All posts by Euan Granger

How to Achieve Award Winning Procurement – Learn from the Experts

Henderson Global is a leading independent global asset management firm. The company provides clients access to skilled investment professionals representing a broad range of asset classes.

Henderson Global

In 2011, Henderson Global’s third party spend was valued at over £100m. However, there was no formal procurement function, with individual business areas conducting informal sourcing activities. The decision was made to create a centralised procurement function, with the aim of delivering value, increasing control and reducing risk.

The department was formed in early 2012 and handed some stiff objectives to prove its worth. It took just three months for the team to deliver significant value and savings and, in 2014, it won the CIPS ‘Most Improved Purchasing Organisation – Start-up’ award.

Nykolas Bromley, Head of Procurement at Henderson, talks to Procurious about his and the team’s journey to this award and plans for the future.

How did you get started in procurement?

After university, I applied to be a trainee buyer on the Tesco Graduate Programme. I assumed that I would end up working in one of the grocery categories, but was offered a place in their procurement function instead. I’ve worked mainly in indirect procurement ever since.

Tell us about getting the department up and running and what your successes have been?

Rather than spend months analysing and strategizing, we initially targeted quick wins in order to demonstrate that procurement can generate an immediate return on investment. By delivering benefits so soon after the function was established, we gained credibility and opened the door to involvement in much larger and more complex projects. In the three years that have followed, we have built out our systems, policies and processes, and focused heavily on developing capability within the team.

What prompted you to submit a nomination for the award?

We were genuinely proud of what we had achieved and felt we had a good story to tell.

What will the award do for you and your team?

Winning a Supply Management Award has raised the profile of the department both within the organisation and the wider procurement industry. The award is proudly displayed in the office, and should the need arise, I expect it will be easier to recruit new talent into an award-winning team.

What has been the most challenging aspect of being in a start-up/greenfield department?

Henderson celebrated its 80th anniversary in 2014, and for most of that time had existed without any form of central procurement. This created something of a communication challenge, whereby stakeholders were often unfamiliar with typical procurement terminology and processes. The steep learning curve worked both ways, as having moved from the retail industry, the language and acronyms of investment management were entirely new to me too.

Do you have any advice for someone in a similar situation?

There will always be a degree of resistance from some quarters in an organisation with no tradition of formal procurement. However, there are also likely to be areas of the business that are crying out for assistance. My advice is to concentrate on the stakeholders that want your help first. Even though they may not be the most strategic or highest value projects, it’s a great opportunity to build up allies, advocates and success stories.

What are your key aims for 2015?

This year we will complete the implementation of a new Purchase-to-Pay tool, which will transform the way that we manage our purchasing and payables processes within Henderson. This is a substantial change-management initiative, and a successful roll out of the tool is a key priority for the function.

What do you see in procurement’s future and how can social media play a role?

We are a small team with low staff turnover, so we try to utilise our external network to keep in touch with developments and best practices in the wider procurement industry. Tools that provide access to potentially thousands of procurement experts and facilitate knowledge sharing are invaluable in our situation, and in advancing the profession.

How to Achieve Award Winning Procurement – Learn from the Experts

Procurement and Supply Chain Management Professional of the Year – Fabienne Lesbros, CPO, Britvic Soft Drinks

fabienne

Fabienne Lesbros started her procurement career in 1991 on the Channel Tunnel project. Since then she has worked across a number of sectors and industries, procuring for well-known companies such as Future Electronics and GlaxoSmithKline, before being appointed CPO for Britvic Soft Drinks in 2010.

Britvic has an annual global spend in excess of £1.1 billion, with suppliers in over 40 countries. Since 2010, Fabienne’s team has achieved great success in both savings and value creation, but has also led the way in sustainability, innovation and education.

In 2014, Fabienne was awarded the CIPS ‘Procurement and Supply Chain Management Professional of the Year’. Of her career she says, “My passion for the profession is stronger than ever, fuelled by a changing world focussed on sustainability, responsibility, innovation and the digital age.”

Fabienne talks to Procurious about her continuing journey and where she sees procurement in the future.

How did you get started in procurement?

Like a lot of my peers, I ‘fell’ into procurement at the start of my career. I had finished my studies and procurement was the first role I got. Again, like many of my peers, I didn’t really understand what procurement was or what the job entailed.

