Our “State of the Chief Procurement Officer” discussion, focusing on Ardent Partners’ latest research report, CPO Rising 2011: Innovative Ideas for the Decade Ahead, continues today.
It is no accident that more CEOs and CFOs are talking publicly about the importance of procurement in support of business strategy and the impact that procurement success has had on their results. We’ve highlighted some of this growing number on this site and in many of our recent presentations and webinars. Here’s one article that comes to mind – Executive Engagement: The CEO – where one CEO talks about the future success of his company’s business in the context of procurement and supply chain operations.
The executive engagement trend continues, so much so, that now there are some CEOs who are bring their Procurement and Supply Chain Leaders more directly into the conversation. Bill Johnson, the Chairman, President and CEO of the H.J. Heinz Company is one such leader. Earlier this year on a Heinz’ (NYSE Ticker: HNZ) earnings call, after the CEO and CFO gave their presentations (both spoke at length about procurement’s impact on earnings and profit margins), they welcomed Bob Ostryniec, SVP and Chief Supply Chain Officer to spend twenty minutes highlighting the recent performance of Heinz’ procurement/supply chain operations and their key initiatives to drive productivity on a global scale in the next fiscal year.
“Friend of the site” and a “CPO on the Rise” Eric Beylier, CPO at Tetra Technologies, Inc. has an actual earnings per share target assigned to him by his manager, the CEO – we profile Eric here. The question is what happens when more CPOs are given direct accountability to earnings and more CPOs are introduced to stock investors and analysts as part of the executive management team? Will outside analysts one day start tracking the coming and goings of CPOs (as they do with CFOs) and incorporate the talents and plans of the CPO into their buy, sell, hold determinations? I could see it happen.
Jean Cloutier (another “friend of the site” and a “CPO on the Rise“) leads a procurement team that reports into the CEO…. And other CPOs who will be profiled on the site this year report directly to their CEO. We highlight these stories today (or in the 2010s) in part, because five or six years ago, when a CPO that reported to the CPO, it was unique if not very rare. Today, as Ardent’s latest research shows, almost 1 in 5 of every CPOs reports to the CEO.
As impressive as that number is, I do not believe that a CPO must report to the CEO or have Board-level access to make a difference. Yes, it is desired and yes, it is helpful but, that argument always rings hollow to me. Effective leaders (and transformative CPOs) are able to play the reporting structure hand that they are dealt.
For example, I’ve been working with one CPO who’s just been promoted and is looking for his replacement – this CPO still won’t be reporting to the CEO, but the procurement-driven results at this company have been in a word, awesome. Failing to report to the CEO is no excuse for any poor or limited performance. Don’t let it be yours.
To read more about the “State of the CPO,” you can download my latest report here or here, and here (registration required at each).
