The CPO's Agenda 2009: Smart Strategies for Tough Times
Executive Summary
The global recession is taking no prisoners. Neither industry, nor region, nor company-size has provided shelter from its impact. Within the enterprise, few business functions have been unaffected. Yet, as this business downturn continues, the Chief Procurement Officer's ("CPO") agenda and the CEO's agenda have started to converge. In fact, two-thirds of this study's participants believe that the economic downturn has positively impacted the role of the CPO within the enterprise. One thing is certain: the CPOs who successfully devise and execute smart strategies in these tough times will continue to rise.
Best-in-Class Performance Aberdeen evaluated over 220 enterprises between February and April of 2009 and distinguished Best-in-Class enterprises by a combination of two metrics: the percentage of spend under management and cost savings (as a percentage of total spend) delivered. Best-in-Class enterprises in this study are notable for their superior performance and for their focus on and automation of the strategic sourcing process as well as their ability to accurately track their performance across many key areas.
Competitive Maturity Assessment Survey results show that the firms enjoying Best-in-Class performance shared several common characteristics with respect to the procurement operations. These top-performing CPOs and their departments are:
Twice as likely to automate their spend analysis programs
91% more likely to conduct regular reviews of contract compliance
65% more likely to have a formal supply risk management program in place
Required Actions In addition to the specific recommendations in Chapter Three of this report, to achieve Best-in-Class performance, enterprises should take action across the following areas:
Supply risk management: Develop formalized programs to measure and track risk within the supply base, focusing on strategic suppliers and those key suppliers that can impact revenue, production, and reputation.
Sourcing and other cost containment initiatives: Accelerate plans to source new or renegotiate current contracts, prioritizing speed to implementation as much as savings.
Strategic planning: Ensure alignment with the larger enterprise agenda by proactively engaging the CEO and CFO.
