5 Things Your CPO Should Know

The Resilient Enterprise | The riskmethods Blog

March 19, 2019

by Bill DeMartino

 

The job of a CPO is a big one that sometimes goes under the radar. But to let this happen is a big mistake! It’s essential to realize that the CPO and the entire procurement organization are crucial to the health of your company as a whole. Without a procurement function that's ensuring a resilient supply chain, you can’t have a resilient enterprise. So: Do you have a resilient supply chain? If your CPO can answer these 5 questions, you’re moving in the right direction.

#1: How many sole-source suppliers do we have?

A sole-source supplier is a supplier that is your only source for a specific product, and you should be aware of them when you have them. The implications of a sole-source supplier should be clear to anyone, not just a procurement or logistics professional: If something impacts the ability of this supplier to deliver goods or services, your company is going to be severely affected. How many do you have, and who are they? If you’re a CPO, you should know. If you have a CPO reporting to you: You should know.

(Bonus points for your CPO if he or she can answer this supply chain visibility question: How many of our suppliers have sole-source suppliers?)

#2: Which of our suppliers is the most critical for our network?

A critical supplier is one whose downfall can serisouly disrupt your ability to meet your commitments to your customers. Sole-source suppliers are great examples of critical suppliers, but they’re not the only example. All kinds of criteria should go into this consideration: spend amount, what they supply, how often they supply it, how reliant you are on it, etc. Without question, your CPO should be able to pull a list of these suppliers and know exactly why they’re critical to your supply chain—and your business.

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#3: What is your action plan for when one of our critical suppliers go down?

Pulling a list is one thing. Anyone can pull a list. The next question is a lot harder: What’s next? In other words, it’s not enough to just know which of your suppliers is the most critical. You also have to know what you’re actually going to do if something should happen to one of them. And we’re not just talking a financial event—of course, that’s a thing that happens. But you have to prepare for any number of situations: strikes, natural disasters, more. Who’s responsible for taking action? What should the action be? Who should be notified? The answers to all of these questions should be not only known, but documented—and reviewed and updated regularly.

#4: Which geographic region is most critical for our supply chain?

In case you haven’t noticed, these questions are getting harder as we go.

It may be that your CPO is totally on top of your actual suppliers—but, unfortunately, this doesn’t mean you have the full picture of the risk in your supply chain. What if a geographic region is susceptible to a particular risk event, like a looming hurricane or civil unrest? If you wait to hear about these situations directly from your suppliers, it's going to be too late to do anything about them. But if you’re monitoring your key geographic regions for events that will disrupt your supply chain—and therefore your business—then you’ll be able to take action to prevent or minimize the damage from these events.

#5: How close are our relationships with our key suppliers?

Okay, this last one is a trick question. Because I can already tell you the answer: Not close enough. Everybody talks about supply chain visibility these days (that is, an understanding of what’s going on in all tiers of your supply chain), but nobody really knows how to do it. However, there is an answer, and it's one word: collaboration.

Supply chain visibility is all about communication, and I guarantee that your procurement organization isn’t doing enough of it. Having a tool for reaching out to suppliers when things are going wrong—or when you think they might go wrong—is an absolute must for the resilience of a company.

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Bill DeMartino

General Manager, North America

Bill is the general manager of North America at riskmethods. Got questions about how supply chain risk is threatening your business? Drop him a line at om@riskmethods.net.

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