“Our 5th annual survey shows the CIO entering a period of rapid transformation. Expect more business responsibilities and (say 32% of respondents) even a change in title.
Other critical factors include . . . a CIO with the well-rounded skills to be a trusted business leader, and a CIO who spends a good deal of time communicating with constituents – both internal and external customers.”
from CIO Role Revs Up, by Brian Gillooly – Information Week’s Optimize (June 2007)
Similar to the observations in Gillooly’s article that “rapid transformation marks the CIOs career and their impact on the company,” the transformation reshaping the impact of an organization’s purchasing department is equally dramatic.
In fact, a great deal has changed since I initially wrote about the “evolutionary” changes associated with an area of practice that had long been “viewed” as merely an adjunct function of the finance department. I am, of course, referring to my August 3rd, 2007 post, “Procurement’s expanding role and the executive of the future.”
A review of a CPO Agenda round table discussion in 2006, asking the question, “are there any limits to procurement’s role,” raised several sobering facts. It is worth noting that the roundtable involved senior executives from notable companies such as Nestlè, Danone, British Airways and Merrill Lynch. The one fact that stood out the most was the consensus that the best (and most qualified) individual to oversee a company’s purchasing department is someone who does not have or comes from a purchasing background.
Add into the equation the results from a 2007 Aberdeen Survey of CFOs, which revealed the following:
- Less than 20% consider the work of CPOs and their staff as “having a very positive impact” on competitiveness.
- Only 46% feel that the procurement team has contributed to enterprise growth.
- Only 57% of CFOs feel that procurement contributes to enterprise profitability, and an interesting picture begins to take shape.
What was especially troubling is the study’s revelation that 73% of all savings claimed by a purchasing department is “routinely discounted” by finance as irrelevant.
Of course, the picture to which I am referring is one in which the traditional boundaries of functional “responsibilities” are becoming blurred. This blurring – which reflects the evolutionary process cited in the Gillooly article regarding CIOs, confirms that the familiar silos of C-Suite operational duties and focus are going through an evolution of expanding parameters centered on enterprise-wide knowledge and increased stakeholder engagement. From a finance department perspective, I have seen this evolutionary transition first-hand as a steadily increasing number of financial managers are taking my seminars based on their recent transfer to their organization’s purchasing departments.
Even in the hallowed corridors of the executive “tower,” similar transformations are taking place, as reflected in a recent “Trend Watchers” article which concluded that the “leadership principles at the turn of the 20th century will not work when applied directly to 21st-century conditions.”
Based on the above, the purchasing department’s “territory” or domain is being infringed upon by external (and internal) forces of change that threaten to leave many “traditional” professionals out in the cold. In response, many traditional purchasing associations scramble to update their current education curriculum to deliver relevant content reflective of a dynamically changing and increasingly globalized market. In many instances, purchasing professionals feel detached and even abandoned by a profession they did not necessarily choose to be in so much as they “fell into.”
So what is the solution? Perhaps the observation of American Social Writer and Philosopher Eric Hoffer can shed some light on the new lens through which purchasing professionals can (and should) view this changing landscape. According to Hoffer, “In times of change learners will inherit the earth . . . while those who refuse to learn continually inherit a world that no longer exists.” Part of this learning experience begins with taking an expanded view of the enterprise as a whole. From finance to emerging technologies to marketing strategies, purchasing professionals can no longer confine themselves to the outdated definitions of their traditional roles.
As with their finance and IT counterparts, purchasing professionals are not islands unto themselves. Therefore, they must take the proactive step to inform, understand and empower themselves through a more holistic view of how all the individual parts of their collective enterprise work towards a shared and beneficial outcome.
With this in mind, I think you will find the June 30th broadcast of 21st Century Leadership: An Evolutionary Profile a good starting point for understanding the changes in the executive suite that will ultimately lead to transformations that will reverberate throughout your entire organization.
PI Window on Business Special (21st Century Leadership: An Evolutionary Profile)
Mark your calendars for Tuesday, June 30th, when a guest panel of four internationally acclaimed/best-selling authors who have appeared on major networks such as CNN and Fox will join me to discuss the new attributes of a 21st Century business leader.
nda round table discussion that took place in 2006 which asked the question, “are there any limits to procurement’s role,” a number of sobering facts emerged from the discussion which involved senior executives from notable companies such as Nestlè, Danone, British Airways and Merrill Lynch. The one that stood out the most was the general consensus that the best (and most qualified) individual to oversee a company’s purchasing department is someone who does not have or come from a purchasing background.
Add into the equation the results from a 2007 Aberdeen Survey of CFO’s which revealed the following; 1) less than 20% consider the work of CPOs and their staffs as having a very positive impact on competitiveness, 2) on average only 46% feel that the procurement team has contributed to enterprise growth, and 3) only 57% of CFOs feel that procurement contributes to enterprise profitability, and an interesting picture begins to take shape. Especially when studies reveal that 73% of all savings claimed by a purchasing department are routinely discounted by finance as being irrelevant.
The picture to which I am referring of course is one in which the traditional boundaries of functional “responsibilities” are becoming blurred. A picture which reflects an evolutionary process such as the one cited in the Gillooly article and corresponding survey where, the familiar silos of operational duties and focus are going through an evolution of expanding parameters centered on an enterprise-wide knowledge and increased stakeholder engagement. From a finance department perspective I have seen it first hand as a steadily increasing number of financial managers are taking my seminars based on their recent transfer to their organization’s purchasing departments.
Even in the hallowed corridors of the executive “tower” similar transformations are taking place as reflected in a recent “Trend Watchers” article which concluded that the “leadership principles that were referenced at the turn of the 20th century will not work when applied directly to 21st century conditions.”
Based on the above, the purchasing department’s “territory” or domain is being infringed upon by external (and internal) forces of change that threaten to leave many indigenous professionals out in the cold. And while traditional purchasing associations scramble to update their current education methodologies in an effort to deliver relevant content that is reflective of a dynamically changing and increasingly globalized market, in many instances purchasing professionals feel detached and even abandoned by a profession they did not necessarily choose to be in so much as “fell into.”
So what is the solution? Perhaps the observation of American Social Writer and Philosopher Eric Hoffer can shed some light on the new lens through which purchasing professionals can (and should) view this changing landscape, specifically that “In times of change learners will inherit the earth . . . while those who refuse to continually learn inherit a world that no longer exists.” Part of this learning experience begins with taking an expanded view of the enterprise as a whole. From finance to emerging technologies to marketing strategies, purchasing professionals can no longer confine themselves to the outdated definitions of their traditional roles.
As is the case with their finance and IT counterparts, purchasing professionals are not islands unto themselves and therefore have to take the proactive step to inform, understand and empower themselves through a more holistic view of how all the individual parts of their collective enterprise work towards a shared and beneficial outcome.
With this in mind, I truly hope that you will find the June 30th broadcast of 21st Century Leadership: An Evolutionary Profile to be a good starting point for understanding the changes in the executive suite that will ultimately lead to the transformations that will felt throughout your entire organization.
Procurement Insights 
Posted on June 3, 2009
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