CPOs still not seen as part of the exco group of organizational heads

Place_on_the_board.jpgA survey of formal Chief Procurement Officer (CPO) representation at executive committee (exco) level in state-owned or government-controlled enterprises; consulting and audit organizations; and the top 100 listed-corporations revealed some very startling findings.

In the second of four articles on the state of procurement, Dr Douglas Boateng shares his concerns in this month’s SmartProcurement.

Dr Boateng’s research unearthed the following startling findings:

1. Top 20 global banks – Zero have a CPO reporting directly to the CEO or sitting on their executive committees, despite a combined procurement-related spend that exceeds billions of dollars.
CITI Group, Royal Bank of Scotland Group, Industrial and Commercial Bank of China, Santander, UBS, HSBC, China Construction, JP Morgan Chase, Standard Chartered and Barclays.

2. Top 20 global mining companies – No CPOs report directly to the CEO nor sit on the executive committee.
BHP Billiton, Xstrata, Newmont, Barrick, Rio Tinto, Anglo American, Vale, Goldcorp Suncor and Teck.

3. Companies in the $18-billion global minerals exploration sector – No CPOs.
Silver Wheaton, Royal Gold, Franco Nevada to name a few.

4. FTSE and DOW JONES top 30 companies – Less than 20 per cent of CPOs are on executive committees or report directly to the CEO.

5. Top global accounting, audit, tax and advisory services – No CPOs on the executive committees, nor reporting directly to the CEO, despite a $100-million annual procurement spend.
Ernst & Young, PWC, Deloitte and KPMG.

6. Fortune global 1 000 companies – Less than 30% have a CPO sitting on their executive committees and reporting directly to the CEO.

7. Major global construction companies – None have CPOs reporting directly to CEOs and sitting on the executive committees.
Balfour Beatty U.K, Cscecc China, Bechtel U.S., Hochtief Germany, ACS Spain, Skanska Sweden, Leighton Australia, Kajima Japan, Vinci France, Odebrecht Brazil, Larsen&Toubro, India CCC, Middle-East, PCL Canada, Enka Turkey, Orascom Egypt.

8. Top global chemical companies – CPOs do not report directly to the CEO, nor are they on the executive committees. Noteworthy is that within the Shell Chemical Group procurement falls under Malthias Bischel who is responsible for Projects and Technology.
Shell, BP, ExxonMobil.

9. Leading global consulting companies – No CPOs on executive committees, nor reporting directly to the CEO.
Mckinsey, Accenture, Booz and Co, IBM Global solutions, Roland Berger, AT Kearney, Oliver Wyman.

10. Largest African cement companies – CPOs do not report directly to the CEO, nor do they sit on the executive committees.
Lefarge, PPC, Afrisam, Dangote.

11. International Telecommunications – No CPOs report to the CEO, nor do they sit on the executive committees, despite a combined expenditure of hundreds of billions of Rands.
MTN, Colt Vodacom, Vodafone, CellC, Telkom SA, AT&T, Airtel

12. NHS Trust Hospital (overseeing National Health Development Authority) – CPO does report directly its Chief Executive, despite a combined annual procurement expenditure that is one of the biggest in the world.

13. South African Financial Services Providers – CPOs do not report to the CEO, nor do they sit on the executive committees.
Absa, Standard Bank, Standard Chartered, Sanlam, Old Mutual, Alexander Forbes, and Ecobank.

14. Top 5 South African construction companies – No CPO sits on their executive committees, nor reports directly to the CEO.
Grinaker, WBHO, Basil Reed, Group5, Murray and Roberts.

15. All known public procurement authorities in Africa report to Finance and Treasury, despite the increasing evidence of a potential conflict of interest.
South Africa, Ghana.

16. UN-affiliated countries – Still no Minister for Procurement.

17. All African countries – As at end Q2 2012 there was no procurement professional reporting directly to the President, nor was there a cabinet-level appointee to monitor procurement, despite 50 per cent (and increasing) of Government spending channeled to procurement.

18. African mining, agriculture and chemical sectors – No CPO reports directly to the CEO, nor sits on executive committees, despite the view that procurement is a strategic weapon to stimulate SMME growth.
AFGRI, SASOL, Anglo American, Pioneer Foods, Tiger Brands, Lonmin, Cocoa Board, Senwes.

19. Many global state-owned enterprises – CPOs do not report directly to the CEO, nor do they sit on executive committees, despite several billions of dollars in annual procurement expenditure.
Eskom(South Africa), Nigerian Ports Authority, Philippines National Oil company, Canal and River Trust(United Kingdom), Landcorp (New Zealand), Via Rail (Canada), VRA (Ghana), Cocoa Board (Ghana), Nigeria National Petroleum Corporation, Ghana National Petroleum Corporation, Indian Oil Corporation, SNCB (Belgium), Areva (France), EDF (France), Petrobras (Brazil), GPHA (Ghana), SAA (South Africa), CNOOC (China) Transnet (South Africa) nad PetroSA (South Africa).

20. Listed companies on various stock exchanges – Over 90 per cent of procurement representatives on the executive committee are not professional members of a recognized procurement professional body – typically procurement is actually represented by another professional that had not signed a procurement professional code of ethics and conduct.

21. Top 25 companies listed on the Nigerian, Ghanaian, South African, and Kenyan stock exchanges – Less than 5 per cent of CPOs report directly to CEOs and sit on the executive committees of the

22. World Bank, International Monetary Fund, International Finance Corporation, African Development Bank and Asian Development Bank – No CPOs sit directly on the senior executive management committees, yet all these organizations regularly pontificate the need to use procurement as a strategic tool for economic development.

DouglasBoateng.jpgQuestions arise:

1. Has the title CPO been damaged by its inconsistent use by relatively lower-ranking procurement practitioners?

2. What does the CPO title really mean in the United Kingdom, France, India, Ghana, Singapore, Australia, South Africa, Canada, Holland, Nigeria, the United States of America, China, Japan, etc.?

3. The fraternity rushed to coin the title of CPO too quickly. Has this led to demeaning the role in the eyes of the CEO?

4. Should the fraternity not discourage the use of the title CPO if an individual is not a member of an organizational executive committee?

5. Is the current content of educational/ training materials suitable to elevate procurement practitioners to the level of executive committee organizational leaders.

Part 1 highlighted the reasons for procurement’s mis- and under–representation, despite its strategic link to economic development and industrial competitiveness.

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