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Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Chief Procurement Officer – What is it? How to become one?

Key take-aways

  • The top authority in a procurement department is the Chief Procurement Officer (CPO).
  • CPOs are usually employed by larger organizations.
  • Becoming a CPO requires strong leadership, sound financial judgment, negotiation, and strategic procurement skills, in addition to pertinent experience and knowledge.

The Chief Procurement Officer (CPO) is perhaps the highest position that one can achieve in a procurement department. They are 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. Then we are going to learn how to become one and the necessary requirements to achieve this role.

Once you’ve finished 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 (CPO) 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 they act 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. They always makes sure that the procurement process must be followed in line with the organization’s standards.

The Responsibilities of 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. They need 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. They are 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 Much Does 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 279,000. The range goes anywhere from $209,000 to $381,000.

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 Qualifications Needed 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 they have led key victories in procurement negotiations and strategies whether in the company where they are working or in a previous company.

Other skills necessary to become a Chief Procurement Officer are as follows:

  • Strategic procurement skills 
  • Financial analysis 
  • Negotiation 
  • People management 
  • Leadership 
  • Contracting skills 
  • Communication skills 
  • Writing skills

Procurement Expert’s Advice on Becoming a Chief Procurement Officer

For this article, we asked a seasoned procurement professional to share his insights regarding the qualities of a chief procurement officer.

Sjoerd Goedhart
Owner, Goedhart Interim Management & Consultancy

LinkedIn Profile: https://www.linkedin.com/in/sjoerdgoedhart/

1. Can you share a personal example of becoming a chief procurement officer? What can readers learn from this?

“To become a CPO, it is essential to have a solid plan in place. You need to carefully consider the steps you need to take from your current position to reach your goal. This includes identifying the positions you should hold, the knowledge you need to acquire, and the experience you should gain. Once you have a clear plan, you can evaluate the opportunities that come your way and decide if they align with your objective. Having a plan makes it easier to say yes or no to certain opportunities because you know what the position should contribute to your overall career goals. Additionally, you will understand what you need to work on to make your ambition a reality.”

2. What should readers know about a chief procurement officer?

“The role of the Chief Procurement Officer (CPO) in an organization is transforming. Previously, the focus was mainly on procuring goods. However, now it is becoming increasingly crucial for CPOs to manage risks at both regional and international levels. Additionally, they need to anticipate the growing demand from customers for transparency in the sourcing of raw materials. To comply with the relevant legislation, procurement departments now need to follow certain guidelines.”

Follow-up Question: In light of the evolving role, how do successful CPOs strategize to manage risk both regionally and internationally?

“As a Chief Procurement Officer (CPO), it’s crucial to include risk management in the company’s strategy and KPIs to ensure its success. It’s the responsibility of a CPO to be aware of potential risks and devise a plan to mitigate them. However, the approach may vary depending on the company and individuals involved. Nonetheless, setting a risk management strategy should be a top priority for every CPO, as this is a fundamental aspect of the role.”

3. What is the biggest misconception about a chief procurement officer? What do most people get wrong about it?

“The role of the Chief Procurement Officer (CPO) is not limited to managing a department of professionals with the sole objective of reducing costs. Instead, the CPO plays a strategic role in developing and implementing effective procurement strategies while managing risks. These strategies must align with the company’s overall goals and objectives. To be effective, the CPO must possess strategic thinking skills, an understanding of the procurement process, leadership skills, and the ability to create and implement plans that result in cost savings, improved efficiency, better supplier relationships, reduced risks, and compliance with legislation. It’s a role that requires overseeing a department that has close coordination and impact on all other departments in a company, so the CPO should have the ability to comprehend and manage the impact on these other departments.”

4. What are the key challenges faced by Chief Procurement Officers in today’s business environment?

“In my opinion, the challenges are the increasing risk in the supply chain of goods, how to adapt to new technology like AI, and how to adapt this to the organization and the new CSRD (Corporate Sustainability Reporting Directive) regulations.”

5. How has the role of the Chief Procurement Officer evolved with the rise of digital and sustainable procurement practices?

“The CPO must be aware of developments in digital and sustainability and the skills to adapt and implement this in the company, as well as strategically and operationally (functions and responsibilities).”

6. What were the good CPOs you worked with? Why were they good? can you elaborate on that?

“The best are those who have a vision about the role of leadership within the company and how it should develop given the changes in the world around us and in line with the company’s strategy.”

7. What does it take for a procurement professional to climb to the top and become a chief procurement officer?

“To become a Chief Procurement Officer (CPO), you need to meet specific educational and experiential requirements. Ideally, you should have experience working in purchasing and procurement departments across various businesses. Additionally, you should possess excellent leadership, communication, and decision-making skills. If you have an ambition to become a CPO, it’s essential to create a clear plan outlining the necessary education and experience required for the role. You should work proactively towards achieving the steps outlined in your plan. It’s also crucial to communicate your ambition openly and seek guidance from existing managers. They can coach you and assist you in achieving your goal.”

Follow-up Question: For professionals looking to climb to a CPO role, what proactive steps can they take in terms of career development
and skill enhancement?

“For professionals aspiring to climb to a CPO role, it’s crucial to focus on both formal development and showcasing leadership qualities. While gaining experience through various positions is essential, possessing natural leadership abilities is equally vital. Leadership skills, strategic acumen, analytical capabilities, project management proficiency, and adept stakeholder management are key attributes of a successful CPO. Additionally, progression through different roles, from sourcing analyst to procurement manager and beyond, provides valuable managerial experience. Leadership is both learned and behavioral, making it imperative to continuously develop and refine these skills.”

Conclusion

The CPO, as the strategic head of the procurement department, carries the weight of leading a robust procurement team, managing the company’s annual budget, and developing the organization’s procurement policy.

The crucial role of managing supplier relationships is highlighted, emphasizing the CPO’s responsibility to foster smooth and mutually beneficial interactions between the company and its suppliers.

Aspiring individuals are encouraged to enroll in this comprehensive training course to equip themselves with the knowledge and expertise necessary for a successful career at the executive level in the dynamic field of procurement.

Frequentlyasked questions

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.

The Secretto Becoming a Chief Procurement Officer is Knowledge

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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.

Marijn Overvest Procurement Tactics