I started as an analyst in the procurement department as part of the channel tunnel project for Eurotunnel and I loved it from day one. I’ve always thought that procurement was a fascinating profession to be part of. You work with one of the few functions where you have contact with all parts of the business. You can touch so many things – the scope for procurement is immense.

What is your proudest achievement in procurement so far?

About a year ago, our CEO (Simon Litherland) spoke to the city about Britvic and how procurement was one of the key pillars to deliver the company’s strategy going forward.

This was a big achievement as it showed how much the procurement team was valued by the business. In many organisations, procurement simply doesn’t have that level of focus, although this is changing as more and more organisations realise that procurement is one of the most powerful tools at their disposal.

Similarly, getting the award from CIPS has to be right up there as one of my proudest achievements, both from a personal perspective but equally from a team perspective. I see this award as just as big an achievement for them.

What prompted you to submit a nomination for the CIPS award?

I hadn’t intended to submit a nomination for the award at all. However, a friend of mine from the CIPS Fellows said that I should and kept asking me until I applied!

The way it works is as follows: you write the submission yourself, but a lot of documentation comes from peers about your work, line manager testimonies and recommendations from colleagues and people you have worked with throughout your career.

After you have submitted the paperwork, a pre-selection takes place and people are informed if they get through to the next stage. If you are selected, you are given a month to prepare a presentation to be delivered to a panel of industry experts.

The key success factor in this part of the process was the ability to communicate, specifically being able to consolidate your message into something clear, concise and pitched at a business level. Of course getting it right first time is essential! This was a challenging exercise preparing 6-7 slides to cover a 20 year career to date.

However, this is no different to everyday procurement activity – one of the main areas I look to develop my team in is the ability to avoid procurement jargon and get their message across by tapping into business issues through the language of the wider organisation

What does the award mean to you and your team?

What the award gives to the team is a great external benchmark and recognition, which then leads to more gravitas internally and the ability to influence the business agenda at pace. People start to understand procurement’s role in more depth and realise that they can reach and surpass their own business objectives by collaboration with us.

Procurement can unlock the potential of the supply base to directly deliver the needs of the business rather than getting lost in the complex world of third party supply chains, which if handled incorrectly can have serious detrimental impact to an organisation.

Quality leads to recognition, which in turn leads to trust and building this trust means our business partners rely on and want to work with procurement for a quality output.

It of course works externally too, as suppliers clamour to work with an award winning team.

What is the most challenging aspect of being the CPO in an organisation the size of Britvic? And the best thing?

The most challenging aspect is the high number of initiatives that the organisation has running at any one time – we are an ambitious organisation and that means there is lots to do!

As commodity experts there is always a lot of pressure on procurement to avoid volatility and equally the cost consciousness agenda that runs through the organisation means our Indirect Procurement team is at the forefront of this – challenging but that’s the way we like it!

The advantage is the size of the company – we are not a behemoth and the closeness to the product that procurement has means we can act with pace. You can see the immediate impact on the bottom line that your decisions are making.

It’s also easier to get round all the business partners and you are able to do more of that face-to-face.

One of the best things about being CPO is being in charge of the coaching and development of the team. I find it very rewarding to develop the team and to see individuals achieve things that they didn’t previously think would be possible – we are nothing without a team that has development opportunity, ambition and talent.

What are your key aims for 2015?

Professionally, I am trying to get the team to develop greater engagement with the commercial and sales teams. The engagement often stops with the marketing or operations teams, but I believe that there is a lot to get from engaging on the commercial side.

They understand the competitive edge, trends and where future products might be heading. I’m pushing the team to work in this area, which will be a big change in terms of engagement, as it doesn’t really happen at the moment. I think you need to do things in a collaborative way and work very cross-functionally.

After all, sales can help procurement on getting into the mind of a seller and vice versa – it’s a trick many organisations miss, which could really strengthen supplier and customer negotiations and relationships.

How can procurement become more strategically involved in organisations?

For me, it’s all about understanding the business needs, adding value and not doing procurement in a silo. This goes back to the engagement with other parts of the business.

