Tempe, Ariz. — March 15
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, for the most part, will depend on who will be the chief purchasing officer (CPO) and to whom he or she will report.
According to Fraser Johnson, Ph.D., and Michiel R. Leenders, D.B.A., — the authors of the CAPS Research Focus study titled, “Supply Leadership Changes” — 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 most likely will 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 might choose to recruit someone who has been reporting to the departing CPO, but the same set of questions (Why change is required? Who will be selected? How is the decision made?) remain the same.
Outcomes in the study show first-time CPOs who came into the position with a combination of supply and nonsupply 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 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.