What Does a CEO Expects from the CPO? In a single word: competitiveness

A strong CEO CPO partnership is becoming a critical factor in building competitive and resilient organisations.

The Chief Procurement Officer (CPO) plays a critical role in ensuring that procurement contributes directly to business competitiveness. Competitiveness, in this context, can be understood as a synonym for effective, efficient, resilient and sustainable operations. The objective is therefore shared. The CEO must ensure that the organisation remains competitive, while the head of procurement or the Chief Procurement Officer (CPO) supports that objective through effective procurement initiatives.

However, an important question arises: are both CEOs and CPOs fully aware of this role? Does the CEO provide sufficient support, and how can the CPO ensure that the organisation fully utilises and maximises the value created through procurement?

Is the CPO a Business Partner or an Operational Manager?

Depending on the industry, organisations spend more than 50% of their revenue through procurement. Despite this, CEOs often focus primarily on sales performance and the operational efficiency of core transformation processes.

This is reflected in several visible indicators:

• the level of investment in procurement digitalisation compared with other business functions

• the position of procurement within organisational structures and hierarchies

• investments in the development of procurement professionals

• and the representation of procurement within corporate strategic plans.

Why Procurement Has Not Evolved as Fast as Other Functions

Several factors contribute to this situation. One of them lies in the prevailing micro-focus on narrow operational objectives, which can distract attention from the overarching strategic goal and overlook the necessity of coordinated action across multiple areas.

Historically, procurement has been perceived primarily as a cost-saving function, capable of delivering quick and visible savings through supplier negotiations. It is often remembered that every monetary unit saved in procurement directly increases EBIT, assuming other costs remain unchanged.

This perception strongly shapes procurement objectives and performance metrics.

In addition to being viewed as a cost centre, procurement is also frequently seen as a problem-avoidance function. We often hear statements such as: “If we don’t hear about procurement, everything must be working well.” In other words, procurement is expected to quietly ensure that everything needed is purchased on time.

Such a perception is a double-edged sword for organisations because it ignores the broader need for resource optimisation.

A third perception views procurement as a centre of contractual legal protection, responsible for safeguarding the organisation in cases where suppliers fail to meet their obligations.

However, an important question arises: should contractual protection mechanisms be considered the primary measure of success, or should success instead be measured by the strength of collaboration and the quality of business conditions in which contractual mechanisms support cooperation rather than merely enforce it?

Savings and uninterrupted procurement processes will always remain essential objectives requiring the CPO’s attention. Yet they are no longer sufficient.

Today’s understanding of competitiveness from a procurement perspective goes far beyond these traditional initiatives.

The Business Model of Modern Procurement

The vision of modern procurement describes a next-generation integrative function.

It represents a business partner with a strong entrepreneurial mindset that supports competitiveness through effective strategies aimed at building an agile, resilient and sustainable value chain.

The New Generation CPO

What does the CPO of the new era look like?

A modern CPO must understand business objectives and challenges while also possessing deep knowledge of the business environment in order to shape effective procurement strategies. The traditional micro perspective must be replaced with a broader strategic view.

Rather than focusing exclusively on cost management across categories and suppliers, the CPO actively seeks incremental value for the organisation, explores innovation potential and directs value flows throughout the supply chain.

Furthermore, the CPO designs collaborative frameworks and encourages the development of supplier performance so that joint strategies can address market pressures and volatility. In doing so, procurement helps create a procurement ecosystem capable of adapting to change and achieving long-term progress.

Modern procurement leaders also recognise the importance of building sustainable supply chains, establishing procurement sustainability standards aligned with ESG initiatives, promoting best practices and supporting the development of sustainable procurement.

By improving processes and leveraging modern technological capabilities, the CPO develops an agile system with high operational efficiency.

At the same time, the CPO strategically connects stakeholders within the supply chain into a unified system for identifying and capturing procurement-driven value.

Finally, the future of procurement requires a broad range of modern competencies and skills among procurement professionals. These include a high level of digital literacy, familiarity with data analysis methods and tools, comprehensive business understanding and strong strategic thinking.

The CPO must therefore create mechanisms for attracting and retaining talent while fostering an environment that encourages continuous learning and the development of a new generation of procurement professionals.

The CEO as a Strategic Protagonist of Procurement

A fundamental prerequisite for building a modern procurement function that supports competitiveness is strong executive sponsorship and support from top management.

Procurement should not be an isolated function separated from the strategic management of the organisation. Integrating procurement into decision-making processes ensures the flow of critical information required to develop effective procurement strategies.

Modern procurement organisations achieve approximately 60% better results than average organisations.

For this reason, a forward-thinking CEO will position procurement high on the list of strategic priorities and ensure:

• balanced development and transformation of procurement alongside other business functions

• investment in modern information infrastructure for procurement as a prerequisite for informed decision-making

• early involvement of procurement in product and service design processes

• participation of procurement in planning processes

• concentration of decision-making authority over sourcing strategies

• the creation of procurement policies and autonomy in selecting implementation tools and instruments

• the design of processes and technological solutions enabling a high level of automation and effective strategy execution

• continuous professional development of procurement specialists.

Through such an approach organisations create the conditions to identify and capture value that goes far beyond simple procurement cost savings.

Transforming procurement is undoubtedly a demanding and complex process. However, with the right leadership and approach, procurement can rapidly evolve into a central driver of organisational success.