Lessons from the 1990s ring true today: Leaders must start viewing suppliers and the CPO very differently.
by Christian Schuh, Daniel Weise, Alenka Triplat, Wolfgang Schnellbächer
For Industry Week
photo: shutterstock.com/Jirsak
This excerpt is adapted from the new book Profit from the Source:Transforming Your Business by Putting Suppliers at the Core by Christian Schuh, Wolfgang Schnellbächer, Alenka Triplat and Daniel Weise. Copyright 2022, The Boston Consulting Group Inc. Reprinted by permission of Harvard Business Review Press. All rights reserved.
The story of Jack Smith is instructive for any business leader. He was given the daunting responsibility of delivering the turnarounds of GM Europe, and then of GM North America, and then of the entire company, and he delivered, every time. This was because he turned to what he called his secret weapon: the CPO and the procurement function.
Although Smith was not a procurement specialist, he understood the value that the function could offer, and he was ready to cultivate a new corporate mindset and give the CPO a seat at the table and a wide mandate for change.
Of course, nearly 30 years on, the world has changed, and CEOs cannot expect to have the same impact simply by reprising Smith’s actions. He was narrowly focused on the bottom line and cutting costs, whereas today a sophisticated procurement capability can be used to deliver top-line growth. But by drawing inspiration from GM’s former CEO and elevating the role of the CPO, today’s CEOs can have a transformative effect on their companies.
Cultivate a New Corporate Mindset
In the vast majority of companies, suppliers are a second thought and procurement is a back-office function with little or no strategic involvement. If this is to change, as we think it must, then companies will need to start viewing them both very differently—and the only way to change perceptions is for the CEO to take personal responsibility for cultivating a new corporate mindset. But how, exactly, should CEOs achieve this? By leading from the front and taking very tangible, visible actions at an individual and institutional level.
