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Contents
Executive summary 04
Introduction 05
Survey demographics 06
Career characteristics 08
Challenges and success 12
factors
Metrics and rewards 14
The nuances of the new 16
Conclusions 17
Contacts 19
3
Executive summary
IIn May 2009, Accenture asked senior CPOs are experiencing some conflict
executives ultimately responsible for between actions and outcomes:
procurement strategy and execution, While internal factors such as
drawn from a representative range achieving savings targets, attracting
of industries worldwide, to share and retaining the right talent and
their views on the role of the chief addressing organizational barriers
procurement officer. are a priority for CPOs, less than half
indicated that they felt they had
Our findings, based on the replies complete control over these outcomes..
of 78 qualified respondents, found More specifically, only 14 percent felt
some surprising differences in the they had complete control to manage
careers and expectations of CPOs. their organizational barriers and almost
Key findings include: one-fifth (18 percent) ranked their
The path to the CPO role is broad control low or negligible.
and varied. CPOs are clear about their
A procurement path to CPO is typical aspirations and future needs.
but not essential: While approximately
two-thirds of respondents (64 percent) High performance is an essential
arrived in their current role from ingredient: One hundred percent
another procurement role, more than of respondents cited the desire and
one-third (36 percent) came from roles capability to help their organizations
outside of procurement. For those become a high-performance business
coming from roles outside procurement, as their most important success factor.
there is a wide range of previous CPOs feel recognized as effective
disciplines and functional capabilities. leaders: Ninety-two percent of CPOs
Education is a factor in CPO selection: were either very satisfied or satisfied
Fifty-five percent of respondents have that they were perceived as an
an advanced degree, MBA or related effective leader by their workforces.
Masters’ degree while 77 percent have a CPOs are headed to a bigger role
university degree. in the current company or a bigger
CPO role in a bigger company: The
Mobility is an emerging trend for majority of respondents expect to be
CPOs: More than one-third of the in their current role less than three
respondents moved into the current years. Nearly one-fifth (18 percent)
CPO role from outside their current of respondents expect to be in the
company. Many CPOs expect to move role for four to seven years. The CPOs
outside their current companies for in both groups expect to move to
their next role. bigger roles with more responsibilities
following their current positions.
CPO priorities often go beyond
their performance metrics. The remainder of this report illustrates
additional survey findings and begins
Most CPOs want to do more than is
to paint a more detailed portrait of
currently expected of them: While
the CPO today and where he or she is
CPOs acknowledge their performance
headed tomorrow.
is currently assessed on savings and
budgetary measures, more than two-
thirds (69 percent) of CPOs believe the
broader metrics that should be used to
judge their success are largely around
total cost of ownership.
4
Introduction
Previous Accenture research1 has past, the current scale of the crisis
shown that winning companies—those in global markets has resulted in
that outperformed their industry for dual performance pressures—on the
six years following the recession of individual and the organization.
the early 1990s—take a bold path. Potentially tasked with balancing
While remaining attentive to the innovation, growth and cost
current cost structure, they keep containment, procurement mastery is
their eyes on the broader prize: not for the faint hearted.
building sustainable future value for
the company and its shareholders. With the help of the CPO Circle
Further Accenture research2 into the community, Accenture decided to
characteristics of high performance investigate just how the role of chief
through procurement has shown that procurement officers is evolving. The
companies that successfully position results begin to paint a striking portrait
procurement as a strategic capability of the current generation of CPOs.
outperform the competition.
1 Source: Seizing the opportunity: Achieving high performance in today’s economy through
procurement outsourcing.
2 Source: High Performance through Procurement: Accenture research and insights into
procurement performance mastery, 2008.
5
Survey demographics
6
Respondents were from companies Figure 2. Survey participants by industry.
representing a diverse range of
industries. At 15 percent, the Products Resources
consumer products sector was
best represented, followed by
communications (telecommunications)
at 13 percent and industrial equipment
and insurance at 12 percent. Other
industries included utilities—9
percent—energy, automotive and travel
and transportation—8 percent—and
banking and pharmaceuticals and
medical products at 6 percent.
Representatives from retail, forest
products, metals and mining,
chemicals, capital markets,
electronics and high tech, media and
entertainment and health providers
(private and government) also
completed the survey (Figure 2).
Financial Communications
Respondents were drawn from Figure 3. Survey participants by Figure 4. Survey participants by
organizations with a wide range of corporate revenues (2008). scope of responsibility.
annual corporate revenues. Twenty-
seven percent of respondents came
from companies with global corporate
revenues of $10 billion or more during
the fiscal year 2008. The majority,
55 percent were from companies of
between $1 and $10 billion revenues.
An additional 5 percent had revenues
of $500 million to $1 billion and 13
percent stated their company revenues
were under $500 million (Figure 3).
