A Road Map to High Performance for CPOs

Accenture outlines a road map that will allow CPOs to meet short-term savings goals and transform the purchasing function to enable high performance.

Today’s tough economic conditions pose a dilemma for CPOs. On the one hand, they are under intense—often overwhelming—pressure to deliver immediate cost savings to their organizations. On the other hand, current conditions demand a more strategic approach to deliver long-term change that will ultimately strengthen procurement’s role as a valued collaborator in shaping business strategy and helping to enable high performance.

Accenture has developed a road map to guide CPOs through the short-term objectives of savings and cost mitigation, and then the longer-term goals of transformation.

Accenture’s road map for CPOs is based on its long experience in the field, backed up by research conducted within the Accenture CPO Circle, a peer-to-peer community of senior sourcing and procurement executives. A combination of online surveys and roundtable discussions with 100 senior CPOs confirms that purchasing is under pressure to reduce spending. More than 41 percent of respondents have seen increases of up to 15 percent in spending-reduction targets, with 18 percent experiencing an increase of 15 percent or more. The roundtable discussions revealed four consequences of the economic crisis:

• Record business failures among suppliers.
• Unprecedented uncertainty about product demand.
• Exceptional volatility of commodity prices.
• General pressure on operating budgets and investments.

Accenture’s road map for working through this time of crisis outlines actions in four key dimensions of purchasing for meeting short-term savings expectations and the longer-term transformation of purchasing operations to achieve competitive advantage, and ultimately high performance:

• Supplier relationships. Mitigate supplier risk and strengthen collaboration with suppliers.
  
  
• Internal client relationships. Help internal clients achieve their cost-reduction targets to improve sourcing and mitigate risk. The economic crisis opens the door for purchasing to extend its role by participating in strategy sessions and demonstrate the financial impact of savings mechanisms.
  
  
• Sourcing strategy. The economic downturn and increasing volatility of commodity prices mean that raw material prices need to be managed strategically. In addition, single-source strategies are now under review, and leading companies are looking past today’s crisis to develop capabilities that will benefit the organization in the post-crisis environment.
  
  
• Purchasing opportunities. The CPO must take the lead in helping buyers negotiate still-lower prices in the downturn. Purchasing staff need training in ways to meet new objectives such as capturing cash and minimizing bankruptcies. Now is the time to develop new skills that will help organizations achieve high performance when the crisis is over.
  
  

Contact us to find out how Accenture can help your purchasing organization create a road map to high performance.