Outlook for the Chief Procurement Officer Role

by Beverly Harvey

What You Need to Know Right Now to Level Up as a CPO

The Chief Procurement Officer (CPO) role has broadened in the face of digitalization. The CPO role has morphed beyond a cost-cutting function to one that seeks new, strategic ways to create value – so much so that that some experts have suggested changing the title to Chief Value Officer or Chief Purpose Officer.

While the procurement industry lacks a common definition for the CPO, the Institute for Supply Management (ISM) defines the job this way: “The identification, acquisition, access, positioning and management of resources the organization needs or potentially needs in the attainment of its strategic objectives.” On the site Spend Matters (an excellent resource for CPOs, by the way), Pierre Mitchell and Michael Lamoureux characterize the CPO as the “highest ranking leader in the organization that has the accountability and authority to influence this supply (and the third-party spending disbursed to acquire that supply) across the organization.” The authors note that CPOs typically report to the COO, CFO, or CEO (16 percent report to the top officer). Only 9 percent of procurement organizations have a CPO who is part of the C-suite.

CPOs tend to have worked their way up from procurement or finance roles; an alternate route is via management consulting that focuses on procurement or processes. Some advance into top operational roles, such as CFO and COO, after serving as CPOs.

Key Competencies for the CPO Role

The minimum education requirement for the role of CPO is typically a bachelor’s degree, though a master’s degree in finance, supply-chain management, or procurement – or an MBA – will enhance a candidate’s marketability. Some CPOs have advanced degrees in technical areas, such as engineering. A number of certification programs also are available in the field. Organizations typically seek at least 15 years in management, with a significant portion of that involving managing purchasing and procurement departments. Developing relationships with suppliers while advancing toward CPO can be an advantage.

Leadership and communication skills are a given for CPOs. In your career-marketing communications, showcase the additional CPO competencies and characteristics on this list you possess:

  • Procurement-development and budgeting skills
  • Ability to identify cost-reduction opportunities
  • Ability to select and manage cutting-edge procurement systems
  • Strategic thinking and problem-solving
  • Analytical mind
  • Risk-management knowledge
  • Business skills, especially in finance and accounting as applied to budgeting, cost management, financial accounting, treasury, and risk management
  • Strong negotiating skills
  • Collaborative and team-building skills, especially with IT, finance, HR, and legal
  • Solid operational management and general business skills and savvy
  • Change-management skills
  • Knowledge of enterprise risk management and business continuity planning

Level-Up Tips

Here are a few suggestions for those seeking to break into the CPO role, expand their horizons in an existing CPO role, or even rise beyond the CPO role:

  • Be sure you fit the culture. The lack of cultural fit in which “the culture of the CPO does not fit with other senior managers, perhaps his or her immediate boss or maybe the wider stakeholder group,” is one of the top 3 reasons CPOs are fired, reports Peter Smith on Spend Matters (the other reasons are lack or results and deficient strategic alignment). Whether you’re climbing the ladder into a CPO role or moving from one CPO role to another, you can pre-empt lack of cultural fit through careful research and observation in the job-search stage. Learn as much as you can about an organization in which you are interested in serving as CPO. Consider informational interviews before you even apply for a job. Talk to members of your network who work for the organization to get a feel for the culture and whether you fit. Ask questions in job interviews, and ask if you can talk with members of the team you’d be working with.
  • Make an impact in your first hundred days. KPMG lays out a detailed plan for success in a CPO’s first hundred days on the job, suggesting that a new CPO focus on three key aspects:
    • understanding the culture and environment (see above point about culture), the role, and the stakeholders;
    • managing communication, business expectations, and change;
    • developing a compelling vision and plan.
  • Sharpen your skills and expertise in risk management. Deloitte’s Global CPO survey 2018 lists risk management as one of three top priorities for CPOs (new products/market development and reducing costs are the others). Indeed, companies are scrutinizing the supplier stability, considering the survival of specific suppliers, as well as the possible effect of natural disasters and geopolitical events.
  • Become a master of procurement technology. The Deloitte report notes a relatively low use level of technologies such as predictive analytics and collaboration networks, with just a third of procurement leaders deploying these digital approaches. Given technology’s role in transforming the CPO’s ability to lower costs and aid collaboration with suppliers, CPOs and prospective CPOs ready to use these technologies will stand out. Indeed, blogger Alexia Antuzzi affirms, “in the coming years, we’ll see the further evolution in next-generation digital procurement. It’s imperative that CPOs start (or continue the pursuit of) their digital procurement journey now to ensure they’re not left behind in the race for competitive advantage.”

CPO Trends to Watch

  • The CPO becomes more of a strategic partner. So says Antuzzi, noting that “the role of cost-killer is rapidly giving way to critical business partner.” CPOs are now expected to deliver value across the entire organization.
  • Strong supplier relationships gain in importance. CPOs are using technology to better understand supplier processes, reports, Killian McCarthy, sales director for SoftCo. McCarthy recommends creating a supplier strategy and deploying technology for supplier onboarding, managing data, creating an intuitive supplier catalog, tracking, purchase orders and invoices, and communicating with suppliers. Procurement teams, advises blogger Malvi Goyal, should involve suppliers in strategic decisions from the initial planning phase on.
  • Digital transformation slowly makes its way into the procurement world. Like all aspects of business, procurement is affected and enhanced by digital transformation. Vollmer, however, identifies roadblocks to this transformation – in the form of budget restrictions, talent shortages, and more. Most CPOs believe these technologies will improve procurement performance but must find the resources to implement them in procurement operations.

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