7
Career characteristics
Initial survey results CPO history service. With nearly four out of ten
respondents with less than a year in
contain interesting While approximately two-thirds of
respondents (64 percent) arrived
their CPO positions, Accenture believes
this suggests a significant interest
insights into the path in their current role from another from new CPOs in exploring the
procurement role, more than one-third
to and from the CPO (36 percent) came from roles outside
potential of their future career paths.
8
Figure 5. What was your role prior to becoming the CPO
(or most senior procurement executive) in your current position?
••Assistant to CPO
••Business unit manager
••Controller for region
••COO
••CPO at a larger company in a different
industry
••Director ICT
••Distribution director
••European CPO of a larger company in
similar industry
••General manager procurement services BPO
provider
••Head of production
••Interim procurement transformation director
••Logistics manager
••Management
••Managing director of a division
••Managing director of a Limited company
••National operations director
••Operations
••Procurement general manager reporting to a chief
of business unit
••Procurement manager of only the insurance part
of the company
••Procurement regional manager reporting to a
regional vice president purchasing
••Product development
••Regional procurement senior vice president at a
bigger size other company in a different industry
••Accenture
••Supply chain director
••Ariba
••Supply chain planning
••Booz & Co
•• Vice president global research &
••Partner
••Purchasing consultancy development operation
••Vice president trading
9
CPO future or preparation for a CPO position with CPO reporting
greater accountability and managerial
Our survey also discovered more about responsibility. Notably, a large In our survey sample, it is noteworthy
the aspirations of CPOs in the longer (28 percent) group of respondents that 64 percent of CPOs have a
term. When we asked “What is your indicated that the CPO role was new direct reporting relationship with
expectation for your next career to the organization. That is certainly a C-suite executive; however, less
move?” nearly 80 percent said they encouraging news for procurement than one-fifth (19 percent) report
aspire to go up, with almost half, leaders as it suggests more companies directly to the CEO. For the most
40 percent, looking for a promotion are continuing to recognize the part, procurement leaders report to
within their existing company. If importance of procurement. the senior levels in the organization,
offered the right package, many of which is progress from just a few
the respondents might follow the Whatever the reasons for a CPO years ago when the procurement
27 percent of CPOs who talk openly reaching the top, it seems either the function was generally associated
about a CPO position in another, larger actual time spent in the role or the with the finance department.
company as their next move. aspiration for time to be in the role is
relatively short. Eighty-two percent of Overall, we believe that the findings
When we asked survey respondents respondents acknowledged that they on reporting relationships provide
“Why did the prior incumbent of are likely to hold their current role for additional support that organizations
your position leave?” (Figure 6), 26 less than three years. An additional recognize the value of procurement
percent of respondents said that the 18 percent believe they would move increasingly and continue to upgrade
outgoing CPOs had been promoted in four to seven years. Whatever the its status accordingly.
or rotated at the same level. An period of tenure, it seems that existing
additional 12 percent left to take new CPOs have aspirations to move on and
roles in other companies with just 13 to move on fairly quickly.
percent indicating that the former
CPO had retired. This supports some
of our earlier findings suggesting
that the CPO role is a precursor to
becoming a senior executive with
responsibilities beyond procurement,
10
Figure 6. Why did the prior incumbent of your position leave?
••General manager
••Supply chain director
••Vice president logistics
••A new position
••Consultant experience
••Did not meet expectations
••New procurement set up reporting to CEO
••Performance related
••Relocated
••Reorganization
••Split responsibility
••Still in procurement, but as category manager
11
Challenges and success factors
Figure 7. To what extent do you feel managing the issues identified,
which directly reflect your effectiveness as a CPO, is within your control?
Challenges majority, 60 percent, said they had (supply chain, sustainability, supplier
qualification), seem to be of far
only moderate or some control. This
In response to the question “What suggests there is still a significant less concern than some of the more
is the single most important issue gap between the best performing internally-focused issues.
keeping you up at night which directly procurement organizations (where
reflects your effectiveness as a CPO?” complete control is seldom an issue) What is interesting to note is that
survey participants highlighted four and the majority of procurement CPOs feel more in control of supplier-
broad areas and indicated to what organizations. related issues, despite the fact that
extent they felt that managing these these remain outside their own
issues was within their control: 3. Attracting and retaining the organization, than issues they have
right talent. Almost one-fifth of with their own internal customers
1. Addressing organizational barriers. the respondent CPOs pointed to (Figure 7).
Given this was a keen aspect of almost talent management as their greatest
every metric relating to personal challenge, and they felt more
success (see page 14), more than comfortable in terms of control, with
one-fifth of respondents (21 percent) more than three-quarters (79 percent)
singled out internal barriers as their having complete to moderate control.
