4 March 2010

From aviation to utilities, procurement offers a host of opportunities to aspiring candidates. Here a leading light from each sector makes their case

Automotive

Mark Adams, vice-president, purchasing, Toyota Motor Europe

The automotive industry, this firm included, has suffered a fair degree of tangible and reputational damage recently. However, time spent as a grass roots buyer in an automotive OEM remains a good choice.

More than 70 per cent of the manufactured cost of a car is bought from external suppliers under the responsibility of purchasing. So CEOs take a keen interest in the performance metrics of purchasing, which gives its young stars early exposure to top management.

Down-sizing has resulted in leaner organisations, so graduate entry buyers are given much more responsibility earlier in their careers.

The modern buyer faces different challenges. The need for confrontational price negotiation has been surpassed by the demand for talented individuals who combine collaborative people skills with an eye for cost improvement opportunity. An ability to embrace technical detail, yet maintain sensitivity for commercial risk management at the supplier completes a complex skill set that, when developed, delivers an individual prepared for a future CPO role in any industry.

Aviation

Craig Cherry, head of group procurement, Monarch Airlines

Like many travel companies, Monarch is multi-faceted. As well as an airline we have engineering, tour and coach operations, online bed banks and seat-only for planes, all requiring strategic involvement with varying degrees of procurement discipline and structure.

In tour operations, for example, procurement was previously only used to buy hotel beds and services such as excursions. Head office procurement involvement is now more structured with a higher degree of corporate governance which enables the UK procurement team to get involved and run tenders for car hire, transfers and tourist boards.

As for aviation, world-class logistics and procurement is a crucial piece of the engineering jigsaw. Every millimetre of supply chain is scrutinised. Safety comes first. This is an exciting, challenging arena.

With the airline itself, our brief and remit covers almost every category of spend. We have a small team but use expert stakeholders in various departments, marrying their technical and operational skills with our procurement techniques.

Procurement in travel is definitely on the rise.

Construction

Nigel McKay, head of procurement, supply chain and quality management, Bovis Lend Lease UK  

Many construction companies now invest heavily in training for procurement and commercial staff.

As well as internal courses, companies such as our own join with CIPS for more structured procurement-related training and education.

We have a number of graduates and a rotation system so they get experience not only in procurement but in planning, cost planning and site logistics. Some are also now completing secondments with our supply chain partners to get specific experience around key construction commodities and the procurement practices that they employ. This gives them a well-rounded foundation into the role of procurement, the different strategies that each uses and also how they are perceived when interacting with stakeholders.

Mixed training strategies give people a sense procurement is a process which has customers and suppliers at its heart. Understanding their needs and drivers allows them to grow quickly and seamlessly into effective procurement practitioners.

Consultancy

Richard Berry, executive adviser, KPMG  

The great thing about working in procurement consultancy is the variety. No other sector can offer the breadth and depth of experience and this is a key differentiator in attracting and developing talent.

The range of clients provides opportunity for individuals to work with the public sector, SMEs and multinationals on projects ranging from procurement transformation, supplier management development to cost reduction. So you not only get the variety of sectors but also the full spectrum of cutting edge procurement projects which provides an ongoing and varying challenge.

Developing talent is core to all good procurement consultancies because, apart from the brand, talent is the only asset they have to sell. Formal training courses are an essential part of the development programme but working with other experienced team members and experts from other parts of the business – such as change management, forensic, treasury and tax – is also key. This interaction results in more rounded business change practitioners needed to successfully deliver often complex procurement projects.

Electronics

Tom Linton, CPO, LG Electronics

There are a couple of things that make consumer electronics businesses attractive and unique.

First, Asia is the epicentre of the industry - it’s where all the action is. Even the big companies in Europe carry out most of their procurement in Asia. And if you want opportunities to advance, be promoted and become more well-rounded, you need to go to a place where activity is expanding. While US companies are cutting jobs, we didn’t lay anyone off during the recession, we continued to hire.

Furthermore, the core procurement work doesn’t change. People buy hardware, software, FM and HR services, technology, functional support such as insurance – all the same things as someone in London would buy, and more. So experience in electronics is not so niche that it can’t be used elsewhere. And it’s a lot more entertaining to work on cool stuff such as smartphones and touch screens. Things are always moving in electronics – for example, now it’s LED instead of LCD. It’s constantly changing.

Engineering

David Kemp, vice-president – supply chain, Goodrich ECEPS

Engineering companies depend on an effective supply chain to underpin the business. Engineering and manufacturing are built around the purchase of components and assemblies, adding value internally, then onward to customer delivery.

