State Of Procurement Part 2- The Chief Procurement Officer (CPO) is generally not seen as part of the C-Suite Group organizational leaders.

CIPS 2 November 2012

State Of Procurement Part 2- The Chief Procurement Officer (CPO)  is generally not seen as part of the C-Suite Group organizational leaders.

In Part 1, reasons for procurement’ misrepresentation and under – representation despite its strategic link to economic development and industrial competitiveness were highlighted.  In most organizational hierarchies there are mainly two value adding committees:-

1. Tier-1:-Executive and strategic management committee (aka EXCO) of whose members report directly to the Chief Executive Officer. Hence the titles Chief Operating Officer Chief Financial Officer, Chief Information Officer  Chief Technology Officer, Chief Commercial Officer Chief Marketing Officer, Chief Strategy Officer and increasingly  Chief Supply Chain Officer …Hence the C-SUITE Group of organizational leaders

2. Tier -2 Tactical and Operations Management committee(aka MANCOM) of whose members report via  Executive committee members to the CEO--- They include functional general managers, Senior managers and Associate directors.

A random survey of CPO’s formal representation on  state owned or government controlled enterprises, consulting, audit organizations and among the top publicly quoted corporations on amongst others, the New York Stock Exchange Tokyo Stock Exchange,  NASDAQ Euro next, Ghana Stock exchange London Stock Exchange Shanghai Stock Exchange Hong Kong Stock Exchange Toronto Stock Exchange Toronto Stock Exchange BM & FBovespa Bombay Stock Exchange, Johannesburg, Australian, Nigerian Stock exchange, and Kenya Stock Exchange, revealed some very interesting findings. Currently:

1. There are no CPOs reporting directly to the CEO and on the executive committee of any of the top 20 mining companies in the world. These include amongst others: BHP Billiton, Xstrata, Newmont, Barrick, Rio Tinto, Anglo American, Vale, Goldcorp Suncor and Teck.

2. There are no CPOs on any of the companies represented on the $18 billion global minerals global exploration sector. These include Silver Wheaton, Royal Gold, Franco Nevada to name but a few

3. Among mining, agriculture, chemicals sectors in Africa, where procurement is strategically seen as a weapon to stimulate SMME growth there are still no CPOs reporting directly to the CEO plus on their executive committees.   Notable examples include, AFGRI, SASOL Anglo American, Pioneers Foods, Tiger Brands, Lonmin, Cocoa Board and Senwes.

4. The following state owned enterprises with several billions of dollars annual procurement expenditure still have no CPOs reporting directly to the CEO  and on their executive committee:- Eskom(South Africa) Nigerian Ports Authority(Nigeria) Philippines National Oil company, (Philippines) Canal and River Trust(United Kingdom) Landcorp(New Zealand) Via Rail (Canada) VRA(Ghana) Cocoa Board (Ghana), Nigeria National Petroleum Corporation (Nigeria), Ghana National Petroleum Corporation( Ghana,) Indian Oil Corporation(India) SNCB(Belgium) Areva(France) Edf(France) Petrobras(Brazil) GPHA(Ghana) SAA(South Africa) CNOOC (China) Transnet(South Africa),  PetroSA(South Africa)

5. None of the top 20 banks in the world have a CPO directly reporting to a CEO or on their executive committees. Yet on annual basis the combined procurement related spend on IT and other services well exceed over billion dollars. Banks examined included amongst others, CITI Group, Royal Bank of Scotland Group, Industrial and Commercial Bank of China, Santander, UBS, HSBC, China Construction, JP Morgan Chase, Standard Chartered, and Barclays,

6. There are no CPOs on the executive committees and reporting directly to the CEO among the top global accounting, audit tax and advisory services. This is despite the hundreds of millions of dollars spent annually on services and ICT related procurement. Notable names include Ernst and Young, PWC, Deloitte and KPMG.

7. Less than 30% of Fortune global 1000 companies examined have a CPO reporting directly to the CEO plus on their executive committees.

After almost 25 years CEOs, Government Ministers, Policy Makers are still skeptical about the Chief Procurement Officer’ formal representation on the executive and senior policy development committees. One wonders whether:

a) CPO as a C-SUITE title has been damaged by the inconsistent use by relatively lower ranking procurement practitioners.

b) The Chief Supply Chain officer is appropriate title for EXCO qualified and experienced procurement professional.

c) What the CPO title really mean in :- the United Kingdom, France, India, Ghana Singapore, Australia, South Africa, Canada, Holland, Nigeria United States of America, China, Japan, , etc

d) The fraternity rushed to coin the title of CPO too quickly which has led to its demeaning  as role in the eyes of the CEO

e) The fraternity must discourage the use of the title CPO if an individual is not a member of an organizational EXCO.

f) The current educational/training content materials are suitable for the procurement practitioner to help elevate him/her to the C-SUITE of organizational leaders.

Dr Boateng is a Fellow of CIPS, Fellow of IOD UK and Southern Africa and current chairman of the CIPS Africa Board. He is also a Fellow of the Chartered Management Institute, Chartered Institute of Logistics and Transport and President of the Institute of Operations Management Africa and CEO of the PanAvest partnership, a vertical specific human capital development organization

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