
Knowledge,
2.62
Category
Management,
2.59
Contract
Management,
2.63
1.00
2.00
3.00
4.00
CPO's Grade - Sourcing Skills
© Ardent Partners - 2016

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COMPETENCY MATRIX - P2P SKILLS
Operational
Procurement,
2.94
Supplier
Performance
Management,
2.34
Supply Risk
Management,
2.22
Cash
Management,
2.23
1.00
2.00
3.00
4.00
CPO's Grade - P2P Skills

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COMPETENCY MATRIX - GENERAL BUSINESS SKILLS
Project
Management
Skills
2.53
Presentation
Skills
2.51
Financial
Analysis
2.32
Data
Analysis
2.59
Business
Consulting
Skills
2.38
UsingTechnology
to Drive
Value
2.24
1.00
2.00
3.00
4.00
CPO's Grade - Business Consulting Skills

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3.02
2.94
2.63 2.62 2.59 2.59 2.53 2.51
2.38 2.34 2.32
2.24 2.23 2.22
1.00
2.00
3.00
4.00
CPO's Grade – Procurement Staff Skills
COMPETENCY MATRIX - ALL SKILLS
Sourcing
P2P
Bus. Cons.

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PROCUREMENT PERFORMANCE IN 2016

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SUPPLIER COLLABORATION AND INNOVATION
“It’s amazing what we have been able to
achieve through competition and our
new strategy. Right now we’re working
on deep space travel programs that
would not be possible without tight
supplier collaboration.”
~ – Bill McNally, Deputy Chief Acquisition Officer (“CPO”),
NASA

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AFTER SAVINGS, TOP METRICS USED BY EXECUTIVES
TO MEASURE PROCUREMENT PERFORMANCE

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THE 2016 PROCUREMENT BENCHMARKS

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2016 BEST-IN-CLASS PROCUREMENT PERFORMANCE

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BEST-IN-CLASS PROCUREMENT MATURITY FRAMEWORK
Best-in-Class impact on $1B = $31.2 million in extra savings

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BEST-IN-CLASS CHARACTERISTICS
People, Process, & Knowledge Levers:
 More agile and better-equipped to adapt to change
 Tightly aligned to enterprise objectives
 Allocation of resources is more fluid.
 Superior competencies across all areas but esp. sourcing process, category
management, and supply risk
 Strong collaboration with line of business and functional peers
 Twice as likely to have their Source-to-Settle process entirely linked
 Supplier management programs that have a “direct impact on supplier
performance”

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BEST-IN-CLASS TECHNOLOGY ADVANTAGE

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PROCUREMENT MASTERY

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STRATEGIES FOR SUCCESS
 Ensure that department objectives are mapped to the
primary goals and objectives of the enterprise
 Develop and foster the skills that enable staff to
accomplish the things that support primary business
objectives
 Demand greater investment in people and technology
 Regularly assess the strengths and weaknesses of the
organization’s capabilities

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STRATEGIES FOR SUCCESS
 Stay focused and vigilant throughout 2016
 Weave agility into the organization’s fabric
 Expand and automate the sourcing program
 Develop and maintain a spend under management
“pipeline”
 Cross-pollinate skills and staff

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For more information please visit:
www.ardentpartners.com & www.cporising.com
Q&A / Discussion (Contact Info)
Andrew Bartolini
Ardent Partners
abartolini@ardentpartners.com
@andrewbartolini

CPO Rising 2016: The Art and Science of Procurement

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