Learning procurement in this environment is a fantastic way of developing an in-depth understanding of the profession. Where high technology is involved, it’s not just a matter of managing inbound supplies. It is also about innovation, time to market and driving waste out of the supply chain in the context of productive ongoing business relationships.

The technology of the product can be enhanced with the supplier’s input, so the ability to negotiate the ownership of intellectual property and protect the position of customer and supplier is part of the routine.

Soft skills are honed internally, where stakeholders will see success as dependent on the effectiveness of the procurement team.

The challenge is to influence the development of holistic strategies that best support the end customer, with an integrated product, supply chain and manufacturing strategy. This creates further opportunities for personal development and learning.

FMCG

Ralf Garczorz, vice-president value chain OTC/CHC, Johnson & Johnson consumer EMEA

New mandates have emerged for fast-moving consumer goods (FMCG). I will describe three that directly result in a challenge and opportunity for procurement. If successful, procurement can drive its value contribution to the enterprise and enhance its profile and equity at the same time.

First, the continuous cost pressure. More than ever, procurement must drive total value across the external and internal value chain. A traditional focus on unit price will no longer suffice. Holistic, innovative approaches are required.

Next is contribution to top line growth. The recession proves this is a key mandate for FMCG. Procurement can play a leading role by engaging the innovation capabilities of the external supply base to fuel the new product pipeline.

Third, the rapid emergence of sustainability. Procurement is at the forefront – not only to ensure sustainable supply but also to help the enterprise to develop appropriate strategies for competitive advantage.

As procurement takes on a much more strategic role, it provides opportunities for talent to get broad business exposure and access to unique development and career options.

Hospitality, leisure, tourism

David Read, Prestige Purchasing

The hospitality, leisure and tourism sectors provide an excellent grounding for developing talent. While businesses within these sectors are often less sophisticated than their counterparts in similar sectors, such as retail, there are some strong arguments in its favour.

One is the enormous breadth of type and size of business, and the nature of ownership. These organisations span just about every enterprise in the whole economy, from catering in the public sector such as the Armed Forces and the NHS through to plcs and private businesses in hotels, airlines and entertainment. There are huge catering or hospitality businesses such as Pizza Hut, Sodexo or Whitbread through to smaller more specialist businesses like Carluccio’s or Hotel du Vin. This presents bright young talent with the opportunity to learn a wide set of procurement skills and methodologies – a far bigger range than most other sectors.

Similarly, there is greater breadth of product and service than in most other areas. Food and wine alone originate from just about every nation on the planet, and that’s without touching the many other categories sourced by this rich and diverse industry.

Mining

Scott Singer, chief procurement officer, Rio Tinto

I believe that the mining sector offers some distinct advantages for newly minted supply management professionals or later stage professionals wishing to diversify their procurement and supply chain management skills from other industries. The clear area of opportunity is developing sourcing, negotiation and buying skills for indirect materials, both goods and services. As a former supply management professional in the manufacturing sector of highly engineered product (i.e. jet engines, elevators, helicopters) I often encountered staff and peers who looked down at indirect procurement as something inferior to direct materials. I disagree with this view completely and have always sought the indirect spend to compliment my direct spend. The primary reason is that it offers far more what I call, “intellectual diversity” than straight direct materials procurement. You also learn more about total cost of ownership (TCO) drivers with indirect materials supply management.

In the mining sector, it is all about indirect materials but on a colossal scale.  For example, while fleet management may be a non-event for some SM professionals, managing a fleet of ultra-class haul trucks, monster tires, dozers and excavators 24/7, in hostile environments and limited inbound supply chain options is mission critical for the business. You couple this with opportunities to develop your capital equipment and services procurement skills and you will become a much more rounded professional with transferable skills. I have yet to encounter a business that has no indirect spend procurement and yet many companies are trying to unlock value in this area.

Oil and gas

Adil Mohammad, global category manager, Shell

The oil and gas sector offers an excellent basis for developing procurement talent: it is diverse, global in scope and the procurement and supply chain challenges are integral to competitive advantage.

The sector covers a variety of commodities and comprises many aspects of the supply chain – from raw material extraction to distribution and marketing to the end consumer. In many cases, oil and gas firms cover this diversity within the same company and this offers exposure to all aspects of the supply chain.

Add to that operations spanning the globe, from developed to developing countries, from urban civilisations to frontiers in hard to access areas of the world – procurement professionals can gain cultural awareness and leadership skills.

