This week's Wiki-Wednesday topic is the Chief Procurement Officer. An excerpt of the article is below, but you can also click here to read the full article on Wikipedia's site. Our choice of this topic connects our two event picks of the week: the SIG webinar on The CPO in 2011 and Andrew Bartolini from the new analyst firm Ardent Partners, who is speaking in the Supply & Demand Chain Exec webinar on Wednesday. If you would like to read more about why we see this as a valuable topic, you can read our blog post on 'The Point' by clicking here.
Chief Procurement Officer (CPO)
A new Supply Management report published in July, 2011 says that “76 per cent of chief procurement officers (CPOs) feel the skills of their purchasing staff either 'need improvement' (65 percent) or display a ‘significant gap’ (11 percent), according to research from Ardent Partners . This survey of nearly 250 CPOs around the world includes a procurement competency matrix, which considered the higher-level skills a purchasing department should have. Contract management, category management, data analysis and presentation expertise were rated as average by CPOs, with no competencies achieving a good or excellent rating. The report said there was a 'picture of a very middle-of-the-road set of skills residing within the typical procurement department.' It also added: 'For the average department, opportunities for improvement abound.'"
Globalization, compliance pressures, supply market risk and procurement automation have simultaneously elevated the visibility of the procurement discipline within companies and increased supply management challenges. In response, procurement executives have established agendas for organizational transformation. These plans incorporate activities to bring more spending under management, enhance the procurement organization's skills and visibility, and increase both internal and external collaboration.
A chief procurement officer (CPO) typically is the executive of a corporation who is responsible for the management, administration, and supervision of the company’s acquisition programs. He may be in charge of the contracting services and may manage the purchase of supplies, equipment, and materials. It often is his responsibility to source goods and services, and to negotiate prices and contracts.
The chief procurement officer often ensures that goods and services are promptly delivered. He may be responsible for making sure vendors are paid in a timely manner. A CPO's focus generally is on supply management, whether it is in an office, manufacturing, or retail setting.
Some CPOs are in charge of locating sources for supplies and services, and of maintaining relations with suppliers and vendors. They usually negotiate with vendors to get the best prices and deals, utilizing the power of purchase and the economies of scale. Often they set up contracts between vendors and the company.
Aside from sourcing and negotiating prices and contracts, a chief procurement officer may see to it that files containing all information regarding purchases and services are kept in an orderly fashion. He or his staff usually works with the accounting department to ensure that vendors are paid on schedule. In addition, he usually keeps inventory levels current and foresees future needs of the company.
Many industries employ procurement officers, from small companies to global organizations. In a small company, the procurement officer may work singly, but often there is a team that executes the purchasing for an organization. If working in for a multinational corporation, the chief procurement officer might have to manage a global team.
Whether at a small company or a large one, the chief procurement officer usually provides overall leadership to the purchasing team and ensures that procurement policies and procedures are followed. Typically, he also is constantly in search of better quality products and better prices. In a lot of companies, all procurement decisions ultimately end up at the desk of the CPO.
The position of the chief procurement officer is believed by many to have taken on increased significance in corporations, and the role is thought to have grown more strategic in recent years. Globalization, compliance pressures, and other factors have triggered a trend toward centralization of the procurement function for the purposes of standardization and leverage. Many CPOs report directly to the president or the chief executive officer (CEO) of their company.
Exceptional interpersonal and negotiation skills generally are required of successful chief purchasing officers. Excellent oral and written communication skills may also be necessary. Fluency in other languages also can be considered an asset, since vendors may be situated in other parts of the world.
Someone who desires to become a procurement officer typically should possess a bachelor’s degree, preferably in supply chain management, contracting, procurement, business administration, economics, finance, accounting, statistics, math, or communications. A master’s degree usually is highly desirable.