Daily Archives: November 3, 2014

CPOs Deserve to be in the C-Suite

And the general belief is that because Supply Management is so important to organizational success, CPOs should report to the CEO. And while this should be the case in theory, should it be the case in practice?

According to a recent study by A.T. Kearney (as highlighted over on S&DC Exec) conducted in association with CIPS and the ISM, only 10% of procurement functions have established recognition with their CFOs regarding how procurement contributes value and that the benefits are real and measurable. Ouch! Reading this make one wonder if maybe the CPO should be reporting to the CFO.

Why? Because if the CPO is a direct report, it might convince more CFOs to spend more time trying to understand the ways of Procurement and convince more CPOs to spend more time trying to understand the ways of Finance. The joint effort might result in more CFOs and CPOs coming to a joint understanding, which might result in more CFOs understanding the true value of Procurement.

Right now, as per a recent Cap Gemini Survey (available at this link), 20% of CPOs report to Finance. It’s unfortunate that we don’t know how many of these CFOs are among the 10% of those that understand the value of Procurement. Because if the majority of CFOs who understand the value of Procurement were those who had the CPO as a direct report, then the answer would be simple. Have the CPO sit at the table but report through the CFO on a daily basis until such time that Finance understands the true worth of Procurement. However, if the percentage of CFOs with direct CPO reports who understand the value Procurement brings is only in the 20% range, then having the CPO report to the CFO makes no difference.

Any thoughts on the issue?