If I am offered the position of Chief Procurement Officer (CPO), I would report to the SVP of Manufacturing. A CPO is responsible for finding sources for supplies and services, and maintaining suppliers’ relations. A CPO usually negotiates with suppliers to get the best offers and sets up contracts between the suppliers and the company. Therefore, to find the best suppliers, there must be a coordination between the two functions; procurement and manufacturing. To find the best suppliers to contract with, a CPO must be informed about the company’s current manufacturing needs, targets, and capabilities. These important information are known by the SVP of Manufacturing as the job scope includes planning, implementing, and directing of all manufacturing activities. Having the right suppliers ensures that the company uses the most efficient, effective, and economically viable methods to produce the company’s products.
1) Identify and explain your Top 3 initiatives you would have Procurement focus on.
The top three initiatives I would have Procurement focus on would be:
a) Supplier collaboration: There must be a high level of trust between the company and the supplier. Collaboration enables both the company and the supplier to understand the capabilities that exist on both sides. As a result, the best improvements that will benefit both organizations could be determined.
b) Driving suppliers’ innovation: Incentives must be given to suppliers to motivate them to invest time and resources in innovation. Among the ways of doing so are using supplier rewards and recognition, or sharing in the profits and progress of innovative ideas. It is important that the company clearly articulates the rewards the suppliers may benefit from to push innovation among them.
c) Engagement with the wider organization to understand how procurement can reduce costs across the value chain: The full potential for benefits may be missed if cost reduction initiatives are focused solely on achieving a price reduction from contracts. Looking across the entire value chain opens up a greater opportunity for significant savings.
2) Identify how to maintain and secure innovative capability.
In order to maintain and secure innovative capability, an organization may focus their efforts on reducing the amount of transactional work that employees are responsible for. Some functions may be automated; thus, giving more free time for procurement executives to tackle value-added work such as in-depth vendor research or partnership-building. As a result, there will be more opportunities for continuous improvement plans that will boost the overall organizational performance. Moreover, innovative capability could also be maintained by having open lines of communication with other departments outside of procurement. Ideas for critical organizational improvement may come from either top executives or lower level employees.