This is the first post in a new CPO website series examining the chief procurement job description. We will dive, in detail, into the responsibilities of a CPO and what it takes to lead a procurement organization. You can also check out our previous article that serves as a comprehensive overview of the CPO role.
When it comes to being a CPO, it is not just understanding the job description that matters. One also must know how to properly prepare for the role. So, to that end, in this series we are going to rip the typical description apart and hopefully give you some deeper insights and context to the capabilities needed to succeed.
We'll start with the position overview, and break it down piece by piece.
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.
You are held responsible for all procurement efforts, even if you don’t always have the authority over all the resources that execute them. You are expected to influence each business unit and functional partner (i.e., to the extent necessary to achieve the necessary results with direct and indirect sourcing procurement efforts, even though you often have no authority under the current organizational structure). And, you are expected to help the stakeholders gain more value from their spend – more “bang for the buck.” This usually means less spend (with lower costs and associated lower pricing being a major component of this), but also more “bang” in terms of ensuring that the stakeholders get more value from the spend in terms of their objectives. When they see the CPO and the procurement function as an enabler for this process, then you are “setting the table” for which you’ll sit with your stakeholders.
Immediately, you can see that stakeholder influence will need to be a core competency (i.e., how do you convince someone that they should have you help them spend there money differently) if you want to influence the spend. When you understand this, the difficulty of the task at hand immediately starts to crystallize. And, if it doesn't, the rest of the position overview will hopefully cement the point.
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.
This indicates that procurement obviously isn't just expected to cut a purchase order and expedite delivery, it is also expected to help identify suppliers, issue tenders, negotiate contracts, execute the purchases (i.e,. set up the suppliers and the processes for managing requisitions, orders, etc.), ensure the inbound logistics are in place (and quality management processes, too), deal with problems and resolve disputes and conduct the post-mortem contract evaluations to find out what went right, what went wrong and what lessons need to be learned. These processes are just the “table stakes,” because the real game also includes adding value in bringing innovation in from supply markets (e.g., through early supplier involvement in R&D activities) and extending corporate efforts out into the supply base (e.g., sustainability initiatives, risk management activities, and so forth).
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 be expected to be a great team leader as the complexity and extent of the tasks involved will require a very skilled, talented team to implement. This team will serve as an extension of your skill sets down in the trenches. This will be a tall task, though, because the irony is that when you arrive, the team will be a mixed bag of talent. Some may have no chance of meeting the skill sets of the new procurement profession. And, some who may be talented may not be very skilled due to minimal training and because they have stayed within “the procurement box” (i.e., the narrow value proposition of pushing POs, expediting and doing reactive deals that stakeholders drag in at the eleventh hour). So, the CPO will not only have to lead, but will also have to educate the team so that they can lead as well.
The CPO will be responsible for overall procurement strategy and for increasing spend under management, identifying and evolving best practices, and transforming the organization from one that is often still locally driven to one that becomes a center of excellence.
The procurement organization will generally not be as mature as you’d hope it would be. Even if the organization has a good reputation in the procurement world, it will still likely have many miles to travel on the path to procurement excellence. We find that even some of the most seemingly advanced of firms have quite a few of the proverbial “hamster wheels” in the background. A CPO should also have some type of performance improvement and capability improvement framework for leading the transformation. Most consulting organizations (and even non-profit firms and software vendors) have some type of diagnostic framework that they use with clients (and to value-sell to clients), and other business functions have similar frameworks (e.g., the CMMI framework for IT and project management areas). There is an entire ecosystem of third parties that can provide this, and we’ve written about some of them in other Spend Matters articles like here and here. There is an even broader ecosystem that can help guide you in “adjacent” areas of supply chain, risk management, innovation and other areas.
Regardless of your “cookbook,” the organization will be looking for you to create leading strategies, identify ways to increase Spend Under Management (SUM) and evolve processes and procedures to make the organization more efficient, considerably more cost effective and more valuable in the eyes of stakeholders and customers. You will need to come across as a bold, forward moving, inspirational leader who can identify a strategic vision, rally a team around it and make the necessary process and technology changes to increase SUM, realized savings and strategic value derived from an improved supply base. Of course, you’ll need to also plug into the company culture and its pace of change while self-funding your journey. As much as most firms preach about quality, cost avoidance, risk management and innovation, what many really want from a new CPO is cost reductions across the board because the market is tight, the budgets are tighter and the board and shareholders are still 99% focused on cost reduction.
So what does this mean for you? After we review the primary responsibilities and listed qualifications, we will discuss in detail precisely what they are looking for, what they really need and where the two shall, and shall not, meet.