Hunter Campbell’s Supply Chain Salary & Employment Forecast Series profiles roles within the Supply Chain job family including jobs in demand, salaries, and employment prospects.
In our sixteenth instalment, the role of Chief Procurement Officer (CPO) is in the spotlight.
The New Zealand Environment
Over the past twenty odd years, New Zealand procurement has come a long way. Thanks in part to the Chartered Institute of Procurement and Supply (CIPS) and various other consultancies that provide training and advice in best practice procurement. This has seen a move from transactional to a more strategic procurement focus. The profession has developed and progressed to form a fundamental part of most large organisations. Small and medium sized enterprises (SMEs) made up of 0 – 49 employees make up 97% of New Zealand business and employ close to 43% of the workforce (Stuff, Sept 2020). Although many of these organisations have a buying / purchasing function, they do not require the skills of a CPO.
This article will focus on the skills required of a CPO, General Manager (GM) and Head of Procurement. As a catch all, using the title ‘CPO’ to cover CPO, GM and Head of Procurement titles. This article will highlight the purpose of the role and key skills required, then look at the recruitment forecast and salary guide.
The purpose of the role
In its most simple form, the role of CPO is to define and implement the procurement strategy and policy to enable optimal performance from goods and services provided to that organisation. However, when you peel back the layers it is a complex and demanding role that requires an incredible depth of knowledge and skill. The procurement landscape has changed. After decades of focusing on cutting costs, CPOs are really coming into their own as key contributors to an organisations’ overall strategic direction and business growth. There has been a shift from solely driving cost savings to focusing on providing broader value across the procurement ecosystem.
Procurement is operating in an interesting and constrained supply chain environment because of global factors: not least having to work around a global pandemic and more recently a war in Eastern Europe. These are having and will continue to have a major impact on global commodity prices and are creating lengthy delays in delivery of product to market. This has an impact across the whole value chain. Because of these factors, organisations are looking for CPOs to deliver innovative and agile solutions to ensure reliability and risk mitigation in a complex supply environment.
Leadership and People Skills
CPOs cannot achieve their strategic goals on their own. They need to build strong working relationships at an executive level, collaborating with key functional players across Supply Chain, Operations, IT, Finance, Legal, People and Culture and other departments. CPOs will often have to bring together teams from different parts of the organisation to achieve their objectives. Therefore, the ability to communicate their plan for highlighting the benefits execution the plan will deliver to the organisation is critical in bringing other parts of the business along on the procurement journey.
Some CPOs have a formal process like Sales and Operation Planning (S&Op) where key participants of the business are engaged at the earliest opportunity in the procurement process. This gains stakeholder buy-in, transparency of process, holds participants to account and provides regular updates through clear communications throughout the process.
Critically, a CPO needs to build a team focused on procurement excellence and continuous improvement. This requires time and investment in the professional development of staff to ensure they are masters of their category. They need to ensure their team is trained and can access the constantly evolving tools available to enhance procurement. And importantly, a CPO must be able to provide their team with support and guidance at both a technical level and mentorship level.
Advanced Analytics & Technology
CPOs now operate in an environment of digital change and advanced analytics. The ability to identify new and improved technologies and harness them to provide advanced analytics gives a competitive edge. When used intelligently, it allows procurement to interpret information and challenge previously held assumptions with clear and concise data. However, to manage this increase in data and advanced analytics, CPOs must ensure support with the right tools and budgets to implement relevant staff training to maximize the benefits available.
It’s all about your suppliers
Supply assurance became top of mind for CPOs as the Covid-19 pandemic swept the globe during 2020 and is still front of mind. Just try buying some gib board for your home DIY project now! As a result, CPOs need to further strengthen third-party risk management. Although NZ procurement organisations may feel confident in their existing risk management programs, the current environment would suggest this should be reviewed with the aim of enhancing these capabilities. This means engaging risk monitoring across a broader set of risk exposures at earlier stages of the supplier life cycle – during the beginning of the sourcing process – and continuing to monitor and mitigate risks using real-time data and insights through the full supplier life cycle. Visibility and timeliness are key in risk management. This is where the CPOs use of proper digital tools to maximise visibility throughout the supply chain, and leverage market intelligence data from multiple internal and external sources will pay dividends.
Sustainability – a key focus
Apart from Covid-19 and war in Eastern Europe several other factors will need to be considered by CPOs in 2022 through to 2023. There is a shift towards the heightened importance of corporate social responsibility. Previously, sustainability meant little more than complying with regulations. Now, it plays an integral part in generating business value through reduced costs, risk management and improved brand value. As a result, it must be factored into the procurement process. The environment and climate change are now important considerations for the Government and consumers. CPOs need to take this into account ensuring they have visibility and transparency across their and their suppliers supply chains. This approach also has an ethical application for human rights and labour regulations. Currently New Zealand has no accountability legislation requiring transparency in supply chains. However, this is under review.
Ideally CPOs will have a high level of education and bring a depth of knowledge and experience to the role. Typically, CPOs will have a tertiary qualification in, Economics, Supply Chain, Engineering, Commerce, or Law.
CIPS also provides professional support that CPOs can tap into, to assist in training their teams. CIPS provide various levels of certification through to advanced diplomas and provide ongoing support.
There are plenty of factors that will have an impact on global procurement for 2022 and 2023. Supply chains are still massively constrained, and China is still working through lock down processes that will affect supply availability. The procurement environment will continue to be challenging. And therefore, the need for senior procurement skills has never been stronger.
For all intents and purposes, the borders continue to be closed for non-residents. However, there is a timeline in place to open the border to visa holders and some skilled migrant categories. This will obviously take some time to work its way through the bureaucratic system, resulting in continued skill shortages in the senior procurement space.
However, the major constraint for CPOs or aspiring CPOs in Aotearoa is the lack of industry to support the function on any scale. This results in career focused talent often heading offshore in search of opportunity.
This information is anecdotal and based on roles Hunter Campbell is currently recruiting or has previously recruited and relate to base salaries. They do not include any additional bonuses or benefits.
Key factors influencing range include size and complexity of organisation, size of team, level of spend,
Head of Procurement in a medium sized business: $170,000 – $200,000
Head of Procurement medium- large business: $220,000 – 280,000
Chief Procurement Officer – large corporate: $280,000 -$320,000
The above is a guideline. Recently, there have been employment adverts looking for CPOs between the $300,000 – $400,000 remuneration band.
If you would like to find out more about the role of Chief Procurement Officer, please contact Founding partner Ken Webb. Ken specialises in design and development of effective supply chains and leads the Supply Chain, Procurement & Operations recruitment team for Hunter Campbell. For more news and views visit our website by clicking here, see what opportunities we have available here or follow us on LinkedIn.
Supply Chain Salary & Employment Forecast Series
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- Maintenance Engineer
- Warehouse Manager
- Sales & Operations Planning Manager
- Procurement Category Manager
- Production Planner
- Lean Manufacturing Manager
- Supply Chain Co-ordinator
- Supply Chain Manager
- Logistics Co-ordinator
- Production Manager
- Supply Chain Manager – SME
- Inventory Manager
- Reliability Engineer
- Purchasing Officer