The Critical Role of the Chief Procurement Officer

Conventionally, the role of the Chief Procurement Officer (CPO) is focused on sourcing, procurement and supply management for a company, responsible for the management, administration, and supervision of the company’s acquisition programs. The role may include contracting services and may manage the purchase of supplies, equipment, and materials. In addition, it may also encompass sourcing goods and services, and negotiating prices and contracts.

That seems clear enough on the surface, as it gets more specific, it is not as simple as it sounds. For example, the CPO is responsible for, but does not personally do transactional purchasing. Rather, and the “C” in the title reflects this, the CPO operates at an enterprise-wide, strategic level, and that makes the CPO a critically important member of the C-Suite.

In his 2016 paper STRATEGY, STRATEGIC MANAGEMENT, STRATEGIC PLANNING AND STRATEGIC THINKING, Fred Nickols, then Head of Strategic Planning & Management Services at Educational Testing Service (ETS) asserted that strategy is concerned with the deployment of resources. In this definition, then, Procurement is on the supply side of the resource chain, and responsible for (a) having sufficient resources to meet strategic deployment needs, (b) not depleting a key resource (money) to achieve this, and (c) making sure there is not an excess of resources (waste), perhaps by walking the tightrope Just in Time sourcing.

A previous blog post on this site discussed the importance of leadership (as distinct from management) in Supply Chain Management stated that The best supply chain executives have strong communication and relationship management skills to deal with both internal and external stakeholders. Of that group, fewer have the ability to think strategically and create value. While leadership skills are important at the supply chain level, they are critical for the CPO who must balance the practical concerns of sourcing, price, quality, timing, etc.

In an organization that has moved on from outmoded ideas of vertical organization (silos) to a more strategic and collaborative leadership model, CPOs are responsible for a lot more than the basic definition. In a modern organization, a CPO will generally be required to:

• Lead procurement strategy.
• Achieve financial objectives through supply assurance, total cost reduction, spend reduction and support for top-line growth and brand protection/enhancement.
• Develop a “balanced scorecard of supply” with stakeholders to assure that supply performance is aligning with broader organizational strategy and KPIs.
• Satisfy business needs with respect to the supply performance itself and how procurement engages the business as a supply services provider.
• Lead the process for managing third parties, especially strategic ones, including third-party manufacturers, 3PLs, outsourcing providers and others.
• Be a source of vision for the improvement of supply management and for the business.
• Be an active contributor to strategy planning and review in the C-Suite.

In C-Suite hirings, while experience, credentials, certifications, etc. are important, leadership is the most important attribute to be looking for and this is where a high-level recruiting firm, one with wide experience in finding candidates for the top of the organization can be invaluable. After meeting and interviewing numerous candidates, an experienced recruiter will be able to sort for the best qualities of leadership along with all the other requisite attributes.

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