Both the role and the meaning of the Chief Procurement Officer have come a long way since the first time it appeared in a printed format. The term appears to have its roots in the World-War-One era, when delegated military officers were tasked with the responsibility to acquire the requisite resources to wage offensive and defensive operations during wartime. Interestingly enough, the first adaptation of this militaristic term within the corporate world occurred shortly thereafter in the early 1920s, when Samuel McRoberts, the president of the National City Bank in New York City, overlapped this duty with his role as the chief procurement officer of the Army Ordnance Department.
Still, for several decades, nearly all uses of the chief procurement officer title continued to be applied to military officers until the term seeped into usage within other sectors of government operations. Governments at the state level were among the entities that anointed chief procurement officers for handling resource acquisition on a regional level, as did the U.S. Postal Service and the Federal Bureau of Investigation. The use of “chief procurement officer” in a lower-case form is intentional in this instance, as there was no executive mystique associated with the title in its initial conception, and holders of the title appear to have had little hierarchical significance outside of their undertaking to acquire the goods and services required by the organizations they served.
Chief procurement officer seems to have achieved greater usage within the private sector during the 1970s, albeit on a project basis, and holders of the title were still not full-fledged members of the C-suite. However, by the early 1980s, there are documented cases of high-ranking bank executives holding the Chief Procurement Officer label alongside their other roles. From that time, the frequency and stature of the CPO label has been formalized and elevated to the point where most corporations conducting vast numbers of purchases—or even those that simply rely on an elaborate bidding process for sourcing vendors—retain full-time CPOs.
Even as the Chief Procurement Officer has progressively evolved to the present point where it has become a fixture within many organizations’ C-suites, further changes are already ongoing that will further the progression of the CPO until it ultimately transitions into… well... the CPO. However, in the latter case, the “P” will refer to “purpose” rather than “procurement,” and the name change is the result of a logical outworking of the progression of the CPO role, and a fundamental shift in the responsibilities of procurement professionals as a collective entity.
Yet, before any special conditions are added to the responsibilities of CPOs, they are already among the most powerful decision makers within their organizations, controlling about 82 percent of total spend on average. This grants them formidable leverage over the thematic considerations connected with purchasing decisions. In essence, CPOs can wield broad influence with regard to shaping the culture within the organizations they serve. And, as we progress into the 2020s, sustainability is rapidly becoming a cultural hallmark of a growing number of organizations, with procurement departments frequently leading the charge in shaping those environmentally conscious efforts.
The fact that sustainability so quickly became a central consideration of procurement professionals aligns neatly with the triple-bottom-line ethos spreading through the world of western business. In accordance with that disposition, an increasing number of companies are focusing on “people” and “planet” in addition to “profit.” In essence, the methodology explains how organizations should be able to offer fair wages to their employees while also elevating the quality of life in the communities they serve. In addition, while engendering goodwill through their serviceminded approach, these same companies should also pay heed to environmental concerns, and particularly to issues that polls identify as resonating with the public, like global warming and plastic ocean waste.
For organizations like these, there is a presumption that social responsibility will ultimately translate into profitability one way or another. From a reputational standpoint, companies that generate goodwill through their actions expect to garner brand loyalty from consumers, which culminates in profitability at the point of sale. In addition, when product and service offerings are viewed through a lens of sustainability, it yields product lines dependent upon environmental consciousness, like items produced of 100-percent recycled materials.
Predictably, several clusters of consumers have proven themselves heavily supportive of business efforts with goals attributable to environmental consciousness. Those with control of the household finances are likely to be cognizant of worldwide concerns linked with conservation and the environment, and frequently provide their backing to organizations that make public proclamations of efforts to remediate those concerns.
In a direct response to sustainability concerns, some of the largest and most well known corporations in the world—McDonalds and Starbucks—are testing out initiatives designed to combat waste and assuage public fears linked with excessive littering. In the process of formulating these ecological solutions, they may have potentially stumbled upon alternative business processes that are even more popular than their present methods.
However, procurement efforts sparked by environmental consciousness aren’t the exclusive purview of Fortune 500 companies. Of the 610 total buying and supplier organizations surveyed by the sustainability firm EcoVadis and New York University’s Stern School of Business for the 2019 Sustainable Procurement Barometer, 81 percent had increased their commitment to sustainable procurement in the past year. In addition, the same study showed 13 percent of the organizations listed “executive support” as a challenge to implementing sustainability policies. This latter statistic is a clear indication that modern executives are minimally resistant to environmentally focused initiatives.
In actuality, the top three challenges to implementing sustainable procurement practices were a lack of internal resources, the inability to effectively and efficiently track supplier sustainability performance, and concerns about costs.
Obviously, procurement plays a central role at the heart of all of these purpose-driven enterprises, naturally linking these endeavors with their sustainability objectives. In support of this, procurement teams create and control the relationships their organizations form with suppliers. This naturally instills the procurement function with tremendous power in terms of its ability to shape the corporate culture and establish the corporate agenda, simply by crafting requirements that guarantee compliance with sustainability standards of various sorts. Furthermore, this capability extends to local attraction efforts, since specifications can be imposed on the behalf of the procurement team to apply preferred-vendor status to local suppliers. This creates opportunities for companies to act as upstanding neighbors in the regions within which they sustain a physical presence.
Whether the “P” in “CPO” is definitively updated to stand for “purpose” is an interesting question to consider, and time will tell as to whether or not that idea gathers steam. Nevertheless, the capability of CPOs to shape the scope of procurement operations in a way that enhances the environmental and social portfolios of the organizations they serve has never been more apparent.