CPO Agenda for 2nd half 2013
Bill KohnenDiscussion notes for Informal CPO Roundtable Hyatt Hotel San Francisco CA June 2013
Agenda
•Emerging Key Measures▫Self reported cost savings not trusted
anymore•Success factors of top performing
organizations▫People and how categories are defined
•Redefining Categories▫Need to add forward looking view
•CSR remains Important▫Becoming business practice and strong
area for professional development
Emerging Key Measurements are:Cost of Goods SoldEBITDA
2010 2011 2012 20130
20
40
60
80
100
120
COGSEBITDA
~ 70% of Purchasing Success Based on•People
▫Who you have ▫Development▫Skills▫Support
•How Categories are Defined and Managed▫How you define what to focus on▫What you do with categories
People• Organizations not doing a good job getting and keeping people with skills
needed or training them internal
▫ Core Procurement Skills▫ Analytic Skills▫ Business Acumen▫ Managerial Skills
Why?Salary part of issuePoor understanding of needs by HR staff and HeadhuntersNot investing in tools and training to support top peopleFor Example: Hiring a top person to identify million dollar total cost savings opportunities but expecting her to fly to Asia coach, stay in a discount hotel while using a hand me down computer and expecting her to expense trips with personal credit cards.
How Categories are Defined and Managed•This does not require any particular technology•Recent evidence suggests rethinking setting
categories based on 4 quadrant review.•Refining Definition of Strategic sourcing
▫Strategic Sourcing Methodology does deliver results▫However, as practiced this really covers operationally
and financially important suppliers in the short term▫Using 80/20 Rule and Single/Sole Source as criteria do
not identify areas that are really strategic
Emerging View of CategoriesOperationalImportance
StrategicImportance
Action Where Goal
Not Not Automate Consolidate Leverage Basic core Purchasing Skills
Operations in LCC
Outsource or create Shared Service Organization
Operational efficiency
Cost
Yes Not Current Strategic Sourcing Tools
Based on historical data and near term forecast
Regional Reporting into CPO.
Cost
Manage Risk
Quality
No Yes Forward looking
Identification of opportunities for mutual alignment with suppliers
With CTO, Bus Development Design Centers
Enabling technology
Product Development
New revenue
Corporate Social Responsibility
•Remains important to companies with and without brand image.
•Leaders are integrating into practice of:▫ Supplier Management▫ Supplier Audit▫Supplier Recognition
•An area where there are opportunities to develop staff internal with rotational assignments or teams to conduct reviews.
Upcoming Events
PASIA World is a high level event that worth attending if you can coordinate with other travel to Asia or can send your staff in Asia there. Semicon – July 8 to 10 San Francisco
▫ As industry picks up and 450mm becomes more clear may be some excitement this year.