I was fortunate enough to be a fly on the wall for a CPO roundtable discussion yesterday. The session, which was moderated by CPO Agenda Editor-in-chief Geraint John, was focused on procurement’s increasing role in risk management. It was an interesting topic that led pretty natually into a candid assesment of how the role of procurement has evolved in the last decade.

The biggest shifts in the field and it’s position within an organization seemed to be:

• R-E-S-P-E-C-T (and the responsibility that accompanies it) - There was a great deal of talk about the challenges of rising commodity prices. Despite a broad range of industries and products, these CPOs are all feeling the squeeze on their bottom line from fuel costs, steel, copper, etc. But with that cost pressure has come an increased awareness of procurement from the C-suite and an increasing responsibility to produce results that help the bottom line. As a result, rather than rolling up under the CFO or another branch of the company, CPOs are getting a seat at the table in management discussions, where they’re viewed as a strategic business unit rather than paper pushing purchasers.
• Risk Management - Procurement has taken a leading role in managing risks to their supply chain, in terms of unforseen cost increases and supply chain continuity. But within leading companies, that responsibility for risk management is expanding into areas like ‘reputational’ risk and Corportate Social Responsibility efforts. Pretty logical changes when you consider that the best way to minimize risks of any kind - from PR to regulatory - is to nip them in the bud.
• Globalization - I was a little surprised to hear the direction the discussion went around globalization. Obviously everyone there was involved at some level with LCCS (low-cost country sourcing). But their efforts abroad are seen by their companies as a foot in the door of emerging markets. As the middle class grows in an LCC, companies with operations there are well suited to tap into that market.

Justin Fogarty is Managing Editor of Supply Excellence and will be covering Ariba LIVE 2008 Europe in Brussels this week. If you have any questions or feedback about the event or blog, Justin can be reached at jfogarty[at]ariba.com.

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