The Future Role of the Chief Procurement Officer

I had an interesting discussion with Stephen Hall from the Procurement Leaders Group this morning. Stephen is putting together a feature for Procurement Leaders Magazine on ‘The End of the CPO’ and we had a quick chat about this idea.

Stephen is essentially looking at where the procurement chief role is heading in mature functions. He was wondering whether there is any thinking around integrating the responsibilities into other functions, once the procurement function has reached a certain point of progress, and also whether, because influencing is such a huge part of the role for global CPOs, once the integration of procurement and other business units has reached a certain level, whether that role becomes something that can be divided and built into the function elsewhere.

My thoughts on this were three-fold. First, I believe that the CPO of the future will be a type of “Technology Master”, in that they will be the purveyor of new technologies in the supply base. His or her role will be to marry suppliers of “blue-sky technologies” to internal product and service development engineers, and to align technology roadmaps to drive innovation. This approach will require much more focus on current technology roadmaps to ensure that they do align in the future, and that the technology will be able to drop down at the right time in the future with the right capabilities, capacity, and solutions that will enable an entirely new product. Apple has done this exceptionally well in working with innovative suppliers such as Fox Conn, who like it or not, have exceptional plastic injection molding capabilities that allowed them to product the sleek look of Apple products.

Second, the future CPO will be much more engaged with marketing and sales, to drive visibility into supply market conditions that will impact current and future projects. The CPO as “Sales Team Supply Market Expert” is especially important in the EPC, oil and gas, chemical and biopharma industry, where exposure to multi-year projects can determine whether the project is successful, profitable, or even able to be completed on time. Major Engineering, Procurement, and Contracting companies have CPO’s who are actively engaged with marketing and sales to drive contracts that will result in profitable and sustainable outcomes on major projects.

The third role of the future will put the CPO in the role of “Supply Market Nerve Center”. While procurement organizations will be more de-centralized, they will also need to build centralized nerve centers that collect and desseminate market intelligence and information from geographically diverse business centers, to collect information, synthesize it into information, create insight in the form of market risk and market opportunity, and communicate that to C-suite executives as a core input into shaping business strategy. For example, a major pharmaceutical company has a role where they can build “revenue at risk” predictors that can shape business plans, based on intelligence collected on which branches of supply are most at risk. This includes financial as well as operating risk, and requires deep market insight and transparency on what is happening in supply markets.

This type of leader will be very different from the current transactional and cost savings role that many CPO’s find themselves in today.