The procurement team doesn’t speak in procurement terms to other teams; they try to speak their language. You engage the business better by speaking in IT, marketing or operations terms to those other teams and understanding what their key drivers are

You constantly need to understand what the business’ needs are. You fulfil a need from the business, but finding a need that the business never knew it required in the first is far more powerful: this is how procurement adds value to the business.

Procurement can be seen as part of the team and can bring so much functionality into the business. It’s the only team that can touch everything internally and externally every day.

What do you see in procurement’s future and how can social media play a role?

You can look at this from two angles, the first being the impact from social media on the supply and demand for goods and services. We live in a world of multiple social media streams, which has completely changed the way we interact with our consumers.

This is at the forefront of our marketing strategies which ultimately impacts us all – for procurement reacting to customer preferences and rapid changes in trends means we have to be quicker than ever in dealing with the supply base and sourcing innovation to match our needs. We have more information at our finger tips to inform us of supplier performance/preferences and this will only accelerate over the next 5 years.

Secondly, I look at social media from a perspective of developing the profession. Procurement is not a profession that is really on people’s radar, you don’t see procurement anywhere in terms of being a career. Kids don’t come home from school and tell their parents that they want to be a buyer!

We need to establish procurement as a profession in the same way as law and accountancy, and make people in schools and universities aware that there are careers in procurement out there.

Social media can help this happen. Engaging with schools, showing them what procurement is and how to qualify, what careers are available and what you can do in procurement – all of this can be shown on social media.

How can we engage with the next generation of procurement professionals?

As with the previous question, we need to show procurement as a profession. There should be programmes in schools about it, have universities linked up with CIPS to offer information and qualifications and courses in procurement and then for companies to create graduate programmes where they can.

The profession needs people. At the moment, we don’t have enough people with the right skill sets. Procurement should be a profession for which there should be a degree/professional accreditation, the same as being a lawyer or an accountant.

It’s vital for procurement to become a recognisable profession. It’s becoming too critical to organisations not to have people coming naturally from a professional stream.

The iCar cometh: Is Apple about to diversify its supply chain further?

First the iMac, then the iPod, iPhone, iPad and the smartwatch – is the iCar next?

Will we see driverless cars on the roads of our future?

It might seem a bit far-fetched to think that the company that has revolutionised the way we communicate would expand into the electric car market, but reports in the past week suggest that we might see an Apple car as early as 2020.

Although much of this remains speculation (Apple are refusing to comment on any of the reports), there seems to be strong evidence that the tech giant may be getting ready to enter a completely new field.

Head-hunting

Apple has reportedly brought on board senior executives from both Ford and Mercedes-Benz to head up a new team at its HQ. Moves have also been made to hire employees from Ford and Tesla in the fields of car safety, renewable energy, battery and hybrid technology and car software systems.

As ever, none of this has come without issues. Elon Musk, the owner of Tesla, has been quoted as saying that Apple has been tempting Tesla employees with huge signing bonuses and salary increases, while A123 Systems, a battery technology company, is reportedly suing Apple for ‘aggressively poaching’ its senior engineers.

Busy Market

So, will Apple diversify its supply chain further? With the organisation rumoured to be spending $1.7 billion building a plant with Japan Display to allow it to produce its own OLED displays, is there funding available to bring a car to market inside 5 years?

There are a few big players in the electric car market to contend with. Alongside Musk’s Tesla, arguably the innovation leader, automotive giant Toyota is currently top of the tree with its Prius and Lexus brands. Other notable competitors include Nissan, Porsche and Daimler, with either fully electric or hybrid vehicles.

With traditional manufacturers taking more notice of new entrants, the electric car market is wide open for innovation. Even if it took Elon Musk sharing all his designs to try to prod competitors into action.

User Experience

However, entering into this market with a vehicle is very risky. Sales of electric cars are low and margins are tight, leading people to question why anyone would want to get into the market right now. Instead, Apple may choose to focus on the user experience, something that it already has a strong reputation for.

Procurious has reported on recent developments in driverless, autonomous or technologically enhanced vehicles. As there have been for Google, there would be opportunities for Apple to develop user systems that could be fully integrated into cars. This would mean Apple was using its existing expertise, and therefore lowering its exposure and risk.

This would also open up the possibility of a partnership with one of the established players in the market, sharing innovation and development costs, plus opening up a new market for Apple. Just think how marketable a car would be with a fully integrated Apple operating system.

