Call Toll Free: 888-623-2374

Request InformationSupport

Does Your Company Need a Chief Procurement Officer in 2020

CPOs are a relatively new addition to the C-Suite, but an effective Chief Procurement Officer can bring spending under control, reduce costs, and improve supply chain efficiency.

Does Your Company Need a Chief Procurement Officer in 2020

What is a Chief Procurement Officer

In a globalized economy, procurement and supply chain management is increasingly important to the success of modern businesses. The increased profile of procurement is partly due to lengthening and increasingly complex supply chains. It is also driven by procurement's connection to every aspect of a business: factors from product timetables and profit margins, to the availability of credit all depend on the health of procurement processes and supply chains. 

Procurement has never been more essential to the success of businesses than it is in 2020. It is no surprise then to see large businesses bringing procurement under the control of a high-level executive who typically reports to the CEO. 

The Chief Procurement Officer (CPO) is a relatively new entry into the C-Suite, and many see the elevation of procurement as a necessary step. But what exactly is a CPO, and what part does he or she play in the success of a business?

What is a Chief Procurement Officer?

A Chief Procurement Officer is responsible for overseeing the sourcing and procurement of goods and services an organization requires. That includes resources used in manufacturing, products used by all parts of the organization, and anything else the organization needs to acquire from third-party suppliers. Everything from a fleet of new vehicles to computers, to Kleenex, falls under procurement. 

Specific procurement and supply chain management tasks are usually carried out by procurement professionals reporting to the CPO and also by executives, managers, and employees in other departments. But the CPO sets procurement policy and manages its implementation throughout the organization. 

What Does a CPO Do?

Because procurement touches so many areas of an organization, the CPO has a broad set of responsibilities that include:

  • Cost management — The CPO directs negotiations with suppliers and manages supplier relationships to ensure that supply chains are as cost-effective as possible. 
  • Spend management — CPOs are also tasked with ensuring that spending is managed. Unmanaged spending, often called tail spending or rogue spending, can be a significant burden on organizations that don't adequately enforce procurement policies. 
  • Procurement technology — eProcurement and spend management platforms have transformed the ability of organizations to integrate with suppliers and to automate procurement workflows. CPOs often take the lead when selecting platforms and integrating them with suppliers’ systems for functionality such as PunchOut catalogs, and automation of the exchange of electronic documents such as purchase orders, confirmations, invoices, and shipping notices. 
  • Supply chain ethics — Ethics and corporate social responsibility have become an increasingly critical aspect of procurement in recent years as consumers, employees, and the media have become more aware of the consequences of unethical practices in global manufacturing, mining, and other areas.  

In short, a CPO is responsible for the administration and supervision of all aspects of an organization's acquisition of goods and services. 

Does Your Business Need A CPO in 2020?

Chief Procurement Officers are most useful in larger, more complex organizations. Suppliers, distributors, and manufacturers with massive and diverse supply chains benefit the most from having a voice in the C-suite. An effective CPO is deeply involved in procurement and has the power to enforce change and lead procurement technology adoption throughout the organization, which can reinforce an organization’s procurement strategy while lowering procurement costs and streamlining order processing. If this is where your organization stands in 2020, it might be time to start considering if a CPO could add value to your business.

To learn more about how PunchOut2Go can increase efficiency and create value for your procurement department, contact us today.

We're glad you are here. Let us help you integrate!

Request more information about PunchOut2Go and our Solutions.