The role of a Chief Procurement Officer (CPO) is to oversee an organisation’s strategic approach to improving and enhancing profitability.
Procurement itself is a business function focused on supplier management, identifying better sources of supply and transactional activity in order to streamline processes.
Ultimately, Procurement is what develops, streamlines and executes processes, whether the resources used to perform them relate to that part of the business or not.
This means that the CPO is the highest ranking person in a company with the authority to influence the spending of supplies required throughout the entire business.
As a result of carrying out these responsibilities, a CPO ultimately helps to reduce a company’s bottom line, which is why they are a vital component to help any business achieve financial success and growth.
Here, we asked a selection of esteemed senior Procurement figures to share their insights around the qualities which inform and shape a CPO so that they can excel in their role.
Understand the rules and how to apply them
A CPO has to start with a thorough knowledge of the applicable rules and regulations which are relevant to their area of practise in order to reduce costs.
A CPO would then have to demonstrate the ability to apply those rules to the relevant circumstance, placing a strong focus on supply chain risk management. They must bear in mind that every Procurement project is different and applicability will depend on the context.
They must also take steps to possess clarity of thinking and expression and have the strength to resist people who overly adhere to process and governance. This is in order to make Procurement’s messages, policies and procedures appropriate but streamlined and easily understandable and accessible.
This will enable a CPO to themselves maintain deep subject matter expertise in the relevant areas of Procurement while introducing fresh insights to the business to inform decision making and ensure that it remains current and moves with the times.
Promote and communicate the values of procurement
It is the responsibility of a CPO to increase the visibility of Procurement and gather the information that this arm of the business needs to diligently carry out its core functions.
Through close business engagement, a strong CPO will take the time to promote the benefits they can offer by creating a clear and compelling vision of how the Procurement function can deliver best value to the wider organisation and then implement the necessary changes effectively.
This depends on the ability of the CPO to tell the narrative of Procurement in their organisation in an engaging way, including details around what is spent, how and with whom, what is done well and what could be done better.
They must then be able to sell a convincing story around how Procurement can improve this storytelling, such as proving their methods will result in cost efficiencies and a healthier bottom line.
If CPOs only talk in Procurement language they will fail. They need to move the conversation to other topics which are important to the rest of the business. This will help to connect the dots for other strategies to add greater value to the organisation as a whole.
A CPO should be able to use their “sales” skills effectively to articulate the case for change and the opportunities which Procurement can unlock. This means that they will possess the resilience required to push through often unpopular changes to make better choices.
Born to lead
A CPO needs to have both charisma and credibility to be able to operate and communicate effectively with senior people in their organisation.
A CPO in any business needs to be someone that the entire organisation respects and looks up to for guidance, advice and insights. This means that the advice they give should help to inform decision making at senior level.
They must have the skills in place to influence the business and ensure that the Procurement team is not pushed around and told what to do. They instead must lead from the front and set a good example to all employees.
This is the aspect that people tend to find the most difficult as they must consider any legal risks in terms of likelihood and impact which might stem from their advice and then balance those risks against operational roadblocks, such as a project not being delivered on time or to budget and any subsequent reputational damage.
There is also a tendency for people to be risk-averse; a CPO will aim to keep their organisation safe but equally need to position themselves as a trusted advisor to the business, which requires pragmatism. This is both in terms of interpretation and application of rules and regulations and also in manner of communication, such as breaking advice down so that it is easy to understand, by using layman’s terms for example. It is this ability to strike a balance which helps a good CPO to lead from the front.
A team player
A CPO must be equipped to set a strategy through collaboration across the business and within their own team. They must have the imagination and creativity to do a lot with a little through teamwork and collaboration.
This will help to make them credible at executive level, in tandem with building deep relationships with senior stakeholders both inside the business and with suppliers.
With that in mind, a CPO must have a good eye and the wisdom and confidence to pick the right people, by building and developing high performing teams through hiring well, nurturing talent and inspiring leadership. They will then empower and support them to focus on delivering commercial value while being fully aligned to the business’s strategic goals and priorities.
In essence, a good CPO must have an inquisitive nature and allow time to find and deliver innovation both internally and through third parties to support a wider culture that thinks in this way.
They must explore ways to remove the silos in Procurement and allow for the cross fertilisation of ideas and expertise. Business functions are changing and so are the ways in which suppliers operate so Procurement must adapt and evolve with it and teamwork is a key part of this process.
A CPO should set out a vision and inspire change, while steering the conversation across senior management teams. With that in mind, they must have a keen eye to the future because the traditional role of Procurement is changing. The Covid crisis
did impact the industry to a point but innovative technology is continuing to transform Procurement and its core functions for the better.
CPOs need to know how to position Procurement to harness and support these changes to increase productivity and profitability. This might result in Procurement headcounts becoming smaller but the influence and outcomes will ultimately be greater.
Change will, without doubt, impact Procurement and people need to be ready for it. For example, they should think about upskilling as automation and digitisation become the new norms over the next five to 10 years while the categories change radically. A CPO should now be thinking about how to bring people into Procurement as some of the entry roles disappear or continue to be outsourced. The big issue is; how to equip teams with skills for both now and the future.
Ultimately, a good CPO is well-equipped to navigate the complex nuances within the Procurement arena in partnership with their team with a view to communicating their findings across the wider business.
The best CPOs understand the rules and regulations which surround Procurement and make sound and reasoned decisions which improve the day-to-day running of their entire organisation.
If you would like to find the ideal CPO to meet your business’s Procurement requirements, please get in touch with our Procurement Managing Consultant Stephen Fletcher: firstname.lastname@example.org
We would like to thank the following Procurement experts for their generous contributions and insights which have helped to shape this article: