Columns

Snapshot of the CPO Role Shows Significant Change

Author(s):

CAPS Research

October 2012, Inside Supply Management^® Vol. 23, No. 8, page 34

CAPS Research: Promoting Supply Management's Best Practices
A study provides insights into the evolving titles of CPOs, as well as their level of experience and tenure in the position.

A recent CAPS Research study about the roles and responsibilities of the supply organization provides insight into how large North American supply organizations are structured, and explores their responsibilities, resources and leadership. A total of 249 private-sector companies, covering both manufacturing and services, participated in the study — the fourth in a series spanning 24 years.

The study covered a total of 12 research questions focusing on such areas as reporting line, acquisition categories, staffing levels, supply objectives, involvement in major corporate activities, team usage, social issues and risk management.

This article highlights the key study findings related to the role of the CPO, with a brief italicized analysis of the findings.

Category: Job Title

Respondents were asked to provide their full titles. The most popular term was "procurement," (43 percent), which included CPO. The next most common terms were "supply chain" and "purchasing" (22 percent each) when CPO was included.

"Procurement" was an especially popular term several decades ago, but was supplanted in progression by purchasing, materials management, supply and supply chain. Obviously, no unanimity exists regarding the CPO title, and it appears the term "supply chain" is not as popular among practitioners as it is among academics.

Approximately 70 percent of CPOs who responded to the survey carried the title of vice president, which included the title of senior VP and executive VP, while 16 percent of respondents carried the title of director. The title of manager or general manager was carried by 4 percent and 3 percent of the respondents, respectively.

The substantial increase of the vice president title for the CPO reflects favorably on supply and, at 70 percent, represents an emerging consensus in North America.

Category: Experience

CPOs had been with their present employers an average of 14 years, with 36 percent of the respondents in the one-to-five-years category and 42 percent in the more-than-15-years category.

The average CPO tenure in his or her current position was 4.6 years, compared to 4 years in 2003, 5.9 years in 1995 and 6.1 years in 1987. The majority of CPOs (72 percent) had been in their present position for five years or less. Approximately 60 percent of the CPOs were hired from within the company.

The average tenure of the CPO at 4.5 years does not allow much time for him or her to get up to speed, develop plans and execute. The finding that 35 percent were hired into the CPO position from another company may help explain why a significant percentage of CPOs had only been with their companies for less than five years. It also indicates a willingness in large organizations to go outside the company for CPO talent.

Respondents reported an average of 27 years of work experience, with 14 years in supply. Operations/production, engineering, finance and transportation/logistics/distribution were the most common areas of nonsupply experience.

Ten percent of respondents indicated that the CPO did not have any previous purchasing experience before taking the CPO job, compared to 6 percent in 2003, 2 percent in 1995 and 1 percent in 1987. Meanwhile, the percentage of CPOs with purchasing-only experience declined from 29 percent in 1987 to 19 percent in 2011. Approximately 40 percent of CPOs in the study most recently worked in a function other than supply before becoming CPO.

While 90 percent of respondents had some previous supply experience, 39 percent most recently worked in a function other than supply before becoming CPO. Thus, it would seem that while previous supply experience is viewed as an advantage, the route to the CPO position can be through other functions.

Category: Education

The CPOs in the study were well-educated, with 43 percent holding undergraduate degrees, 53 percent with master's degrees and 3 percent with doctorates. Business was the most popular degree of specialization for 70 percent of respondents, and MBA was the most popular degree, accounting for 44 percent of total respondents.

The popularity of the MBA degree reinforces the broad nature of CPO decisions and the necessity of understanding strategic and other considerations for total company performance.

Category: Age

The CPOs at the responding companies in the study were an average of 51 years old. Most CPOs were between the ages of 41 and 60 (86 percent), with 5 percent between the ages of 31 and 40, and 10 percent being 61 and older.

The age and tenure of CPOs implies that they're unlikely to retire in the job and will face other options within supply, within the company or elsewhere upon leaving the CPO position. While the average age (51) of CPOs has hardly changed over the last 24 years, the younger category (30 to 40) has decreased, while the 61-plus category has increased. Thus, one may conclude that it is more difficult to become a CPO at a younger age.

The full report is available at www.capsresearch.org, and is titled Supply's Organizational Roles and Responsibilities, by P. Fraser Johnson and Michiel R. Leenders.

For more information, send an e-mail to author@ism.ws.

Back to Top