CPOs lack 'strategic' fit to sway board policy

6 June 2007
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07 June 2007

CPOs have less impact on board policy than a finance or production director who represents procurement, new research suggests.

Boards regard these other directors as having more of a "strategic" fit within firms, with more opportunity to impact on profits.

The findings come from a study by the Supply Chain Management Research Group (SCMRG) at the Manchester Business School. It was based on interviews with 12 procurement directors and a survey of 142 senior procurement managers on the CIPS database.

Paul Cousins, professor of operations management and a CIPS professor of supply chain management and head of the research, told SM he was surprised at the outcome.

"We thought that if procurement was represented on the board it would be seen as a key 'stakeholder' of the business and have a clear influence on policy development - however, this does not appear to be the case," he added.

The research shows boards tend to see purchasing as a function that saves money rather than as a "strategic weapon". Cousins says cost considerations are important but procurement must extend into supply chain risk minimisation and supplier relationships if it is to be seen as a strategic process with an effect on shareholder value.

Gerard Chick, head of knowledge management at CIPS, said: "The route through which procurement is channelled to the CEO or board is not really the issue here. What we believe is more important is reaching the CEO and board and making them recognise procurement's strategic importance and the role it has to play in organisational success."

SMjun2007

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