Definition

chief procurement officer (CPO)

The chief procurement officer, or CPO, leads an organization's procurement department and oversees the acquisitions of goods and services made by the organization. The CPO ensures that purchases will meet organizational needs while helping to reduce costs, give higher profit margins or both.

The role is a strategic one, with the CPO establishing the processes and policies used to guide acquisitions throughout an organization.

Given the strategic nature of the position, the CPO does not handle each and every purchase. Instead, the CPO is only directly involved in transactions that involve a strategic partnership with a supplier and/or have high costs.

Moreover, the CPO's policies and procedures determine which acquisitions require the procurement department's involvement and which are handled exclusively by end users. These rules typically require a purchasing department's involvement for complex, expensive and long-term purchase transactions; end users are usually left to handle simple, low-cost and one-off transactions.

Duties of a chief procurement officer

The CPO is expected to reduce and contain costs; evaluate and help select suppliers; ensure excellent supplier performance; oversee and sometimes participate in contract negotiations; guarantee the highest level of ethics in every transaction; and ensure procurement policies and procedures meet internal and external compliance requirement around diversity initiatives, social responsibility goals, and other such programs.

As such, the CPO must be well versed in regulations and compliance as well as the various laws and requirements governing the procurement process. For example, organizations may have internal policies as well as government requirements around diversity of suppliers to ensure nondiscrimination against minority- and women-owned businesses as well as others.

Furthermore, the CPO is responsible for guaranteeing a diversity of suppliers in terms of numbers and ensuring that supplies continue if a first-choice provider is unable to deliver the needed goods or services.

Training and experience

The CPO is expected to have, at minimum, a bachelor's degree in a business or finance discipline, although many organizations also require the CPO to have a master's degree in business, finance, procurement or supply chain management.

Additionally, the CPO is expected to have experience working in purchasing departments and should be skilled in strategic decision-making, project management and negotiation, as well as cost and price analysis. The CPO should be able to work collaboratively and across various functional areas, too.

Most common at large companies

Some procurement departments have hundreds of employees across the globe, while smaller departments may have only a handful of staff members. Depending on the size of the organization, the CPO may oversee a purchasing department that includes purchasing managers, directors of purchasing, contract administrators and purchasing assistants.

The CPO commonly reports to the chief executive officer (CEO); however, the CPO at some organizations reports to the chief financial officer (CFO), the chief operating officer (COO) or another executive or senior vice president position.

The position is most common at larger companies, where the volume of purchases justifies the need for an executive position and staff to handle those acquisitions. The position sometimes has an alternative title, including vice president of procurement and vice president of sourcing. Smaller companies may also employee a CPO, although smaller companies are likely to give the position a different title, such as procurement director or contract manager.

This was last updated in April 2016

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