What are the present challenges facing Chief Purchasing Officers,how will they transform their organizations, and what can suppliers and solutions providers do to help them. Depending on the organization titles maybe interchangeable or a Director may have more actual authority than a CPO in one organization vs. another

1. Chief Purchasing Officers, CPOs,
VP Purchasing, Purchasing Director
Who they are, what are their concerns and what they need.
Depending on Organization Roles Can Be the Same or a Director may
have more actual authority than a CPO in one organization vs. another
Bill Kohnen October 2014

2. From 1887 to recently …………

3. Overview – CPO’s
• Who are they
• Present State
• Where they want to go
• Challenges
• Indirect Spend Is Important
• Need tools to support improvement
• What the CPO Needs

4. Todays CPO Is All of These
Your price is too
high!!!
I am too busy to
find a solution
I still have not
accepted the ROI
of computers
Lets build a
relationship
I need global
standard
solutions
Innovative
solutions will
transform
performance.

5. Ultra Legacy Enterprise Purchasing and Contract Management Solutions
To Avoid Risk of Cloud Solutions and Reduce Cost
I Need an
Existing
Contract/PO
I Need an
New
Contract/PO
“I’ll check the files and send to
you right away Sir.
Can I also bring you some
coffee?”
The Boys in Purchasing
and Legal will start drafting
that right away
Reasonable
Discussion Between
Stakeholders Contract is Ready

6. B2B Purchasing Transformation
B 2 B Purchasing Transformation
Big Data
Cloud
XaaS
Mobile
Open
IoT & M2M
M2MM2M
+

7. CPO Challenges
• Adoption of Technology Enablers in Purchasing
• Massive changes and disruptions with other functions within
their own organizations
• Creating complete transparency across supply chain
• Alignment of supply chain resources with organizations
strategic goals
• Escaping the grip of expensive legacy systems and process
which constrain opportunity and innovation

8. What Are The CPO’s Investment Choices?
• People
• Resources
• Travel
• Training
People
Training
Travel
Resources
Resources Make Up 12% of Budget – Most going to allocations to legacy
systems and overhead and ~ 10% for computers, phones etc

9. Purchasing ROI
Cost Saving + Cost Avoidance
Purchasing Operations Cost
• Any ROI above 1 is coming out ahead
• Average Purchasing ROI is 5.5
• Having a huge ROI could be the result of putting few resources into purchasing
• Problem is “Purchasing activities could be happening unaccounted for in higher cost less efficient
areas. (Engineering, IT, Operations)
B Kohnen
August 2013

10. CPO challenge Leveraging Investment in Team
• Too little and negative ROI and absolute savings
minimum and not scalable
• Too fast and negative ROI and bloated. CPOs
know they need quick big wins to ‘fund” further
growth
• Align investment with success to continue to
create self funding absolute value to enable
support to strategic items

11. CPO/Purchasing Leader 3 Year Roadmap
Organization Technology and Metrics Supply Base
2015 Distributed Organization with
more Category Expertise
Internal and External
More time spent recruiting.
Disengagement from Legacy
Systems Move to cloud Aps
for pain point needs
Traditional Metrics continue
to lose relevance replaced by
insights from big data
analytics
Indirect as an area of focus
and value
SRM challenges as Suppliers
CRM changes
2016 Global recruiting and
development. lines blurring
between traditional
department and career paths
Integrated Cloud Solutions
AP Driven Purchasing in Place
Multi tier Supply Chain
Transparency takes hold
Emergence of M2M
Traditional corporate Indirect
suppliers disappear or leave
markets
Even for hardware and
commodity companies IT
related spend rivals direct
material spend
2017
Direct Staff professional,
Strategic. Self directed cross
functional and aligned directly
to revenue.
Recruiting and training take
up larger portion of time and
budget
Integrated end to end cloud
based solution drive
innovation and open
standards begin to emerge
Integrated Data fully enables
organizational best Total cost
decision making
Integration with key supplies
systems
Open or AP based integration
with others
Sourcing is still important

12. Companies Across all Segments are Actively Seeking
Indirect Category Spend Leaders
• Getting the Director is less of a challenge than getting Category Managers with deep
content knowledge
• As a result companies must focus on process and technology to optimize results
• With proper attention indirect spend saving can be 15% to 30%

13. Indirect Purchasing Approaches in Practice
Today 5 years
Best Practice Benchmarks will spark
Shift to SaaS to with Hybrid
Companies Stuck with
Legacy ERP Systems
Tactical Enterprise SaaS BPO

14. Purchasing Tools Must Cross Chasm To Enable Better Performance
Innovative Cloud
Based B2B
Purchasing Tools
to Optimize
Purchasing and
Supply Chain
Enterprise ERP
Based Purchasing
and SCM Tools
that Are Good
Enough for Status
Quo
New tools needed for better results.
Purchasing Organizations encountering
friction with current tools and are
relying on a finite # of purchasing pros to
meet goals- which is not scalable.

15. Innovative Purchasing Tools Into the Majority in 2015 –Why?
• CPOs need tools
• Innovators tools more stable and generally more acceptance of
Software as a Service Cloud Solutions
• Ironically introduction of legacy ERP Vendors cloud products provides
credibility even if their products remain expensive and not fully
integrated and optimized. Some CPOs will have to “settle” for these
tools.
• Early Majority results will set benchmarks that even the “establishment
consultant and legacy ERP players “will not be able to contain
• Purchasing Teams and organizations using the innovative tools will like
them and not accept legacy systems or approach's.

16. Todays CPO Is All of These
Your price is too
high!!!
I am too busy to
find a solution
I still have not
accepted the ROI
of computers
Lets build a
relationship
I need global
standard
solutions
Innovative
solutions will
transform
performance.

17. What a CPO Needs?
• Fix a specific pain point
• Solve it with minimal work by the CPO
• Quickly Demonstrate Real Savings and ROI
• Then move to broader implementation of
solution or service