Earlier this year, McKinsey & Company listed the challenges, providing a blueprint for success for today's Chief Procurement Officers (CPO) and we decided to repost that document and some tips that may be valuable to you.
"Some of the most important trends may persist well beyond 2023," McKinsey wrote. "In addition, the procurement function itself continues to face major changes that have rendered its traditional operating models obsolete. Forward-looking organizations are increasingly distancing themselves from the rest of the pack, deploying their talents, capabilities, technology, and insights about the world's complexity in ways that propel them far ahead of the rest."
McKinsey argues that "one size fits all" procurement models are no longer viable in 2023, but that a "category-level response" is appropriate.
"Procurement can play a key-role in solving today's most pressing business problems, but it cannot do it alone. Winning now requires a whole new level of improved resilience and value creation, built through a coordinated, enterprise-wide effort," they say.
The consultant also listed "10 key actions" that procurement professionals can take to meet today's challenges. Here they are:
1. IDENTIFY VULNERABILITIES WITH A 360-DEGREE RISK ASSESSMENT
2. GAIN REAL-TIME VISIBILITY THROUGH A "RESILIENCE COCKPIT"
3. UPDATE CATEGORY STRATEGIES AND FIGHT INFLATION
4. IMPROVING THE RISK OPERATING MODEL
5. OPTIMIZE END-TO-END OPERATIONS
6. OPTIMIZE ENERGY CONSUMPTION - IN THE SHORT, MEDIUM AND LONG TERM
7. COORDINATE RESPONSES FOR INTEGRATED WATERFRONT MANAGEMENT
8. REDEFINE THE DESIGN OF THE PRODUCTS IN THE PORTFOLIO
9. COORDINATE A HOLISTIC RESPONSE THROUGH A CENTRAL NERVE CENTER OR CONTROL TOWER.
10. BUILD NEW RESILIENCE CAPACITIES
McKinsey goes on to provide a more in-depth analysis of each stock, which you can read here.
According to the international consultancy, supply chain challenges are currently structural and may take several years to resolve. Therefore, "transformative action [is] the only option to address volatility and disruption".
This provides a great opportunity for procurement leaders, he says. "The current environment is a career-defining moment for CPOs. Procurementleaders who demonstrate value to the company can become full-fledged strategic partners to the CEO, CFO and COO," McKinsey says in the same document. "CPOs should no longer be mere custodians of a portion of company costs.Thetime has come for procurement leaders to step into a new horizon of value creation."