Evolving Role of the Chief Procurement Officer | DCR Workforce Blog

Evolving Role of the Chief Procurement Officer

The role of a Chief Procurement Officer, or CPO, is not as cut-and-dried as it used to be, so much so that some companies today are seen to be elevating it or at the other extreme, eliminating it altogether. One thing is for sure: The role of a CPO is evolving much faster than most species ever do.

Paring down the prices of materials and services citing volumes, solving issues with supply chain mismatches, ensuring a smooth execution of the Chief Executive’s itinerary may all be still having a place on a CPO’s agenda, but other items are also crowding onto the plate. The CPO today takes a place in the top level strategy team which works to ensure the company’s competitiveness in the market. The CPO is also required to subtly balance the relationships across cross-functional honchos. Not to forget the handling of the dynamic relationships with the myriad suppliers of the business, without losing sight of the fluctuating prices and sustaining profits while avoiding possible exposure to risks.

How CPOs today contribute to their organizations varies from the traditional expectations, and it’s time businesses recognized the difference they make to their competitive edge, in the final analysis.

Duties of a traditional CPO:

  • Pure cost orientation and focus on cutting costs
  • Spend all their time on tendering activities
  • Process forms and worry about pennies
  • Shorten delivery times
  • Minimize supply chain risk
  • Drive suppliers into the ground with constant price reductions

Functions of a modern CPO:

  • Bring in multi-faceted leadership qualities, global standards, work experience in the functional areas they need to support, and a commitment to excellence in all aspects of their operations
  • Credibility brings in value addition and sets strategic direction to sourcing as a supply chain management initiative instead of a sourcing function driven by costs alone
  • Recognize suppliers who provide the right support to the business
  • Encourage product and service innovations to enhance productivity
  • Collaborate with other stakeholders, and employ their highly-honed business sense to recognize what the business needs to execute to succeed at its goals
  • Involved with every business unit and actively participate in all management initiatives, from discussion to decision-making
  • Base every single decision on its ability to contribute to the goal of leapfrogging competition
  • Use technology to assist them every step of the way when making these decisions

Today’s technology and the CPO

To be truly successful in today’s wired world, a CPO must be open to adopt, implement and utilize new and emerging technologies. They could be business networks, mobile applications of the various useful tools employed or technologies which facilitate the management of contingent workers and freelancers. Without the aid of their innovative features, a CPO’s endeavors may not be as successful as they can be. As procurement professionals adapt to new market conditions and embrace new opportunities, it’s especially important for a CPO to shop for a Vendor Management System (VMS).

According to research, nearly 60% of all contingent labor is unaccounted for in financial planning, forecasting and budgeting in most companies. Inability to know the overall cost of one’s contingent workforce program would throw a company’s budget awry and ruin its financial planning. It would also render it impossible for any talent-starved business to plan for the future and win the war it must be waging to bring in the right talent.

Utilizing a blended workforce, which combines permanent and contingent workers, provides a business with flexibility as well as profits. Companies that find their spend on labor forms a chunk of their operating expenses will also find their overall business success rests on their ability to plan and track the growing expenses. A CPO needs to know when it’s time to bring in a VMS which offers new and innovative features tailored to the needs of a business and aimed at improving its operational efficiency. While line managers get to access the talent they need, the cost also needs to be accounted for and measured properly, instead of being categorized under discretionary or miscellaneous expenditures.

The right VMS makes it possible for the CPO to mitigate risk through ensuring compliance while helping him or her to strategize and decide future policy using insights drawn through its reporting and analytics. It will also provide decision tools that can guide the CPO to determine the most appropriate and cost-effective types of workers (i.e., agency contractors, independent consultants, entities providing project services, freelancers or permanent employees) for each assignment. A CPO could enjoy the VMS’s ability to facilitate tactical daily activities, along with its comprehensive reporting on all expenditures and budget for every potential expenditure as well as establish controls that prohibit overspending or charging to closed cost codes.

No forward-thinking CPO can ignore the way a VMS facilitates the management of the total workforce and the control it offers through its systems and processes.

If you are a CPO, what other functionalities are you looking for in a VMS?


Disclaimer:
The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.