1) Identify suppliers and categories where you can play & make strategic changes and product innovations
2) Data & Digitization have uplifted the Procurement Skillset Requirement. If you are not asking for both while hiring your team, you are rooting for mediocrity
3) Look for local optimization opportunities. This should be done iteratively & not once-off
4) Specificity: Develop specific knowledge about your category, new process or cost modelling. This can not be taught or handed over to a consultant or automated.
5) Leverage: My favourite one. As a CPO, do you have a ready catalogue of available leverages on your categories/suppliers? Examples of Leverages - Upcoming Demand not committed yet to suppliers, New Product development opportunity in a category, Early Contract Renewal Opportunity etc.Similarly, you should also keep a list of your lock-in and critical weak points ready!Before you walk into any negotiation, this list will come in handy!
6) Capital: Care for Cash Outflows. If you are not focused on Cash Outflows or optimizing payment terms (additional credit days) that directly impact Operating Costs/Profits, you will miss a major alignment with CFO
7) Procurement Magazines & Conferences: Avoid. There is no skill development involved here. Rather write blogs, do podcasts and videos. Contribute to procurement community!
8) Automate Ruthlessly: If you see your time spending>5% time spent on compiling reports, presentations, chasing shipments, payments, POs, invoices, DO NOT IGNORE. Change the process, eliminate need for reports/presentations & automate. Your team should be spending 90% of their time on points 4 and 5.
9) Monitor everything but Focus on High Impact Events: This is my 2nd favourite. I monitor everything. Inventory levels, Expected order quantities, lead times, transit time, commodity price movements, vendor performance, payment terms, payment delays, good receipt delays, procurement fraud, tail spend etc. But, I only focus on anomalies and opportunities. More on this later!
10) Invest in Negotiation Training and Agility: In 2023, Procurement has to move beyond the hard table-banging negotiation style. Refer to my last post for more on this. We have to combine other disciplines in order to be effective. Procurement + Game Theory or Procurement + Psychology or Procurement + Microeconomics! Invest in this.
On Agility, As Naval Ravikant puts it, "Impatience with actions, patience with results". In fact, these rules are inspired his book "Almanack of Naval Ravikant" !
Thanks for Stephane Morel Alejandro Ramos suggesting adding an important point11) TEAM:
Stephane said :"We are 50% Human, 50% Machine as a function. Even the 50% Machine will happen thanks to Human. And so many managers are totally under stress and no time left in the agenda for PEOPLE.For me this piece makes a huge difference in term of success vs failure"
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