One of the interesting things about consistently reading and hearing content from quality sources is that you start to notice trends. It is amazing how often the same topics arise at the same time in different places. We use this blog as a way to help you stay on top of the major themes in procurement and supply chain management.
Webinar Notes: 'Becoming a Chief Procurement Officer’
This week’s featured webinar was hosted by BravoSolution with main speaker Andrew Bartolini of Ardent Partners. In addition to being the Managing Partner and Chief Research Officer at Ardent Partners, Andrew also does most of the writing for their blog, CPO Rising. If you are interested in the movement of major corporate CPOs in and out of their roles, that is a great place to track them.
So what did you want to be when you grew up?
Ballerina? Fireman? Ninja? It is highly unlikely that you (or any of your friends) would have said Chief Procurement Officer.
Andrew started this fantastic webinar by sharing his own childhood aspirations: garbage man, baseball player, musician. I’ll admit that as a child I wanted to be a sculptor. In fact, my undergraduate years in college studying Shakespeare and Milton paid off just slightly better than those early years of work in Play-Doh.
When business historians look back at the first decade of the 21st century, the transformation taking place in procurement, including the creation of the CPO’s role, is likely to be included. Regardless of exactly what each company calls the lead single point of contact in procurement, the fact that the role exists shows the overall importance of the function as well as the individual.
Leaders in procurement are becoming stewards of business process and strategy rather than guards sitting atop a command and control tower. Procurement is the lead presence for relationships with companies outside the organization (suppliers).
Many of today’s CPOs are the first person in that role in their company’s history. Trailblazers like these have to manage inside of procurement and out, which requires them to communicate, manage performance, and drive results, among other responsibilities. Their ability to drive results needs to go beyond managing spend and suppliers to managing the company’s operational effectiveness.
The CPO’s focus in 2012
- Savings: While savings will always present challenges as procurement performance metric, it will also always be among the highest procurement priorities. What are today’s CPOs doing in response to savings pressure? They could just plan to source more, but instead they are focused on internal stakeholder and supplier collaboration. CPOs are looking for the ‘next level’ of savings by working with the supplier to help improve cost structures and then helping their own organization benefit in return.
- Staffing: CPOs are also focused on shoring up their skills weaknesses, and finding ways to accomplish more with the resources they already have. From a staff capability development standpoint, most opportunities exist on the general business side: knowledge of finance, presentation skills and overall communication.
The CPO position is attractive to a wide range of individuals with different skill sets. Because people with general business skills who can learn procurement and sourcing skills will do well in the function, this opens the career progression to generally strong employees. Aspiring CPOs should take heart if they are not on the traditional path through procurement. It is more important to be able to demonstrate the ability to drive change within an organization.
CPOs in small procurement organizations often serve as player/coaches, while the CPOs of large complicated procurement organizations need the same skills required for any other C-level executive. Many of these CPOs earn seven figure compensation packages for their ability to meet the demanding expectations set for them. While the skills required to land a CPO role may be founded in sourcing and procurement execution, the leadership, communication and relationship building skills PLUS a solid grasp of business fundamentals ultimately allow them to succeed.
The kind of experience organizations look for in their CPOs include time spent in a leadership position, core procurement capabilities, business savvy and financial acumen, and ability to engage the stakeholders and budget holders. The key take-away from this list is that companies are looking for business leaders that are also procurement experts. The path to procurement leadership is enabled by (not ensured by) expertise in sourcing.
Most CPOs have early post-undergrad experience in procurement or finance, or experience with a process driven company or in a process driven role. The average CPO spends 15-20 years in procurement and at least 5 years in a director or VP level position before becoming a CPO. Alternate paths to the role include building deep category expertise or working as a management consultant.
Their educational background is typically technical (business or engineering). Direct industry experience is a benefit but is usually not a prerequisite to an offer. It is most important that the candidate has worked in a similarly sized or structured organization. Driving change and managing transformations with measurable results are also seen as valuable experience.
The State of the CPO
The state of the CPO role is very strong. 75% of organizations have a single point of contact head of procurement. If you are an aspiring CPO and not getting the training you need, plus the well-rounded business professionalism doing your current work in your own organization, find ways to develop and exercise them somewhere else.
We should expect to see more people with greater responsibilities attracted to the procurement function. As responsibilities increase, respect and pay both increase. There is also a recent trend of CPOs being hired in from the outside in order to reinforce the need for change. If you report direct to the CPO, it may or not be a natural way to find yourself in the position when they move on.
How should CPO candidates finding openings if they believe they are qualified? Most Fortune 500 firms use outside recruiters or executive search firms to find candidates. Proactively reach out to those companies so you are in their database for opportunities. Connecting to CPOs within a region or an industry may also put you in the ‘loop’ or let you know of openings.
If you are interested in reading more, take a look at either of the following:
Recent CPO Rising Blog Post - DuPont Names Shelley Stewart as Vice President of Sourcing & Logistics and Chief Procurement Officer
BravoSolution Sponsored Research Report - Becoming a Chief Procurement Officer: The Qualifications, Experience and Characteristics of a CPO (Free registration required)