New CPOs In Post : The 90 Day Challenge with Kath Harmeston

By Kath Harmeston FCIPS

Stepping into the role of Chief Procurement Officer (CPO) offers unique challenges and opportunities. The first 90 days are pivotal, setting the stage for your strategic vision and operational priorities.

This short window is your chance to grasp the existing procurement landscape and communicate what the essential role of the procurement department can be, to drive the organisation’s broader objectives. Effective interaction with key stakeholders, especially the CFO and the Board, is crucial for aligning your strategic goals with theirs.


Establishing a Strategic Foundation

Understanding Organisational Objectives

First and foremost, get a handle on the company’s short and long-term objectives, including financial targets. This foundational knowledge will guide your procurement decisions and help shape your strategy. Cross check business objectives with your procurement leadership team, as they will have subtle nuances and insights to add to this data gathering exercise as well.

Engage actively with other department heads to gain views on their specific functional challenges and requirements. This collaborative approach not only ensures that your emerging strategy will be relevant and tailored to departmental needs but also builds a cohesive procurement vision across the company.

Forecasted global market dynamics for the next 12-18 months will drive your short to medium term procurement strategy. Issues such as inflation, geopolitical instability, Brexit regulations and the Russia-Ukraine conflict, including commodity and currency fluctuations should ensure you have a “pull” from the executive leadership team for ideas on how to mitigate these issues.

Creating a new bundle of cost optimisation projects, embedding supply chain management security measures and speeding up new product development cycles will be well received and expected.

Understanding the business’ goals and objectives, including market challenges across the spend portfolio at a high level, will enable you to develop a simple strategy playbook with “what good looks like” and “how to help” scenarios for the business.

These small soundbites of information are powerful and stick during initial interactions with your peers.


Secure Early Wins and Create A Project Pipeline


Building a pipeline of improvement projects for the business, in line with the resources available to you, is vital to captivate your audience and show the return on investment (ROI) the procurement function can make.

This obviously depends on how mature the procurement function is and how robust the purchase to pay policies processes and practices are.

Identifying and capitalising on the quick win projects, which can be delivered with high confidence factors within 3-6 months of the fiscal year, is crucial to build credibility and demonstrate the value of the procurement function.

These quick win projects can be as simple as changing payment terms, renegotiating key contracts, aggregating small spends into larger bundles for economies of scale, creating an up-to-date preferred supplier list and routing all spend requisitions through the procurement function before orders are placed.

Gain The Mandate to Act


Once the art of the possible becomes visible, and a list of immediate and longer-term opportunities are created, it is time to gain sign off and sponsorship from the executive leadership team.

Non-compliant spend is your enemy ( i.e. spend commitments made before procurement becomes involved or outside of the preferred supplier list) and will dilute any cost reductions you make, thus demotivating your team and sabotaging your strategy.

Obtaining a clear mandate to act, as the spend officer for the business, is key to your success. This means securing the executive leadership team’s sponsorship of:-

  • The spend management policy
  • Your remit and communicating it to the business and suppliers
  • Their departments routing all spend needs through the procurement department
  • Standing by the consequences of non-compliance such as “no purchase order, no supplier payment”


Leverage Technology For Efficiency


Providing real time, accurate, strategic spend management information can influence company-wide decisions.

The role of technology in transforming procurement from a tactical function to a strategic partner within the business cannot be understated. Recent studies from KPMG and SAP reveal that 37% of procurement processes are still semi-automatic and manual, and 77% of executives complain they cannot access good spend data in real time.

Oftentimes many businesses have adequate systems, but they have not been effectively integrated into the business due to lack of training or mandate. This can be corrected relatively quickly with the right support from the executive leadership team and an adequately funded roll out programme.

Spelling out the return on investment for advanced digital tools in the first 90 days is essential.

Each of your stakeholders may benefit from a refresh on the value of automating preferred supplier lists, remote access to the requisitioning system, uploading invoices electronically and reports on the level of current spend commitments to third parties.


Secure Buy-In For Sustainability and Ethical Sourcing


As a new CPO it’s often wise to acid test the expectations of the business in rolling out their environmental and social governance (ESG) policies.

Whilst there may be a significant appetite for ethical sourcing and sustainable practices within the executive leadership team, the awareness of what it takes to resource the deployment of such policies in the procurement department may be low.

