ChatGPT & AI in
Free Preview Lesson
Chief Procurement Officer – What is it? How to become one?
A Chief Procurement Officer (CPO) is the top authority in a procurement department responsible for strategic procurement, managing budgets, developing procurement policies, and supplier relationships.
Companies typically employ CPOs in larger organizations, and CPOs may also have alternative titles such as Vice President of Sourcing or Procurement Director.
To become a CPO, one needs strong leadership, financial acumen, negotiation, and strategic procurement skills, along with relevant experience and knowledge.
The Chief Procurement Officer is perhaps the highest position that one can achieve in a procurement department. He/she is the top authority when it comes to anything and everything about procurement. But how does one become a CPO? What sort of training or educational attainment does one need?
For this article, we are going to tackle the definition of the chief procurement officer. We are going to learn how to become one and the necessary requirements to achieve this role.
Once you’re done with this article, you should already have enough knowledge on how to become a chief procurement officer.
Chief Procurement Officer– The Role Defined
A chief procurement officer is someone who leads the entire procurement department in buying critical goods and services from another organization. A lot of companies hire procurement specialists and procurement managers, but they’re going to need someone with enough experience and management skills in order to come up with good procurement strategies.
The role of the chief procurement officer is a strategic one. This means he/she acts as the brains of the entire procurement department, always creating strategies and holding meetings in order to decide the best course of action for every procurement. He/she always makes sure that the procurement process must be followed in line with the organization’s standards.
The Responsibilitiesof the Chief Procurement Officer
As the strategic head of the procurement team, the chief procurement officer has numerous duties and responsibilities:
1. Lead a Strong Procurement Team
One of the main responsibilities of a Chief procurement officer is leading a procurement team that is able to accomplish the company’s procurement goals for the year. The CPO is also responsible for training the said team to make sure they are ready to do their responsibilities and duties without problems.
2. Manage Annual Company Budget
Since the CPO is in a strategic position, managing the company’s annual procurement budget is also one of his/her many responsibilities. He/she needs to determine the right decisions to make so that the company can save money when procurement is needed.
3. Develop a Company’s Procurement Policy
Ever wondered how a company’s procurement policy is discussed, finalized, and implemented? All that is decided by the Chief Procurement Officer. He/she is responsible for managing and creating the company’s procurement policy while following the metrics placed by the company regarding purchases and procurement. Of course, his strategies are discussed by the rest of the procurement team afterward.
4. Manage Supplier Relationships
The relationship between a company’s supplier and the procurement team is an important one. Therefore, the Chief Procurement Officer needs to make sure that anything and everything discussed between the supplier and the procurement team must be agreed upon by both sides. A smooth supplier relationship ensures a company’s access to needed materials/supplies.
How MuchDoes a Chief Procurement Officer Make?
Because the Chief Procurement Officer is considered an Executive level position in a company, it should not be surprising that the salary range for the said position is set at a higher level compared to procurement managers and specialists.
In the United States alone, the average base salary of Chief Procurement Officers is $290,000. The range goes anywhere from $232,000 to $348,000.
Despite the economic issues and the pandemic, procurement remains a strong industry. Therefore, the rate for Chief Procurement Officers should remain stable, at least for this year and the next.
What Type of Companies Employ a CPO?
As we said earlier, a chief procurement officer (CPO) is someone who leads the entire procurement department in purchasing critical goods and services from another organization.
Additionally, the CPO usually reports to the chief executive officer (CEO) of the company. However, at some companies, the CPO reports to the chief financial officer (CFO) or to another executive position.
The companies that usually employ a CPO are common in larger companies, where the volume of purchases justifies the necessity of an executive position that handles the procurement of a company.
The CPO also has an alternative title to other companies which include the vice president of sourcing and vice president of procurement. Smaller companies may sometimes employ a CPO which also has a new title for it such as contract manager or procurement director.
What are the Skills and QualificationsNeeded to Become a Chief Procurement Officer?
To become a Chief Procurement Officer, a candidate must have strong leadership skills, a creative mindset, and a strong financial acumen. In order to build these skills, any procurement specialist must have a financial or business background in terms of education.
Because being a Chief Procurement Officer is an Executive level position, it means that one must have enough experience, background, and knowledge to prove his/her efficiency in leading a department. If necessary, there must be proof that he/she has led key victories in procurement negotiations and strategies whether in the company where he/she is working or in a previous company.
Other skills necessary to become a Chief Procurement Officer are as follows:
- Strategic procurement skills
- Financial analysis
- People management
- Contracting skills
- Communication skills
- Writing skills
What is a Chief Procurement Officer?
A chief procurement officer is someone who leads a procurement team and develops procurement strategies.
What are the skills needed to become a Chief Procurement Officer?
You need leadership, writing skills, and negotiation skills to become a chief procurement officer.
Is it profitable to become a Chief Procurement Officer?
Yes. With an average of $290,000, working as a Chief Procurement Officer is profitable.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.