Even without the ‘iCar’, Apple can certainly play the role of disruptor that it does so well, and maybe bring the rest of the industry along too, to the benefit of the consumers. These are exciting times in the car industry and we wait with interest to see the next move.

Japan Display – http://finance.yahoo.com/news/apple-spend-1-7-billion-163417908.html

Innovation – https://hbr.org/2015/02/what-happens-if-apple-starts-making-cars

Meanwhile in related news:

Qatar inks deal for Doha Metro driverless trains

  • A consortium of five companies has signed an agreement to build and deliver a full-automated driverless metro system in Doha. The group consisting of Mitsubishi Heavy Industries, Mitsubishi Corporation, Hitachi, The Kinki Sharyo Co and Thales said it has received a letter of conditional acceptance from the Qatar Railways Company for the systems package for the metro project which is slated for completion in October 2019.
  • The package calls for turnkey construction of a fully automated driverless metro system. Included are 75 sets of three-car trains, platform screen doors, tracks, a railway yard, and systems for signaling, power distribution, telecommunications and tunnel ventilation.
  • The package is also expected to include maximum 20-year maintenance services for the metro system after its completion.

Read more at Arabian Supply Chain.com

West Coast port nightmare may start to end

  • More than seven months after the previous contract expired June 20, and after more than three months of alleged work slowdowns by West Coast longshoremen that contributed huge delays in moving containers, a tentative deal between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMI), which represents West Coast ports and terminal, was at last reached over the weekend. “Normal” port operations were said to have started back up Saturday night.

  • The tentative agreement came just three days after US Labor Secretary Thomas Perez arrived in San Francisco to broker a deal with the help of a federal mediator who had joined the talks six weeks earlier. An agreement on the last remaining issue – a rather obscure one relating to use of arbitrators to settle disputes – was successfully resolved, leading to the agreement.
  • The contract, however, will still need to be ratified by rank and file union workers and all the companies and entities represented at the ports and terminals by the PMI. Reports are the union vote may not be held until sometime in April.

Read more at Supply Chain Digest

Companies wasting billions every year by not sharing supplier information

  • Global companies are wasting more than $30 billion (£20 billion) a year because they do not share information about suppliers, according to business information provider Achilles.
  • It says only a third of global firms across the UK, USA, Spain, Brazil and Nordic countries work collaboratively with other similar businesses to manage information about suppliers. This is despite 88 per cent of them saying domestic and international ‘arms’ of their company require the same details from suppliers in terms of health and safety, environment, quality, sustainability and ethics, according to a survey of supply chain professionals from 300 large businesses across the oil and gas, manufacturing, construction and utilities sectors.
  • Achilles chief executive Adrian Chamberlain said: “It is much more efficient when whole industries agree common standards required of all suppliers in terms of health and safety, ethics and compliance, then share the administrative burden of collecting, checking and auditing information,”
  • He added there was no need for firms to be nervous about sharing supplier information, as it was not commercially sensitive.

Read more at Supply Management

Citi and Etihad Airways sign supply chain finance partnership

  • Citi, the leading provider of cash management and trade services in the MENA region and Etihad Airways, the national airline of the United Arab Emirates, today announced the signing of an agreement to provide a Supply Chain Finance (SCF) solution to pay select suppliers.
  • The innovative financing program will enable Etihad Airways to unlock liquidity and pay its suppliers almost immediately through funding provided by Citi. It also offers a highly customised structure that will cater to the airline’s supplier segment across the globe, and will facilitate access to liquidity across businesses of all sizes.
  • James Rigney, Etihad Airways’ Chief Financial Officer, said: “Our suppliers are an essential part of the success of our business and we are happy to provide the tools that offer new credit and liquidity sources and accelerate their access to cash flow.

Read more at eTurboNews

In surprise move, Honda Chief to step down

  • Honda Motor’s chief executive, Takanobu Ito, will step down in late June after six years in the top post and be succeeded by Takahiro Hachigo, a low-profile engineer with global experience, the company said in a surprise announcement on Monday.

  • Honda, Japan’s No. 3 automaker, behind Toyota and Nissan, has hit a rough patch during the past year with quality problems that have led to multiple recalls of its popular Fit hybrid subcompact, which Mr. Ito said this month could have been caused at least in part by an aggressive sales target. Such self-inflicted setbacks were compounded by multimillion-vehicle recalls to replace airbag inflators made by a top supplier, Takata, that have so far been linked to six deaths, all in Hondas.