biggest issue. Only 14 percent felt However, some 21 percent felt they
they had complete control to manage had only little or no control—another
organizational barriers and another18 area of disenfranchisement.
percent ranked their control low or
negligible. This is clearly an issue that 4. Supply risk. Although not as
can reduce the effectiveness and the actively sought out as some of the
impact of the best CPOs. other areas, 14 percent of respondents
identified supply risk as their single
2. Achieving savings targets. Not most important issue. No doubt
surprisingly, financial issues take affected by recent economic volatility
center stage. Yet when asked if which is adding further pressures
managing costs was within their to suppliers, it was nevertheless
control, only 40 percent of CPOs felt surprising that this, along with
they had complete control and the several other externally facing issues
12
Figure 8. Rate the importance of these factors to your success as a
procurement executive.
44%
73%
76% 78%
77%
92%
100% 99% 96%
13
Metrics and rewards
Figure 9. Metrics and rewardss.
#1
#2
•• Inventory reduction
#3 •• Challenge the organization
•• Collaboration with
#4 suppliers
•• Contract compliance
#5
•• Cost avoidance
•• Process control •• Development in
•• Category strategy procurement organization
•• Collaboration with •• Diversity
suppliers •• Innovation
•• Cost avoidance •• Levels of bypass
•• Customer satisfaction •• People management
•• Increased professionalism •• PER or ROI on procurement
of the purchasing team function
•• Internal key stakeholder •• Procurement efficiency
satisfaction •• Proportion of long-term
•• People management performance engagement
•• Procurement efficiency contract
•• Strategic procurement •• Risk reduction
alliances •• Strategic procurement
•• Strategic sourcing alliances
throughout, compliance •• Strategic sourcing
management throughout, compliance
•• Success in ERP management
•• Supplier diversity •• Supplier performance
•• Transaction cost reduction •• Transactional efficiency
•• Turnover •• Transaction cost reduction
•• Web catalog spend
14
Figure 10. What is the maximum as a percentage of your Figure 11. How many hours a week do you currently spend
base salary that you would receive as compensation for with senior executives?
personal performance?
4 Non-executive directors provide independent advice but do not get involved in the day-to-day
running of the business.
15
The nuances of the new
In a deeper dive of the research, we It would appear from this snapshot within their current company against
compared the data from the responses that new CPOs have not yet 48 percent of established CPOs.
of those CPOs who were in a newly- experienced the barriers or are
created position (that is, the CPO role confident in their ability to overcome The picture being painted here is that
had existed previously)—referred to the organizational barriers while the the CPOs of newly-created positions
in this report as the ‘new CPOs’—and established CPOs have a keen sense are dynamic in their approach and
those that were in an established role around the challenges they are facing expectations—tackling organizational
(that is, the CPO position had previous within the organization. barriers, focusing on internal
incumbents)—referred to in this report customers, staying with the role four
as the ‘established CPOs.’ In terms of length of service, there is years or more and choosing an external
also a discrepancy between new CPOs move, onwards and upwards, to
When we asked the question “What and established CPOs. Most new CPOs progress their careers.
is the single most important issue have held their roles longer, with 50
keeping you up at night which directly percent of new CPOs holding the role
reflects your effectiveness as a CPO?” for between four and seven years or
32 percent of the new CPOs felt that more and 44 percent of established
addressing organizational barriers was CPOs holding the role for one year
their priority, twice as many as the or less.
established CPOs at 16 percent.
Finally, the career expectations do
To the query “To what extent do you vary for new CPOs when compared to
feel managing these issues is under established CPOs. When the survey
your control?” 59 percent of new CPOs asked “What is your expectation/
considered ‘achieving savings targets’ aspiration for your next career
was within their complete control move?,” 50 percent of new CPOs
against 32 percent of established identified that they wished to join a
CPOs. What is more, 27 percent of new larger company as a CPO against 18
CPOs feel they are fully in control of percent of established CPOs. And in a
‘addressing organizational barriers’ reverse of these statistics, 18 percent
compared with the limited 9 percent of new CPOs wished to be promoted
of established CPOs.
16
Figure 12. Importance of the following factors to your success as a
procurement executive: New CPOs vs. established CPOs.
