Strengthening CPO-CEO Collaboration

By Kevin Frechette
Dec. 6, 2018, 11:28 AM
Strengthening CPO-CEO Collaboration

Focused on producing results that bring value to their company, procurement is a very important department within the infrastructure of an organization. Because procurement plays such an integral role in a company’s success, it is incredibly important that the CEO and CPO collaborate in order to increase productivity, cost-effectiveness and innovation.

The core function of a procurement team is to keep costs low by ensuring purchases for the company are valuable. However, this does not mean that the department must be limited in its projects. With the help of the CEO, a procurement team can actually create some very innovative, but cost-effective projects. If a procurement department and a CEO have open, direct communication, it can lead to a more competitive business overall.

Procurement’s job is to figure out some of the most difficult and stressful tasks in the life of a company. For example, procurement’s role in mergers and acquisitions is integral to the success of the process. During a merger and acquisition, a company absorbs an entirely new client base, new markets, and is forced to acquire a new spending strategy. It is procurement’s job to keep up with new and old deadlines and projects, making it crucial that the CPO is involved in the planning and execution of the merger and acquisition. When this is not the case, procurement is often given deadlines or numbers that set the department, and therefore the company, up for failure.

In order to have procurement and the executive office on the same page, they need to plan accordingly. Procurement is a highly structured department, so a CEO will benefit from having a well thought out plan in place when collaborating with procurement. Likewise, the CPO needs to learn to be more big picture when working with the CEO, so any ideas, projects, or plans would have to be as well.

The bottom line is that both procurement and CEOs are interested in the financial success of the business. However, because CPOs often oversee “the little things,” and CEOs want big-picture results, there is often a disconnect. It is essential for the success of a business that the CEO is supportive of the procurement team; if procurement is not effective, the company is wasting money, time and resources. Procurement organizations that perform properly show up to a 60% higher ROI. If the results of your procurement department are lacking, contact Fairmarkit to see how we can save you money on your tail spend management. 

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