Procurement should set its sights higher than the CFO

1 November 2010
I recently caught a headline over on Andrew Bartolini's blog: Is Procurement a Finance or Operations Function?. The lack of ambition inherent in this question made me angry, so you can see why I replied to Andrew arguing the answer is neither of these.
 The executive in the organisation to whom the CPO reports plays a vital role in breaking down corporate roadblocks, setting priorities and supporting procurement’s profile within the business. The CPO reporting relationship therefore has an important role in ensuring the effective contribution of procurement to organisational goals and strategies. Significantly, the reporting line sends a clear message regarding the importance of procurement. For most companies the CPO cannot be a “true strategic partner” to the board if they are not directly a board member and instead relegated to a supporting role. While the CFO or COO and CPO must be close strategic collaborators, in most companies the CPO should not report to these positions based upon key business drivers which I discussed previously on my own blog. Placing the CPO at the top table facilitates organisational alignment and helps avoid potential conflicts of interest arising when:
  • The increasingly cross-functional nature of procurement requires independence from departmental politics
  • Outsourcing decisions impact other areas of the business, such as finance or operations
  • The CPO is seen as a potential successor to the CEO, as CPOs are increasingly seen as CEOs in training
I have regularly stated here on Buyography my belief procurement needs a clear strategy for its future direction. Where do we want to be? What is the ‘end-game’? Without a clear answer to this question the profession is left drifting along. As the phrase goes: "If you don't know where you are going, any road will take you there". This is not a strategy to ensure our future survival.
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