Increasingly, companies are appointing CPOs from outside of the supply management profession. What does this tell us about C-level expectations of procurement, and why are supply management professionals missing out?
This is the moment you’ve been waiting for. Years of hard work and a brilliant career in supply management has brought you to within a hair’s breadth of fulfilling your dream – to become the Chief Procurement Officer of your company. Starting at the most junior level, you’ve worked your way up the ladder to your present position as second-in-charge of the procurement function. Your boss announced his retirement last week, and you’re quietly confident your turn has come – after all, there’s absolutely nothing about the organisation’s supply chain that you don’t know.
You step into the meeting room where the out-going CPO and two other executives are seated around a table. Disconcertingly, they stop talking when you walk in and look at you guiltily. Getting straight to the point, they tell you they’re excited to announce the new Chief Procurement Officer is … Jennifer from Marketing.
Is Procurement Being Usurped?
Has this happened in your organisation? There’s every chance that when it comes time to choose a new CPO, the C-Suite will appoint someone from a non-supply background. This means that a colleague of yours in a completely different department may one day swoop in to steal the job that you’ve been working towards for years.
While CEO-level expectations of the CPO continue to blur and broaden, the skill-set required to meet those expectations can now potentially be found in any department. The fact that supply managers are still reporting difficulty in educating their businesses on the value procurement can bring to an organisation doesn’t help the situation. If a CEO (wrongly) believes that a supply manager has spent his or her career focused solely on cost, then they are likely to look elsewhere for candidates for the top job.
Deb Stanton, Executive Director of Research and Benchmarking organisation CAPS Research and former Global CPO of MasterCard, has observed the trend of CPO appointments from outside of the profession. CEOs are no longer as interested in appointing CPOs who possess the traditional skill set that is earnt over years working in supply chain. A savvy marketing professional, or a cost-conscious operations manager who understands how supply management works, makes a very attractive candidate for CPO.
So, what does this mean?
CEOs are looking for a different set of skills for the next CPO
The CPO of the future may have little idea how a tender is run, but they must:
- Be business-savvy and understand the organisation as a whole
- Know how procurement works from a customer’s perspective
- Be completely aligned to overall business strategy (not just the supply management strategy)
- Have a strong knowledge of the business’ finance function
- Be focused on the core customer and external audiences
- Embrace changing technology and external disruptive forces
- Be an influencer and relationship management expert.
Deb referred to CAPS Research’s “Futures Study 2020”, which projects the skills required to manage a procurement function into the future.
The CPO doesn’t necessarily need supply management expertise
The complex and varied skill-set picked up through a career in supply management may no longer be enough to satisfy the requirements for the job of CPO. CEOs may even regard procurement’s traditional audience of stakeholders, end-users and suppliers to be too focused.
That being said, technical procurement skills do matter, and are still vital for any procurement team’s success. In the example above, the disappointed candidate who missed out on the top job can still play a vital role in educating and supporting the outsider CPO with their supply management knowledge.
What’s the solution? If you believe the CPO role rightfully belongs to you, rather than someone from a completely different department, then make sure you broaden (rather than narrow) your focus as you move upwards in your organisation. This means familiarising yourself on a macro level with the whole business, bringing the core customer into every decision you make, and being known as an influencer who can clearly articulate the value you, and your function, brings to the business.
As Deb pointed out today, procurement professionals are in a unique position to overlook an entire business. They’ve got every chance of seeing where the opportunities are so let’s use it an not lose it!