  • For the past three years, Mr. Ito, 61, a feisty former supercar engineer, has shaken up Honda’s tightly knit supply chain as the automaker has sought to trim costs and find more cutting-edge technology. “I think this move is an attempt by Honda to tread a different course, with someone who upholds harmony,” said Takaki Nakanishi, an auto analyst and chief executive of Nakanishi Research Institute.

Read more at The New York Times

Follow @Procurious_ on Twitter
Like Procurious on Facebook
Add us on Google+

Sustainable and Social Procurement – Are We Doing Enough?

Sustainability and social procurement

Even though sustainable and social procurement are currently high-profile topics, it’s been hard to get people excited about them. This is down in part to a lack of consensus on what they are and what people should be doing on a day-to-day basis.

The question is how can we, as procurement professionals, change this?

What are Sustainable and Social Procurement?

A good place to start is a brief definition of both. It’s tricky as there isn’t really a consensus, but these are the most common ones.

Sustainable Procurement – The process for meeting the needs of the current generation for goods, services, utilities and works while considering the overall impact on the environment and wider society.

Social Procurement – A strategic approach to the delivery of organisational objectives while delivering social benefit.

The Current Situation

Increasing numbers of organisations have implemented codes of conduct, ethics and sustainability policies and spend targets for social enterprises. Initiatives such carbon neutral operations and ethical sourcing provide good examples of organisations considering the impact of their operations on the environment and wider society.

And consumers have begun to expect this. Around 88 per cent of consumers would choose to buy a product with a social or environmental benefit in a like-for-like comparison, while 90 per cent of Americans say they are more likely to trust and remain loyal to brands backing social causes.

However, recent high-profile examples, such Rana Plaza in Bangladesh and the UK horse-meat scandal, highlight the importance of companies ensuring that these standards are upheld throughout the supply chain.

So what is holding organisations back?

A lack of understanding is one of the key reasons for organisational inaction. Other common reasons inaction include:

  • Increased cost
  • Resistance to change
  • Lack of management support
  • Increased time to undertake sourcing activities
  • Inability to find ‘social enterprises’ or lack of response from them

And the reality is?

The reality is that all these reasons are surmountable. This is where Procurement must step up and take the lead.

As Procurement touches all parts of the organisation, it can help to ensure that the key decision makers are involved from the outset, helping with both executive buy-in and resistance to change.

Working with external stakeholders can provide both innovation and new ideas, ultimately lowering the Total Cost of Ownership for ‘green’ products. Once the processes are seen as part and parcel of sourcing activities, the time cost is lowered too.

Finally, companies can engage with organisations such as Social Enterprise UK and Social Traders (Australia), who can assist procurement departments in getting involved with social enterprises.

The Future

Experts have identified trends in sustainable supply chains for the coming year, including:

  • Better resource management – focus on codes of conduct, chains of custody and supply chain reporting and evaluation
  • Innovative bio-based materials – less use of primary resources and increased use and development of renewable materials
  • Eco-efficient operations – organisations finding a better balance between economics and the environment

Social media will play a key role too. 64 per cent of millennials use social media to address companies about social and environmental issues, and 36 per cent of consumers say they mainly share content to promote the causes they care about.

What can I do?

  • As a consumer, try to buy brands linked to sustainable or social activities
  • When comparing two like-for-like products, choose the ‘green’ option if you can
  • Integrate sustainability and social procurement into your procurement processes
  • Make a case for your company working with social enterprises and having spend targets for them
  • Ensure all the suppliers in your supply chain are signed up to your code of conduct
  • Leverage social media to highlight your success and set a benchmark for other procurement teams to achieve.

Reading and Reference

Loyalty and Trust for Social Causes: http://instamun.org/90-of-americans-more-likely-to-trust-brands-that-back-social-causes/

Social or Environmental Benefit: http://www.conecomm.com/stuff/contentmgr/files/0/e3d2eec1e15e858867a5c2b1a22c4cfb/files/2013_cone_comm_social_impact_study.pdf

Social media habits: http://www.conecomm.com/csr-and-millennials