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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
Copyright © 2016 - Ardent Partners Ltd.
Christopher J. Dwyer
Research Director
Ardent Partners
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Copyright © 2016 - Ardent Partners Ltd.
HOUSEKEEPING SLIDE
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message to Chris Dwyer for assistance
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Copyright © 2016 - Ardent Partners Ltd.
Visit www.cporising.com today!
CPO RISING: THE SITE FOR GLOBAL CPOS
#CPORising2016
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Copyright © 2016 - Ardent Partners Ltd.
OUR PRESENTERS
Andrew Bartolini
Chief Research Officer
Ardent Partners
abartolini@ardentpartners.com / @andrewbartolini
Emily Rakowski
Global Vice President, Audience Marketing
and Demand Management
SAP Ariba
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Copyright © 2016 - Ardent Partners Ltd.
AGENDA
Introduction
The State of the CPO
The State of Procurement
Procurement Benchmarks 2016
Strategies for Success
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Copyright © 2016 - Ardent Partners Ltd.
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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Copyright © 2016 - Ardent Partners Ltd.
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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Copyright © 2016 - Ardent Partners Ltd.
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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Copyright © 2016 - Ardent Partners Ltd.
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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Copyright © 2016 - Ardent Partners Ltd.
REDUCED PRESSURE TO DELIVER MORE SAVINGS
(2009 – 2016)
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Copyright © 2016 - Ardent Partners Ltd.
TOP CPO HURDLES OVER THE NEXT 2-3 YEARS
39% - STAFFING &
TALENT
CONSTRAINTS
33% - ALIGNING
PROCESSES &
SYSTEMS
43% - BUDGET
CONSTRAINTS
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Copyright © 2016 - Ardent Partners Ltd.
ALIGNMENT BETWEEN PROCUREMENT’S FOCUS AND
OVERALL BUSINESS OBJECTIVES
66%
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Copyright © 2016 - Ardent Partners Ltd.
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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Copyright © 2016 - Ardent Partners Ltd.
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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Copyright © 2016 - Ardent Partners Ltd.
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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Copyright © 2016 - Ardent Partners Ltd.
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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Copyright © 2016 - Ardent Partners Ltd.
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
© Ardent Partners - 2016
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Copyright © 2016 - Ardent Partners Ltd.
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
© Ardent Partners - 2016
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Copyright © 2016 - Ardent Partners Ltd.
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
© Ardent Partners - 2016
Sourcing
P2P
Bus. Cons.
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Copyright © 2016 - Ardent Partners Ltd.
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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Copyright © 2016 - Ardent Partners Ltd.
AFTER SAVINGS, TOP METRICS USED BY EXECUTIVES
TO MEASURE PROCUREMENT PERFORMANCE
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Copyright © 2016 - Ardent Partners Ltd.
BEST-IN-CLASS PROCUREMENT MATURITY FRAMEWORK
Best-in-Class impact on $1B = $31.2 million in extra savings
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Copyright © 2016 - Ardent Partners Ltd.
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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Copyright © 2016 - Ardent Partners Ltd.
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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Copyright © 2016 - Ardent Partners Ltd.
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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Copyright © 2016 - Ardent Partners Ltd.
For more information please visit:
www.ardentpartners.com & www.cporising.com
Q&A / Discussion (Contact Info)
Andrew Bartolini
Chief Research Officer
Ardent Partners
abartolini@ardentpartners.com
@andrewbartolini