Chief Procurement Officer

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Description of Chief Procurement Officer. Explanation.


Chief Procurement Officer

Definition Chief Procurement Officer. Description.

A Chief Procurement Officer (CPO) is the most senior company executive responsible for all decisions related to the acquisition of raw materials, goods and services.

The Chief Procurement Officer is in charge of managing all buying decisions for the firm. The CPO manages extensive research projects about an industry prior to making key procurement decisions. The CPO is responsible for managing relationships with key suppliers and for the entire Purchasing Portfolio of the firm, ranging from strategic items and Co-Creation to bottleneck items and Vendor Managed Inventory to office supplies. Typically he is managing a team or department of purchasing managers.

Over time, due to increasing competition and Globalization, internationalization of business processes and fragmentation of supply chain activities, procurement decisions and strategies became more important in large firms. From an increased importance of procurement derived a need for creating a position that, similarly to other CXOs, could contribute to a company's value creation by optimizing a major corporate function.

The following challenging Demands on Chief Procurement Officers were identified in a 2008 Global CPO Survey by Cap Gemini:

  1. Organization. In order to face globalization challenges, the procurement function needs a matching organizational model. Employees within this function have to adapt to a geographical dispersion of their company supply chain. A commonly suggested model is a Centralization and establishing a centralized procurement department that deals with suppliers globally.
  2. Talent Management. An increased complexity and the strategic relevance of supply chain activities imposes companies to dedicate more efforts on attracting, retaining and developing procurement talents.
  3. Understanding real spending needs. Crucial for a CPO is understanding the real strategic needs of an organization in terms of spending management. The capacity of a company savings is directly related to its profitability to the extent that it doesn’t hurt a company's image or quality level. The improvement of procurement practices doesn’t always involve purchases of lower quality but can also mean an improvement or an integration across the supply chain.

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Compare with: Chief Executive Officer  |  Chief Financial Officer  |  Chief Procurement Officer  |  Chief Operating Officer  |  Chief Technology Officer  |  Chief Information Officer  |  Chairman of the Board  |  Corporate Governance

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