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The role of the CFO in Strategic Procurement

The role of the CFO in Strategic Procurement

The Chief Financial Officer has a significant role to part in the development and implementation of a strategic procurement philosophy.

The functions that the procurement function performs – supplier management, sourcing and contract management – are often referred to as strategic procurement. However, by working in partnership with the procurement function, the CFO can better understand and leverage strategic procurement in conjunction with other spend control initiatives, to deliver positive impact on the bottom line.

The CFO role is thus;

1. work hand in hand with the senior procurement people

2. use their sphere of influence to gain organisational support for strategic procurement

3. help with the refinement and implementation of procurement policies to drive savings

4. help guide the application of enabling technology

More and more CFO are taking an active interest and it’s not uncommon for the procurement function to report directly to the CFO.

One of the key elements of success is the ability of the procurement team to drive value right to the bottom line. However, the dilution effect from close of negotiation to implementation can impact on the relationship. As such, forward thinking procurement teams are focusing on the four areas that restrict this dilution.

I’ve pulled together a short video series outlining this four steps in more detail – click on the link below to gain access.

3 video based training on

5 areas to trim the fat in 2016

5 areas to trim the fat in 2016

As we are about to enter the final quarter of 2016, thoughts are probably turning to how you are going to achieve your numbers for the year. There is undoubtedly uncertainty in the markets at the moment and the economists seem to be divided as to what the year ahead will look like.

However, your success in 2016 will be more determined by your actions than any external factors. If you look back over previous recessions/ downturns, there are always those organisations that come out of them stronger and more profitable. Equally, there are individuals that thrive when the going get tough and those that just give in!

So, the question is – “which are you going to be in 2016 and how can you gear up for 2017?”

To start as you mean to go on, this time of the year is always good to reflect and trim any fat that exists within your business. Take a look at the following five suggestions and see how these can apply to your procurement organisation. Please feel free to add other ideas within the comments.

1. What activities are you undertaking that is adding no value to your end customer? Once you have identified these, review how you could undertake them differently, more efficiently, or more radically, determine whether you have to do them at all or can you outsource them to a third party who can provide greater leverage?

2. What is your core competence and what non core activities are you doing that can be outsourced? Again, by creating focus across the procurement function or ideally across the organisation, identify those activities that you must do to support your core competence. At the same time, this will help you identify those activities that are non core. Look creatively at how you can more effectively deliver these non-core activities.

3. Ask yourself the theoretical question – “if I had to deliver the same results with 80% of the resources that I presently have, how would I do it?” – putting this question another way, all organisations have people within the organisation that deliver little or no value. Make it your business to strip the lowest 20% from your organisation each and every year. You’ll be amazed at the impact that this simple challenge creates.

4. In any process, there will be many hand-offs between people within your organisation. Take each in turn and challenge yourself to reduce these hand-offs by 50% – by empowering individuals within your organisation to take action at the front end, you’ll radically reduce the workflow across any process and the efficiency gains will be significant

5. How is your procurement function performing? Research indicates that 75% of procurement initiatives fail to deliver the anticipated value. Why is this?  How do your term perform? Value is often diluted once the procurement ‘activity’ is deemed to have been completed. However, by applying a simple four step process, you can plug this leakage and deliver massive value.

Take the opportunity to watch my latest 3 part Free Training to understand more about these four steps.

free-training