2010: Lessons for the Recovery

Dave HenshallProcess

t3e55jtbIts the time of year again where we take a look back and try and assess the last 12 months and think ahead to what awaits us in 2010.

In that spirit, we take a look at what we believe represent some of the most important lessons to take into the year ahead:

1.    “Collaborate”: In November we reported how Telefonica O2 used collaboration to both reduce working capital and improve customer service. Collaboration is the key to innovation and risk mitigation to support growth so CPO’s must invest in mastering collaboration.

2.    “Integrate”: In December we highlighted the Business Performance Management (BPM) Forum and the Chief Marketing Officer (CMO) Councils study, which reported on the increasing importance of integrating with business partners to improve their go to market processes. 
CPO’s who have integrated closely with sales and marketing to gain access to the end customer will be best placed to design customer centric procurement strategies.

3.    “Innovate”: In a year where so much went wrong Apple continued its dominance of consumer electronic trends. Its secret – innovation which it has used to devastating effect to redefine whole markets and introduce ‘must have’ products via a world class supply chain. Innovation is critical to everything a company does. It helps retain customers and fuel growth by developing efficiencies and product improvements. CPO’s who have developed a strong innovation network will be best positioned to capture growth opportunities in the “New Normal”

4.    “Optimise”: According to a report published by E&Y from previous recessions, 60% of companies fail to sustain cost reduction programs over the longer term, especially when sales begin to grow again. By staking a more strategic approach to cost and developing ‘cost optimisation’ capability rather than just tactical cost reduction initiatives, CPO’s will be better prepared to manage cuts without losing long term value.

5.    “Talent Management”: The ‘battle for procurement talent’ continues with a much larger pool to fish in due to the cuts made in the downturn. This is an ideal time for CPO’s review their talent management capabilities and to refresh their talent ranks. Research continues to show that those companies with better talent management skills outperform their counterparts.

6.    “Inflation”:  As the world’s economies recover, commodity prices will increase which combined with the impact of govt stimulus programmes is a powerful recipe for inflation. CPO’s would be wise to plan their strategies now

7.    “The Brave CPO”:  If you don’t have one – get one. A Brave CPO will build on the lessons gained during the downturn by  capturing the unique op­portunities to successfully restructure procurement capabilities for long-term competitive advantage. Procurement leaders outperform laggards.

Tell us your lessons for procurement during the recovery