Steer away from agreeing to deploy such advanced policies and practices without the skills and budget to do so.

To demonstrate these points show the executive leadership team an example of best practice for assessing/evaluating a new or existing supplier effectively and pro rate the cost of doing so across your most important suppliers and spend categories.


Forecast and Manage Risk 


Elite procurement leaders predict supply chain risks rather than react to them. It is imperative CPOs new in post classify the spend portfolio and identify the business-critical suppliers within it.

Analysing the risks and issues with each key supplier is necessary to get a handle on the degree of risk you are managing each day as a spend officer for the company.

Debating the risk management plan for each key supplier and signing off these plans with the functional leads will assist in creating good relationships with your business peers, especially if you can encourage them to co-present the findings with you at the next executive board meeting. Pre-empting a crisis can save substantial amounts of money and of course the business reputation. Better to be safe than sorry.


Communicate With Focus


Setting your drumbeat of communication in the business is the bedrock of your success. Identifying who your key stakeholders are, and how often you should engage them is the challenge, alongside a busy diary of leading your department and working with suppliers.

Heads of function and the executive leadership should be first on your radar, starting off with simple conversations to clarify their needs, issues, the internal service level agreement (SLA) and metrics you intend to deliver on.

Resistance may arise initially due to a lack of common language and clear, concise, compelling data-driven insights from you to them. Prepare well in advance for these sessions and brush up on acronyms and terminology. “What can you do for them and why?” is a question I always ask beforehand.

Set yourself up for success with the following 6 commitments:

Regular Meeting Schedules: Initiate and keep regular meetings with key department heads to discuss ongoing needs and how procurement can support specific departmental goals

Joint Performance Metrics: Develop shared performance metrics that align procurement success with overall business success, encouraging collaborative effort towards common goals

Cross-departmental Teams: Establish/reinforce cross-departmental teams to work on key procurement projects, ensuring varied perspectives and buy-in from different parts of the organisation

Transparent Communication: Maintain a transparent communication channel with the executive team and other key stakeholders, regularly updating them on the procurement initiatives and progress

Alignment With Finance: Secure agreed definitions for the types of value-add activities procurement could deliver for the business and how they will be measured and signed off in the business. Agree a dashboard of metrics to report to the CFO monthly, clearly demonstrating where activities may hit the P&L or the balance sheet.

Ultimately it will be down to the CFO and budget holders to decide whether or not the savings your team have made for each department are removed from budgets or reinvested in the business.

Ensure you have a finance business partner to independently support the monthly savings and benefits sign off process with the business. Be sure to record the missed opportunities that the business cannot support you in delivering, due to resource issues or simply lack of appetite

Team Engagement: Make time for your team, carving out set times for you to engage regularly with your leadership team and the wider procurement team. Remember that you act as a conduit for all the data you gather from senior stakeholders and suppliers.

You also act as an interpreter of the business goals and objectives, reiterating each time you engage what the goals are and how the team are contributing to them. Authentic leadership involves transparency with your team and securing the right conditions for them to achieve their goals and develop their skills to foster a culture of trust, innovation and change

Your first 90 days as a CPO are all about gathering large volumes of data and interpretating it to:

  1. Mould a credible savings plan for the fiscal year with some achievable quick wins to secure interest
  2. Design a potential 18-24 month strategy play book on how procurement can support the business operationally and strategically and define its role in the business
  3. Define what you and your team need from the business to be successful
  4. Build strong relationship foundations with your team, your peers and the board. Follow through with a regular communication line with them

Selling the benefits of the savings plan and emerging strategy to your team, key stakeholders and board is probably the most challenging task you will face initially – as it requires confidence and experience to lock in the key success factors for the delivery of the plan (i.e. what each party’s role is to deliver successful outcomes) and lead the charge, allowing for course correction along the way.

It’s an intense yet satisfying period of your tenure, which naturally provides a remit to showcase how supportive and strategic the procurement function can be. Time flies during the first 90 days.

About The Author – Kath Harmeston

Kath Harmeston FCIPS is a seasoned management consultant, senior procurement professional, and Non-Executive Director (Former Managing Partner, Chief Procurement Officer and Group Procurement Director).

Kath’s expertise lies in business transformation, procurement programme management, procurement advisory services, cost management, P2P systems, profit enhancing strategies, bid management, stakeholder management, resilience, board governance, risk management and C-suite coaching.