The Changing Role of the CPO | by Elaine Porteous

Developing and exhibiting an accomplished range of inter-personal skills has always been one of the key requirements of a leader, particularly so if you are a Chief Procurement Officer (CPO). However, in this evolving world of business this is not enough. The CPO’s role is changing, it is becoming increasingly more demanding in other areas such as financial management, spend analytics and market intelligence.

A recent article in Supply Business summarised a study recently undertaken by the University of Bath, UK and CIPS on this topic. The first of seven traits they identified is not new, but it is worth emphasising again as it is probably a major contributor to success (or failure) of the aspirant CPO.

Actively seek alignment with the wider organisation and its objectives

Much is said about the need for Procurement management to be represented at the highest level in organizations. The two researchers in the CIPS/University of Bath study explain it like this. “Highly effective procurement leaders think and talk strategy, culture, stakeholders and competitors. Naturally, they decipher business objectives and communicate them to their team and the rest of the business, including stakeholders. They link people, from building bridges across the top team and the operations of the organisation to tightening the links between the supply base and the customer base. It is also about being part of a senior team and not just running a function”. Achieving a seat at the Board table is not likely to happen unless the CPO is committed to the Company strategy and can collaborate with his peers.

Analytical and research skills

“To succeed now, a procurement leader must also be increasingly analytical and data-driven, making decisions and setting direction based on evidence and analysis, not just personal judgement.” This is the view of Peter Smith, of Spend Matters, a leading commentator on procurement leadership. He adds “in recent years, procurement leaders have had to adapt and acquire new skills, particularly as the role of technology has vastly increased in every professional role, including procurement”. He identifies both spend analytics and market analysis as two areas of focus. There’s a lot of talk about “big data” lately, Forbes magazine’s definition is “a collection of data from traditional and digital sources inside and outside your company that represents a source for ongoing discovery and analysis”. Supply market research includes studying industry reports and commodity information and using the information to make informed decisions based on your own experience.

Developing and growing skills in others

A CPO’s challenge is to build an effective and diverse team and, at the same time, develop their technical and practical skills. Encouraging creative thinking, leading change and challenging the way things are should be clearly visible aspects of a CPO’s actions. Well-designed performance management systems support and reward this behaviour. Highly effective procurement leaders commit significant time to talent management, building the next generation and spend a lot of time actively developing subordinates for leadership roles. A high-performing team, with the right direction, will reflect positively on the CPO’s image and importance in the organization for everyone’s benefit.                  

Functional capability : get the basics right 

A recent study conducted by IBM in May 2013, across more than 1000 CPOs globally, came up with three key areas that procurement leaders need to get to grips with.  In their terminology, it says a CPO must ensure effective delivery of traditional procurement. This means do the main things you were hired to do: reduce costs in the organization by using a core set of skills which include effective upward communication, managing risk, application of standard processes and measuring performance.  

Innovation and creativity

The IBM study also reported that the respondents confirmed that CPOs need to drive creative solutions both internally and externally using their wide range of skills and their established relationships. “Top performers bring innovative ideas into the organization – they achieve results by staying ahead of change” was one of their observations as well as indicating that they need to look for innovation across a wide range of sources.   

Inter-personal skills

If cooperation and collaboration across internal departments and functions is key to containing costs and adding value to the organization, then the CPO needs to engage stakeholders, both in-house and externally. To do this, he needs to build trust and this takes time and patience. Displaying honesty and integrity and fulfilling promises are cornerstones of building good working relationships. Let’s not forget the importance of soft skills which everyone possesses in varying degrees. Having a positive attitude, promoting teamwork and valuing the contribution of others are also ingredients for success. 

Elaine Porteous is a Senior Associate of Bespoke – www.bespokesourcing.co.za

References:   IBM Institute for Business Value : Chief Procurement Officer Study, May 2013. Improving competitive advantage through procurement excellence.  

http://spendmatters.com/2013/09/25/new-research-changing-roles-procurement-leader-analytical-cpo/

http://www.procurementleaders.com/blog/my-blog--paul-teague/add-researcher-to-cpos-skill-set

http://www.supplybusiness.com/previous-articles/winter-2009-2010/features/the-7-habits-of-highly-effective-cpos/
Posted on November 27, 2013

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