While every job description is different, when it comes to a senior leadership role, such as that of a Chief Procurement Officer, there are many similarities. Regardless of the organization size, sector or target market of the organization, there are certain basic requirements for a CPO. For instance, a public sector organization might care more about contracts and compliance to tender regulations and diversity goals than a private organization, and a private organization may focus more on enabling business growth while also pursing cost reduction and process streamlining (and only do the bare minimum where contracting and compliance is concerned). Yet in both organizations, the CPO will be responsible for leading the sourcing effort, identifying potential suppliers and conducting negotiations on high-value or strategic categories. Similarly, whether the organization is a health care services provider, a CPG (Consumer Purchased Goods) company or a financial institution, they will all be looking for the same skills – a strong leader, great communicator and negotiator and an analytical mind capable of taking on the toughest challenges.
To this end, we have prepared a standard CPO job description that includes the majority of common requirements to understand not only what it takes to be a CPO, but, regardless of how thin or thick the advertisement, what a prospective employer will be looking for whether or not they put it on paper. And while each sector will have its own additional set of regional requirements (e.g., OECD requirements in Europe or small business/diversity requirements in the US) or vertical specific requirements (such as a detailed knowledge of HIPAA and medical device standards in the healthcare sector, outsourcing and knowledge of acts such as WEEE and RoHS in CPG and knowledge of SOX and the regulations such as Dodd Frank in financial services), you can bet that a prospective CPO will be judged on each of the requirements and skills identified below – requirements and skills that will be detailed in future posts and supplementary Plus and PRO content on Spendmatters.com.
Chief Procurement Officer Job Description
The CPO leads all global procurement efforts for the global enterprise. There should only be one CPO for the firm (only one true chief), even though for some mega firms with multiple mega business units, the procurement heads of those units might call themselves CPOs. The CPO might report to the CEO and be a true chief at the big wigwam, or may report to operations (e.g., for a manufacturer), into shared services/“Global Business Services” (GBS), or to finance, but the CPO should be responsible for managing all spending, regardless of the nature of the operating/influence model being used (i.e., who performs the strategy vs. execution of sourcing, buying, paying and managing of suppliers)
The Chief Procurement Officer (CPO) is responsible for leading all global procurement efforts to efficiently and effectively enable spend owners such as business units and functional partners to maximize the value they receive from suppliers to meet their objectives. The CPO will work with each business unit to lead centralized direct and indirect sourcing and procurement efforts. This will include working with the internal stakeholder from initial need identification to final goods or service delivery to meet stakeholder needs. The process starts with demand management (via stakeholder management) that then drives supply analysis/strategy, supplier identification, sourcing execution (i.e., “tendering”), contract negotiation, delivery planning and monitoring, purchase execution, and then ongoing performance management and improvement.
The CPO will accomplish these tasks through a team of senior sourcing and procurement professionals, local and remote, who will work for and with the various business units and suppliers selected to meet their needs. The CPO will also establish relationships with senior-most budget holders to ensure that procurement gets aligned with their particular objectives, and to enlist their support (and some level of their resources) in participating in supply base improvement efforts.
In addition, the CPO will be responsible for overall procurement strategy and for increasing spend under management (which doesn’t have to include resources that report hard line to the CPO), identifying and evolving best practices and transforming the organization from one that is often still locally driven to one that is led by a center of excellence. In regions where local requirements need to dominate for practical reasons, the CPO will apply knowledge and expertise to assist the local business units in strategy development, tender execution, contract negotiation and supplier performance evaluation.
- Creation and ongoing value creation with a world class supply base
- Development of organizational procurement strategy
- Creation and management of short, mid, and long term goals and objectives
- Creation and improvement of best-practice based processes (e.g., leadership of high-value/strategic sourcing efforts)
- Management of business process outsourcing activities
- Identification and realization of cost-saving and cost-reduction opportunities
- Selection and management of procurement systems
- Management of procurement staff in (and across) sourcing, contracting, transactional purchasing, supplier management, and miscellaneous internal procurement support activities
- Creating a talent management process in coordination with HR to ensure that the right resources are in place
- Managing the skills and competency development of procurement staff, including training development and knowledge management capabilities
- Leadership of cross-functional teaming across other business functions and initiatives
- Budget management for categories under management – and for procurement itself
- Development of benchmarks and scorecards to be used for continuous improvement
- Building a Procurement Center of Excellence (CoE) to help transform Procurement, and also support broader transformation of the value chain and the enterprise
The organization seeks a candidate with the following skills, education and experience.
- Strong leadership skills
- Team player at executive levels to collaborate with business units and functional partners like IT, finance, HR, legal, etc. The biggest reason for CPOs not staying long at a firm is due to culture
- Solid operational management and general business skills and savvy
- Working knowledge of finance and/or accounting in terms of budgeting, cost management, financial accounting, treasury, risk management, etc.
- Industry knowledge in terms of broad industry dynamics on the buy-side (and the sell-side), but also the internal knowledge and “language of the business”
- Excellent communication skills and even better listening skills that allows the CPO to get the “voice of the internal customer” and to understand the company culture and how to best communicate procurement’s value to it
- Ability to “sell” procurement’s value and to run procurement as a services business like any other well-run professional services business
- In-depth knowledge of sourcing and procurement principles and best practices, but doesn’t have to come from within the procurement ranks
- Strong negotiation skills to use for large commercial deals
- Experience with modern sourcing and procurement systems
- Familiarity with relevant legislative and regulatory requirements, as well as understanding of standard contractual terms and conditions to mitigate legal risk
- Strategic mindset and problem-solving skills
- Change management skills and self awareness to take varying approaches with a dynamic set of stakeholders (e.g., expert model vs. facilitative model)
- Knowledge of enterprise risk management and business continuity planning
- Analytical mindset, but also creativity to seek, encourage and find non-traditional approaches that have historically “boxed-in” procurement
At least 10 years of senior supply management experience (or 15 years depending on the job requirements and the skills/education of the candidate), operational management experience, or experience in the primary service delivery of the organization is typical. Candidates typically come up from the ranks or from procurement organizations of another firm (usually within a similar industry – but not always), but for those who come from:
- Other parts of the business (finance, supply chain, engineering, etc.)
- Procurement consulting (i.e., partner level for many years)
- The sell-side of a large supplier segment (i.e., someone who was on “the other side of the negotiating table”)
The biggest requirement, though, is a proven track record of delivering large savings and other value to large swaths of spend via a strong team of employees that the CPO manages and develops. The more spend and employees you manage (and savings you generate), the better your chances to be a CPO, but these are just the “table stakes.”
At least a Bachelor's degree in supply chain management, economics, finance, operations, engineering or a related area, with a Master's degree preferred.
While not mandatory, it is desirable that candidates who do not have a degree in supply chain management or operations management possess an industry recognized certification such as the CPSM from the Institute for Supply Management or a near equivalent from firms such as the American Purchasing Society, Chartered Institute of Purchasing and Supply, International Purchasing and Supply Chain Management Institute, The International Federation of Purchasing and Supply Management and others.