Change In Procurement – Who Are The ‘Change Makers’?

I remain impressed by those who have driven real and substantial change in the way procurement is done in their businesses. There were some great examples at the recent ProcureCon conference, from the centralisation of both operational and transactional procurement activities by AstraZeneca, to initiatives within Ericsson, Philips Lighting and Shell to name a few.

What remains perennially powerful, however, are the stories we share about what has – and hasn’t – worked so well. Our collective experience helps propel our profession further and faster into an ever turbulent and challenging future. Our people expect us to help prepare them for this path. Our suppliers expect us to be more efficient so they can improve their terms, and our business partners expect us to anticipate, respond and improve the value gained from external suppliers.

To learn from those procurement leaders with tales to tell about the changes they have made in the function we will be running a regular ‘Change Makers’ profile. Our aim is to help capture collective experience and invite your responses comments and contributions to create an essential debate for our industry.

To start with we have asked a few of the Procurement leaders we know well to share their stories by asking a few questions about the biggest problem they had with the way Procurement was operating.

Richard Stewart, Group Head of Procurement, Smiths

We asked Richard Stewart, Group Head of Procurement for FTSE100 company Smiths Group, to share his experience of creating group procurement expertise in a de-centralised business.

Smiths is a decentralised global technology company with five divisions: John Crane; Smiths Medical; Smiths Detection; Smiths Interconnect; and Flex-Tek. The changes Richard was implementing covered all five of these divisions, no mean feat in a global operation.

Improving Group Procurement

“When I joined Smiths in 2013, my remit was to work with the five divisions to improve procurement across the group. We believed that there was good scope to create greater financial returns from procurement, but also to help us manage risk and improve levels of expertise.

“Smiths is a highly decentralised global technology company, with five different divisions, operating in different markets. So the biggest issue initially was creating connections across the individual teams to work together as a function.

“A key enabler for this was the leadership team. They work together to set direction for procurement across the entire organisation. An early step was to bring this team together to develop a roadmap for the next 2-3 years. As part of this, we invested in key software tools, market intelligence, and spend analysis. For instance, we closely watch volatile commodity prices. Not to mention cost modelling, driving take-up of e-auctions and, in particular, standardised scorecards for all procurement.

Creating Shared Understanding

“A core part of our programme was category management training that involved 90 per cent of colleagues (around 100 people). This has helped helped us foster a procurement community with a common language, which has been vital. Overall, we are aiming to create a framework for procurement,  and a shared understanding of best practice.

“Of course, it’s all a learning experience too – it is important to push forward new ideas but you also need to adjust the speed of proposed change to the pace of the organisation and this requires patience.

“Reflecting on the first two years, I’m pleased with the progress we are making and we have had great support from senior leadership. We’re now aspiring to build links between procurement and revenue growth for the next phase of our development – that’s our ambition anyway.”

Common Language and Shared Experience

Working with Richard we have seen how he has tried to strike the balance between maintaining divisional procurement autonomy, expertise and passion, and leveraging group purchasing power and expertise widely across the different divisions of Smiths, with different cultures and business models.

Using a suite of procurement enablement tools and by implementing a category management toolkit and training he is creating a common language and a set of shared experiences which will maintain the existing strengths but will drive consistency and the ability to collaborate to leverage power and expertise across common categories.

This way of building momentum for change, and a group approach, appears to sit well with Smiths group corporate culture and strategic objectives.

For more on the ‘Change Makers’ series, check out Future Purchasing’s blog.

If you would like to appear in the Future Purchasing ‘Change Makers’ series, please contact Anna Del Mar for details here.