This year is all about risk. We’re barely into February and the ruble’s collapse looks permanent, the Swiss franc has soared, oil continues its terminal decline and there’s so much conflicting data from the world’s major economies that most strategic planners’ heads are spinning. (And that’s nothing compared to the market analysts…)
In the ubiquitous global supply chain, virtually every company is vulnerable to geopolitical shocks. Whether it’s instability in Hong Kong, uncertainty created by suspect Chinese GDP figures or the threat of new protectionism, businesses generally – and the procurement function in particular – need to get ahead of the game.
So what’s the recipe? What do we think should be top of the to-do list for smart CPOs? Obviously there’s no one-size-fits-all approach. But we think there are two important objectives to consider before February is out.
First, produce a quick win or two. Quick wins generate momentum and board level support. Robustness of savings calculations is critical to maintain the credibility with finance teams and other stakeholders. So what about a project that’s perhaps been on the back-burner? Something that will have demonstrable benefits immediately and you already feel comfortable standing up to scrutiny?
There’s always a risk that if you bank a big win early on it sets the bar high. (Philosophically, and with your MBA hat on, this is a good thing. Emotionally, and with an eye to your summer vacation, it might not be!) But in a year that promises massive instability; gaining credibility, cash and board sign-off on a project that perhaps requires a bit of investment of time and money as soon as possible is a vital advantage.
Naturally, we can help you identify and execute a quick win in procurement – although we’d also like to help on point two…
Which is; have you baked in enough flexibility to your procurement processes? Risk, whether it’s on the upside or downside, is best managed through agility and preparedness. As Tim Cummins of IACCM stated in our recent webinar, “the old mantras of control, compliance, commoditization and cost as being the key drivers will remain important, but they are inhibitors to actually freeing up an organization to become [a] creative animal”.
And that means if you’re over-efficient, you might have some issues during 2015.
“Over-efficient”? Can a business – particularly a procurement function – ever be too efficient? According to a recent interview (it’s well worth a read) with Adam Pisoni, co-founder and CTO of Yammer, they can. We’re in a year, an era even, of massive unpredictability. But, he says, “Companies want to attack the problem the way they’ve always attacked big problems: with a program, an innovation department, some sort of large-scale planning.”
He advocates a responsiveness model – empowering, flexible, in tune with the networked world in which we operate. Efficiency is still important at a granular level. But long-term plans set in stone? Overbearing processes? That stuff has to go.
Quick wins; liberate your planning. We can’t say for certain what’s going to happen for the rest of the year. But getting both of those sorted in Q1 will be sure to stand you in good stead.
What quick wins are you planning on achieving in Q1? Please add your thoughts and comments in the section below.Jonathan Cooper-Bagnall