The emerging playbook of what CPOs should be doing during a crisis …
Having written last week on what procurement teams are doing right now it seemed logical to ask the follow up question: what are CPOs doing right now?
What then, specifically, are procurement leaders working on, prioritising and thinking about at the moment, in the midst of the Covid-19 crisis?
Fortunately, despite Chatham House Rules, we can share some insights directly from the first three “CPO Coffee Club” online roundtables that are currently being hosted by PASA Connect each Thursday.
PASA connect have worked quickly to move all sessions online, review all content for compelling relevance right now, and quadruple the amount of virtual roundtable sessions – around 40 or so online sessions are running almost daily during April and May; each directly relevant to the many challenges facing procurement working through a crisis.
Melding the themes and talking points from the first three ‘CPO Coffee Clubs’ the core messages from attending CPOs were strikingly consistent. They also fit neatly with the four major activities of procurement teams at the current time, namely;
Securing vital supply lines for their organisations – mostly direct supply lines
Sourcing new stuff – the hunt is on for a reliable supply of PPE in staggering quantities
Pausing non-operational supply lines – letting down suppliers slowly, pausing contracts, halting deliveries and negotiating force majeure.
BAU – All those jobs you wanted to get done but never had the time; mostly within the indirect space
Plus, the compelling additional opportunity, of course, of using the "gift of time" well during the lockdown. What did you do during the crisis?
Aside from the actions needed to support the above activities, the other priorities currently keeping CPOs awake, include:
1. Staff welfare & management
Managing and enabling their teams working from home remotely – some of them for the very first time. Keeping everyone informed and on board.
Leading the team’s efforts to achieve their strategic objectives and evolving crisis imperatives and bottlenecks.
2. Team capacity planning
Allocating people to tasks, redeploying people, training new staff sent from other areas and hiring any consultants and contractors as needed. In addition, they are approving staff leave (annual, sick, carers, long-service, special, unpaid) or conducting any lay-offs or redundancies if required.
How are head-office edicts (sometimes designed primarily for Europe or the US) best implemented here to ensure the right results?
Finally, where is paper-process showing its limits? How can more relaxed or digital processes speed up responsiveness, service and even compliance? What tools are needed?
3. Cash preservation
CPOs are focusing efforts on preserving cash in the business, rather than purely trying to save costs. This might include postponing projects, cutting CapEx, avoiding retrenchments, managing payments, re-negotiating contract terms or capturing governmental support (for smaller organisations).
4. Supplier considerations
Segmenting suppliers: which are needed now, which later, which not at all? What new supply lines are needed and when? How can CPOs strike deals quickly to meet all needs?
Importantly, what do suppliers need from procurement? Does procurement have some duty of care to small suppliers?
5. Procurement policy & strategy
What are the downstream implications of the crisis on inbound supply lines? What are the key lessons? What mistakes & missteps can be avoided in future? Have our sourcing decisions of the past tripped us up in a crisis? Should we amend or rebuild our BCP on the supply side?
Do we need to rebalance risk into our sourcing equations and optimise our supply networks better? Where are we paying for one-eyed procurement decisions of the past?
Perhaps changing some policies on offshoring to re-shoring, buying global to buy local, JIT to buffer stocks, single-sourcing to dual or multi-sourcing?
As CPOs progress down this list of five considerations, so the questions get more difficult as they become more strategic and longer-term in scope.
Yet, the important thing to recognise is this; if we do not ask ourselves these questions now, others may be pointedly asking them later.
Jonathan Dutton for PASA
Melbourne, 21st April 2020
Jonathan Dutton FCIPS is a brand Ambassador for PASA and is currently working to help develop the PASA CONNECT programme of online Roundtables and learning events. He is also the former founding CEO of CIPSA and currently works as an independent management consultant www.jdconsultancy.com.au