Rising risk levels, a lack of relevant skills and managing transition – Milan Panchmatia explores why anyone would choose to be a CPO.
As procurement’s role evolves, this needs to be reflected in way it operates within the business. Savings and other traditional measures of success remain important, but no longer encompass everything the function brings. Delivering value – be it through risk management strategies, better supplier management, or other innovations – is procurement’s goal.
In order to get to this stage, the function needs a leader. Someone with the skillset that allows them to understand the ins and outs of procurement, but also how it can impact the overall business plan. This person might traditionally have headed to another function – perhaps finance – but now I hope they would think twice.
Procurement has come a long way in a short space of time and is an area full of opportunities. It is also a career choice fraught with risks and challenges, which a more established career path would avoid. So why would anyone decide to be a CPO? First let’s consider the skillset required.
A long list of requirements
It goes without saying that a CPO needs to have strong leadership skills. As mentioned earlier, the function is in a position where it needs to prove itself and demonstrate to the rest of the business that it is not just about cost savings. In order to do this, the CPO must have a long-term strategic view of the business’ road map and be able to communicate procurement’s role within it. Having a CPO that has passion and vision both within the procurement function but also being able to drive the agenda and carry the team along is essential to the long terms success of the function.
Visionary and Commerciality
Core to the role of procurement will always be the ability of the CPO and the function to deliver best value for the organisation and being an excellent and experienced negotiator is central to this.
This attribute is not only essential but also an incredibly valuable asset, particularly when working on large areas of spend. Gone are the days when the CPO can sit back and delegate this to their subordinates, today the CPO can be so embedded in the organisations structure that these negotiation skills may be leveraged across the company at anytime.
A team builder
Operating effectively within a business as a head of department requires both a holistic view of the business and good personnel skills. Procurement can only achieve its potential when able to collaborate with the various functions, such as HR, IT, Finance and Marketing. In addition, working with these teams effectively, calls for someone with a working knowledge of finance, budgeting and risk management, amongst others.
The modern CPO will also have in-depth knowledge of the latest sourcing technology and best practices, coupled with a strong insight into the industry in which they operate. Add to this mix the ability to measure success, a vital element for anyone who works in procurement, but particularly the CPO, you can start to see some of the qualities that make a modern CPO
The CEO of the future?
Many of the skills listed above correspond to what businesses look for in their CEO and that’s what modern CPOs should be thinking about.
The role encompasses its fair share of exciting challenges and rewards, but also difficulties. Procurement as a function is in a transitional stage within many businesses and having proved its value as a cost optimiser and must now establish itself at a more strategic level.
A dire economic climate opened the doors for CPOs to demonstrate the value they can add, however, they must now take that momentum and push further. This means devising new, innovative solutions to complex problems, working hand in hand with key suppliers and ultimately, finding a sustainable way to increase margin. I am confident that in the near future, Apple’s Tim Cook will not be everyone’s go to example of a CPO rising through the ranks – there will be plenty to choose from.