17
Conclusion
18
Contacts
Global Sourcing & Procurement Italy and Greece Greater China
Kris Timmermans Giorgio Torresani Hui Wang
Managing Partner Largo Donegani, 2 30/F. Shanghai Central Plaza
Rue Royale 145 20121 Milano 381 Huai Hai Zhong Road
1000 Brussels Italy Shanghai 200020
Belgium Phone: +39 02 777 51111 China
Phone: +32 2 22 67 211 giorgio.torresani@accenture.com Phone: +86 21 2305 3333
kris.timmermans@accenture.com hui.wang@accenture.com
Spain, Portugal, Africa and Israel
Europe Carmen Diaz Madroña India
Kai Nowosel c/ Ramìrez de Arellano, 35 Sanjay Dawar
Campus Kronberg 1 28043 Madrid DLF Center - 6th Floor
D-61476 Kronberg im Taunus Frankfurt Spain Sansad Marg,
Germany Phone: +34 91 596 6000 New Delhi 110 001
Phone: +49 6173 94 99 carmen.diaz.madroña@accenture.com India
kai.nowosel@accenture.com Phone: +91 11 2335 5000
United Kingdom and Ireland sanjay.dawar@accenture.com
Austria, Switzerland and Germany Jeremy Robinson
Ralf Mägerle 20 Old Bailey Japan
Campus Kronberg 1 London EC4M 7AN Masahisa Inagaki
D-61476 Kronberg im Taunus Frankfurt United Kingdom Akasaka Inter City
Germany Phone: +44 20 7844 4000 1-11-44 Akasaka Minato-ku,
Phone: +49 6173 94 99 jeremy.robinson@accenture.com Tokyo 107-8672
ralf.magerle@accenture.com Phone: +81 3 3588 3000
United States masahisa.inagaki@accenture.com
Belgium, Luxembourg and North America
Netherlands Harlen Pyle Latin America and South America
Dimitri Huyghe One Freedom Square José Carlos Roman
Rue Royale 145 11951 Freedom Drive Rua Alexandre Dumas, 2051
1000 Brussels Reston, Virginia 20190-5651 Chacara Sto. Antonio
Belgium United States of America 04717-004 Sao Paulo, SP
Phone: +32 2 22 67 211 Phone: +1 703 947 1545 Brazil
dimitri.huyghe@accenture.com n.harlen.pyle@accenture.com Phone: +55 11 5188 3000
jose.carlos.roman@accenture.com
Denmark, Finland, Norway and Asia Pacific
Sweden Manish Chandra Marketing
Per Segerberg 250 North Bridge Road Sergio Clerici
Õstra Hamngatan 41-43 #33-00 Raffles City Tower Largo Donegani, 2
P.O. Box 2186 Singapore 179101 20121 Milan
SE-403 13 Gothenburg Phone: +65 6410 8000 Italy
Sweden manish.chandra@accenture.com Phone: +39 02 777 51111
Phone: +46 31 339 4000 sergio.clerici@accenture.com
Australia
per.segerberg@accenture.com
Melbourne office
Eastern/Central Europe Don Puckridge
Malgorzata Szulc GPO Box 5176
Sienna 3900-121 Warsaw Melbourne, Victoria 3001
Poland Australia
Phone: +48 22 528 80 00 Phone: +61 3 9838 7000
malgorzata.szulc@accenture.com don.puckridge@accenture.com
19
About Accenture Supply About Accenture
Chain Management
Accenture is a global management
The Accenture Supply Chain
consulting, technology services
Management service line works
and outsourcing company.
with clients across a broad range of
Combining unparalleled experience,
industries to develop and execute
comprehensive capabilities across
operational strategies that enable
all industries and business functions,
profitable growth in new and existing
and extensive research on the world’s
markets. Committed to helping clients
most successful companies, Accenture
achieve high performance through
collaborates with clients to help them
supply chain mastery, we combine
become high-performance businesses
global industry experience and skills
and governments. With approximately
in supply chain strategy, sourcing and
177,000 people serving clients in more
procurement, supply chain planning,
than 120 countries, the company
manufacturing and design, fulfillment,
generated net revenues of US$23.39
and service management to help
billion for the fiscal year ended
organizations transform their supply
Aug. 31, 2009. Its home page is
chain capabilities. We collaborate
www.accenture.com.
with clients to implement innovative
consulting and outsourcing solutions
that align operating models to support
business strategies, optimize global
operations, enable profitable product
launches, and enhance the skills
and capabilities of the supply chain
workforce. For more information, visit
www.accenture.com/supplychain
Copyright © 2009 Accenture About Accenture CPO Circle Grateful thanks to authors Paolo
All rights reserved. Mondo and Harlen Pyle for their
CPO Circle is an invitation-only contributions to this report.
community that offers members
Accenture, its logo, and
access to a wealth of knowledge
High Performance Delivered
and experience in sourcing and
are trademarks of Accenture. procurement. Members benefit from
virtual and live events, gain insight
from surveys and research, interact
This document is not intended to with a panel of procurement advisors,
provide specific advice on your and learn more about how other chief
circumstances. If you require advice procurement officers are approaching
or further details on any matters the global market. Take the CPO Circle
referred to, please contact your Virtual Tour to find out more: www.
cpocircle.com/virtualtour. E-mail
Accenture representative.
cpocircle@accenture.com.