Undoubtedly, in most organizations procurement does report to one of these parts of the organization. Like much with procurement however, the logic dictating this depends upon the maturity of the procurement organization. So assuming a mature procurement capability, I argue:

1. Once procurement moves beyond controlling only direct purchases and takes on indirect purchases such as IT, HR, Legal etc then reporting to operations no longer makes sense.

2. Likewise once procurement shakes off the shackles of cost savings and moves to capture innovation to support growth, the brand and CSR then equally reporting to Finance no longer seams productive.

As procurement becomes more strategic (aligning internal and external resources to support business objectives), its role moves more and more towards aligning more closely with Sales & Marketing. Reviewing trends and events in external markets (Demand & Supply Side), routinely reviewing internal and external capabilities and developing future scenarios to influence business strategy.

In such a situation I see two logical implications for procurements reporting relationships:

1. CPO reports direct to CEO
2. CPO & Sales and Marketing report to a “Chief Commercial Officer” for want of a better name.

I belief such a reporting relationship supports the business fundamental that “every business has to buy, add value and sell”. This simplified value chain places procurement at as a core business competency – not a support function.

Great thought and interesting take. In your view, who should manage procurement? To whom should the CPO report?

In turn I believe procurement should stand alone as part of the fundamental make or buy strategies which determine much of the firms internal and external cost structures and the risk which must be managed in conducting business.

Both finance and operations strategies such as capital requirements and lean vrs flexible operating systems fall out of the strategic sales and procurement decisions.