A CPO and his boss: a crutial couple for Supply performance

For those of you still doubting about it, a new study from CAPS Research is underlining the importance of the purchasing management line for supply-management end-results. Sounds obvious but still, it reminds us that:

  • Purchasing performance needs leadership,
  • the purchasing function needs to a strong positionning within an organisation to be efficient.

Tempe, AZ, March 14, 2007 – As the pace of change in senior executive ranks continues to accelerate, a new study in Supply Leadership indicates the success of the supply management organization will, for the most part, depend on who will be the Chief Purchasing Officer (CPO) and to whom he or she will report. According to the authors of the CAPS Research Focus Study titled « Supply Leadership Changes« , Fraser Johnson, Ph.D., and Michiel R. Leenders, D.B.A., the person who holds the Chief Purchasing Officer (CPO) position in an organization is critical for the leadership and overall performance of the supply function. The study included case-based research from 30 North American and European companies and found that the frequent changes in CPOs have required companies to exercise great care and attention to assure a seamless transition after change.Twenty-nine of the 30 companies investigated reported the assignment of a ‘first’ CPO during the previous 10-year period, which implies there was a high frequency of decentralized supply in these large companies. The first CPO assigned has the daunting task of launching a corporate supply presence. He or she will most likely develop a corporate supply strategy, build a supply team, identify the supply responsibilities, and devise a plan for growth and results. For the replacement CPO, the company may choose to recruit someone who has been reporting to the departing CPO, but the same set of questions about Why change is required, Who will be selected, and How the decision is made, remain the same.

Outcomes in the study show first-time CPOs that came into the position with a combination of supply and non-supply experience had an average tenure of 5.5 years. This is significantly greater than the average tenure of 3.2 years for those first-time CPOs with supply-only experience, and 3.3 years for those with no previous supply experience.

Whether a CPO is a seasoned supply professional or a first-time appointee does not diminish the CPOs important role in ensuring that the supply function contributes effectively to organizational goals and strategies. This is a good opportunity for supply management professionals to be viewed as an equal partner in the organization.

Note: To review the CAPS Research Focus Study, « Supply Leadership Changes » click on the link here.

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