Head of Procurement – Everything a Procurement Professional Should Know
The head of procurement is necessary for every organization. Without it, the procurement department will fail to know even the smallest gaps that can ruin the procurement process. With that being said, many of us are confused about who holds the head of the procurement title.
For this article, we will discuss who the head of procurement is. We will also explore its responsibilities in the organization.
After this article, you will have a deeper understanding of the head of procurement. You will learn how they help the company to become successful. So let’s start unveiling the head of procurement.
The Head of Procurement: Who is it?
The head of procurement in large organizations is the chief procurement officer. However, it is typical to have the same job responsibility with different titles.
In startups and small organizations, A chief of procurement officer (CPO) has a different job title such as procurement director, procurement contract officer, or deputy chief procurement officer.
The head of procurement controls all processes of the company’s purchasing operations. Commonly, it is the one who holds the final approval before the procurement department proceeds to buy the essential goods and services for its daily operation.
The chief procurement officer has the authority to affect the supply and the spending needed to get supplies or services for the company.
Just like any person who holds a high position in every company, its ultimate goal is to make the business as profitable as possible. The head of procurement does this by employing best practices and operational efficiency.
The chief procurement officer directly reports to the chief executive officer. But, some chief procurement officers at other companies report to the chief operating officer or another executive position.
The Significance of the Head of Procurement
Every position in the procurement department is essential for the company to run properly and smoothly. It must get the needed materials or services that are essential for the supply chain.
We know for a fact that sourcing is the lifeblood of the operations of an organization. With that being said, we can refer to the purchasing department as the heart of the supply chain of the organization. Thus, the head of procurement is directly involved in the success of procurement.
Without the head of procurement, the purchases of the procurement department will not meet the organizational needs. Also, the department will fail to reduce costs to produce higher profit margins.
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Duties and Responsibilities of a Chief Procurement Officer
1. Leads the procurement projects and teams
The chief of procurement is the one who leads the team when managing procurement projects. It must ensure to manage procurement staff well and that their training is relevant to the project.
The chief of procurement may also hire new talents. New talents can either be external or internal entities. The chief of procurement must ensure to optimize the performance and workflows of the newly hired entities.
2. Strictly follow regulations and compliance
The head of procurement must have in-depth knowledge of regulations and compliance. Additionally, it must be an expert with the various laws and requirements that surround the procurement process.
The chief of procurement must have a deeper understanding of these to ensure that the organization follows international standards. This secures the reputation of the company that will enable them to develop further.
3. Align the plan with the goals of the company
When the chief of procurement makes a plan to streamline the procurement process, it must also ensure that it aligns with the goals of the company.
It must consider different factors for the success of the procurement process. Once it considers the different factors, it must know how to combine them to ensure that the goals of the company are met.
4. Ensures the delivery of products or services
The chief of procurement is in charge of guaranteeing diversity to the numerous suppliers of an organization.
It also makes sure that all supplies or services will be delivered promptly even if the first-choice provider is not able to do it.
5. Create a strategic procurement plan
The organization expects the head of procurement to create a procurement plan to reduce costs.
The created plan will also help select the appropriate suppliers, ensure supplier performance, and make sure that the procurement policies and regulations meet the external and internal compliance required by the company.
6. Manage supplier relationship
The chief of procurement needs to have great communication skills. It is needed to bring up any discrepancies with the acquired supplies or services.
Additionally, the chief of procurement needs to communicate with suppliers to build a long-term relationship with them. Having a good relationship with your suppliers will ensure that your supply chain is managed effectively.
What does it take to be the Chief of Procurement?
For starters, the organization expects the chief of procurement to have a bachelor’s degree in business or finance. Although, many organizations require the chief of procurement officer to have a master’s degree in finance, business, supply chain management, or procurement.
Commonly, the chief of procurement officers has 20 years of experience in the field of procurement. This means that you need to have exceptional procurement and business knowledge to become a chief procurement officer.
Additionally, the chief of procurement is expected to have working experience with the purchasing departments. Also, the chief of procurement has to be skilled in strategic sourcing, project management, decision-making, negotiation, and price analysis.
The chief of procurement is the leader in the field of procurement. However, they must have good collaboration skills to work effectively across various functional areas.
What type of Organization have Chief Procurement Officers?
As we said earlier, the position is common in large companies. The volume of purchases is a good reason to have an executive position and staff to manage the procurement process. Sometimes, the position has an alternate name such as vice president of sourcing or vice president of procurement.
Startups and smaller companies may also employ a chief procurement officer. Although it has a different position title such as contract manager or procurement director.
Salary of the Head of Procurement
According to Glassdoor, the average salary for a head of procurement is $116,028 per year in the United States. On the other hand, the estimated additional pay for a head of procurement is $18,430 per year. Adding these two, the total pay of a head of procurement will be $134,458.
In Europe, the average salary of an advanced professional level like the head of procurement is $184,000. According to salary statistics, procurement salaries overall in Europe increased up to 6%.
Frequently asked questions
1. What is the head of procurement?
The head of procurement oversees all procurement activities within the organization.
2. What is the highest position in procurement?
The highest position in procurement is the chief procurement officer as it is an executive-level position.
3. Do small businesses have a chief procurement officer?
Yes. However, it has a different title such as contract manager or director of procurement when it comes to small businesses.
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