Moreover, the supply chain is a critical lever for competitive advantage because of the level of spend and criticality of suppliers. This means high expectations to deliver.

Finally, it offers the opportunity to work on the energy challenge – serving the world to meet its needs effectively and sustainably. It’s a sector that matters.

Pharmaceuticals

Phillip Duncan, chief procurement officer, Novartis

Prior to landing in pharmaceuticals, I worked in the consumer packaged goods (CPG) industry, where rapid change, innovation and cost control are paramount.

Procurement has long been seen as central to business performance in CPG; whereas in pharma, it has traditionally been viewed in more transactional, not strategic, terms. Times are changing fast, however, and firms such as ours have realised there is tremendous value to be gained from our supply base, not just in savings but in terms of innovation and market insight. There is also a growing awareness that as the cost of R&D rises, professional procurement can increase investment resources through smarter buying decisions.

In tandem with this rapid change in pharma industry dynamics, perceptions are shifting about what procurement offers within an organisation. Achieving a transformational change around procurement requires associates who possess business savvy, are articulate, and who have presence and credibility.

Procurement is increasingly recognised as an exciting place to be in pharma: an area where opportunities abound for professionals to grow and develop desirable competencies. We are utilising our procurement talent across our many divisions and countries more effectively, and the future looks bright.

Procurement outsourcing

Tom Lawrence, people director, buyingTeam

Procurement outsourcing is a great place to develop talent. It offers a particular blend of experiences to any purchaser from graduates up to the most senior professionals.

The outsourcing structure exposes candidates to a wide range of categories and scenarios. People often work with a number of clients in multiple sectors. They experience challenges presented by medium-sized businesses through to multinationals. This isn’t possible elsewhere without frequent career moves.   

Outsourced professionals get client exposure at board level from an early stage. The level of responsibility for individuals to deliver value is greater than typically exists in in-house functions. We emphasise training in consulting as well as procurement which means outsourced professionals develop a broader skill set than most internal roles require.

And unlike an in-house team that forms part of a wider business, procurement is the core business of an outsourcer. Our people develop alongside more than 100 other procurement professionals and benefit from their expertise gained in many blue chip organisations.

Public sector

Graham Rothwell, strategic procurement manager, Northamptonshire County Council

Few private sector organisations provide the diverse requirements found in the public sector, where buyers must understand complex service needs and the challenges these bring.

We all have our indirect spends that are more or less common across market sectors. However, industry and services tend to focus upon what they consider their core sectors. The public sector has many core divisions, each with diverse requirements – transport, health, education, security, social services as well as estates and FM.

In local government many of these are addressed by a single organisation, so the experience to be gained is unparalleled. Add to this regulatory issues: particularly the ever-increasing requirements of Europe regarding competition and transparency.

The financial horizon looks troubled, with serious cuts ahead. This provides the chance to demonstrate your worth, identifying opportunities for improved value to enable frontline services such as health to be maintained.

Retail

Rob Douglas, retail support purchasing director, DSG International  

One of the defining characteristics of retail is the pace of change. Retailers have to react to consumer trends and competition in weeks, not months. Top retailers know they require highly skilled teams able to deliver the analytics and business change needed to optimise their indirect spend.  

The leaders have adopted strategic sourcing and lean techniques creating cross-functional teams to crack the issues. They have developed and implemented category strategies to provide clear sourcing plans needed when things alter quickly. The adoption of lean techniques to analyse processes and identify and reduce waste is notable.  

Furthermore, retail CEOs and FDs understand the need for a strong sourcing team and this means the focus on sourcing is high for cost reduction and revenue generation. The combination of pace of change, technique and management focus means that retail is creating a breed of sourcing professionals who can have real bottom line impact faster than we might previously have imagined.

Utilities

Colin Davis, director of supply chain, United Utilities

For those starting their career, utilities will provide a range of experience, training and development second to none. Perhaps because risk has traditionally been a focus, graduates often receive training on procurement and supplier management issues in a formal, structured way. So, it is no surprise utility/power companies have consistently performed well in the people development category of the CIPS Supply Management Awards.

The size and scale of the sector provides a vast array of markets and industries. Included are construction, distribution, marketing, retail, customer services, commodity buying, supplier management, energy buying, IT, outsourcing and financial services. And projects are typically multimillion.

There are lots of opportunities for individuals to make a difference. And there is the chance to leave a physical legacy, structures built for the good of society that will be there for years to come – power stations, wind farms and water treatment works.

* Contact us at editorial@supplymanagement.co.uk outlining why the sector you work in is best for developing procurement talent.