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The CPO's New Role Within the Global Organization


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A detailed look at how global organizations perceive procurement's value

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The CPO's New Role Within the Global Organization

  2. 2. Procurement teams have aligned more comfortably with the businesses they serve as their mission becomes more widely valued. A tactical focus on cost reduction used to be CPOs’ modus operandi, but in recent movements to strategic procurement, they’ve sidestepped the negative stigma around cutting back and given other business leaders incentive to cooperate. For CPOs who have regularly consulted with other executives for a while, now might be a good time to check in on the perception of procurement’s value in supporting the larger business strategy. At ProcureCon Indirect West 2017, a benchmarking survey gathered the data from 98 executives. How do global organizations perceive procurement’s value? 02
  3. 3. “If you’re seen and perceived as a value-add, your leaders will invest in you. If you’re not, you’re less likely to get that investment.” Darren Lynch, VP Consulting, Europe, GEP 03
  4. 4. 15% 21% 24% 40% We advise on business, operations, or go-to-market strategies We mostly execute in a tactical role – contract support, “order takers” We’re innovation leaders and promoters of cross-functional collaboration We mostly own cost control and are judged by our savings Source: Charting the Technological and Strategic Transformation of the Procurement Department, ProcureCon, 2018 04 According to the survey’s results, cost control and saving creation are still the prime factors by which 40% of CPOs are judged. Another 21% of procurement leaders occupy a primarily tactical role. On the other hand, a quarter of respondents have managed to redefine their roles to focus on high-end strategic concepts, and 15% are advisors on developing greater efficiency. Procurement’s value relies heavily on strategic transformation…
  5. 5. Source: Charting the Technological and Strategic Transformation of the Procurement Department, ProcureCon, 2018 05 The study also asked respondents what metrics are being used in the C-Suite to assess procurement’s value. The prominence of ROI suggests that most organizations prioritize a simple way of looking at performance. But with ROI as the bedrock of value measurement, stronger forms of analysis—which would naturally be pursued in more advanced departments— are also being explored. …and the attitude of the C-Suite. ROI on functional cost vs. P&L savings EBITDA % contribution COGS % contribution Third-party budget % reduction SG&A % contribution 59% 41% 31% 25% 16%
  6. 6. 06 “Organizations in which procurement has moved to using a COGS percentage contribution or SG&A percentage contribution to evaluate performance are providing much higher value. They have stood up and defined a value proposition that is broader than a purely third-party cost and cost-reduction focus.” Darren Lynch, VP Consulting, Europe, GEP
  7. 7. 07 Successful globalization requires commitment and coordination across the entire organization. But after a long history of enlisting procurement late in the process, some business units are still in the habit of leaving CPOs out of strategic decisions. In these cases, CPOs must up-level the discussion, educating internal customers about the many benefits of engaging them earlier. This means demonstrating the tangible value of strategic procurement, sharing insights for mutual success, and ultimately forging partnerships that will help all stakeholders reach your brand’s globalization goals. What if your organization doesn’t yet support procurement’s vision?
  8. 8. 08 Our recent whitepaper, The Strategic Shift: Localization’s Fast Track to Driving Greater Business Value, was written with localization buyers in mind—but contains a myriad of useful tips applicable to engaging stakeholders in strategic procurement. Alternatively, download the full ProcureCon CPO Study for more on how CPOs are aligning their work with larger business goals.
  9. 9. About Lionbridge Lionbridge enables more than 800 world-leading brands to increase market share, speed product adoption and effectively engage customer in local markets worldwide. We provide technical documentation, labor time, warranty and service information development and validation, training development, engineering services, translation, and application testing solutions that ensure global brand consistency, local relevancy and technical usability across all touch points of the customer lifecycle. Based in Waltham, Mass., Lionbridge maintains solution centers in 28 countries. LEARN MORE AT LIONBRIDGE.COM © 2018 Lionbridge. All Rights Reserved.