14 April 2011 | Rebecca Ellinor
Rebecca Ellinor hears from Virgin Media’s director of procurement about why it’s important to be ‘joined at the hip’ with internal customers and allow buyers to come up with creative solutions
One of our values is fun,” says Amar Treon, Virgin Media director of procurement, explaining the presence of table football in the company’s purchasing department. “We take our customers and our people seriously, and table football is part of that. It’s about engaging with employees and them engaging with each other.”
He is usually casually dressed and says the Virgin Media mascot “RED” has his own office on the floor above, which can be visited if staff are in need of a reminder of what the company stands for: value for money, quality, innovation, a sense of competitive challenge – and, of course, fun.
Despite only having been with Virgin Media for eight months, it has taken Treon no time at all to embrace the culture.
“I don’t like a lot of form filling,” he admits. “It’s 10 per cent planning, 90 per cent action. I want pragmatism – a focus on delivering business objectives rather than a headless-chicken approach. We give people guidance and support, but empower them to get on with it. It’s a non-hierarchical structure.”
The Virgin group as a whole prides itself on having minimal management layers, no bureaucracy and a tiny board. Sir Richard Branson created the brand in 1970 and the organisation now comprises businesses in a number of sectors, including travel, financial services, music and fitness. Virgin Media, which provides TV, broadband, landline and mobile phone services, is one of the youngest companies in the group. In February 2007, it brought together ntl, Telewest, Virgin Mobile and Virgin.net to form the entertainment and communications company.
Today, it is the largest Virgin-branded company in the world, with almost 10 million customers and 13,000 employees across the UK. It has experienced growth for the past six quarters, including a record financial year in 2010. This has boosted its credit rating, greatly helping its relationships with suppliers and putting it in a stronger position to continue to expand. In the reception of its offices in Hook, Hampshire, you can access the internet, watch the news on a big-screen TV or pick a new mobile phone.
While the group’s companies act as independent businesses, as the largest of its 300 brands, Virgin Media keeps an eye on deals that can be done across the group. “We give people clear accountabilities, so everyone knows exactly what category or supply they are responsible for, and they are empowered to maximise that strategy,” Treon explains. “One of those things is looking across the Virgin group at priorities and opportunities. There’s always more potential, and that’s where innovation comes in, getting people to think more broadly. So we need to attract people into procurement who consider this.
“They need to be commercial, they need to be doers. They must be innovative, have good stakeholder relationships and the confidence to stand their ground in negotiations. For people who like industry and challenging roles, it’s a great career. All of those skills are transferable if you move into other parts of the business,” says Treon.
Business partnering
Treon, whose past roles have focused on finance, but also covered operations, product and business strategy (particularly in the telecoms industry), was running his own consultancy when asked to join Virgin. “The challenge was so exciting I decided to come here, and I like the people,” he says. “And procurement is a great place for me to learn about Virgin Media. If I was just in a finance divisional role, I would only see one area. Here I get the external view from suppliers across the whole of the group.”
He heads a team of around 40 people responsible for strategic sourcing. Together they influence about three-quarters of the company’s third-party goods and services expenditure. The department, which reports to the chief finance office, had already made huge strides since it was established, but as Treon puts it, he wants to take it “from good to exceptional”.
He is very clear that purchasing’s job is to make the most of relationships with suppliers and internal customers to benefit the whole organisation, which means procurement must understand business imperatives and broader key performance indicators.
“Procurement’s value-added role is how it partners with the business and suppliers to optimise their contribution,” say Treon. “It’s fundamental that procurement is able to facilitate and engage a lot of different parties towards a common end, which is a commercial agreement. It drives the business forward within a framework of a longer-term partnership to extract the best from the supplier.”
Staff are hired with this in mind. “We’ve gone for people with procurement experience, but with the emphasis on supplier relationship management skills, communication, confidence and an approach that is proactive and not too risk averse about floating ideas,” he explains. “That is a culture that takes time to establish and is not fully embedded yet, but it will be in months rather than years.”
Members of Treon’s team sit in on weekly or monthly meetings with stakeholders in each Virgin Media division, including sales, technology, customer network, corporate and business customer support. This means they are aware of both their short-term goals and long-term business plans. What’s more, he’s banned the phrase “procurement savings”, which he considers to be divisive. “It implies we’ve done all the hard work,” he says. “I cannot deliver strategic sourcing without the business.”
Treon believes that having procurement sit with its internal customers is about understanding what the various divisions are trying to achieve and how they can add to that.
“It could be technical knowledge, negotiations, sourcing, offshoring, bringing in third-party expertise,” he explains. “If we’ve got too many suppliers, we can consolidate; if there are commodity price increases, it’s how to mitigate against them through awareness of regulatory changes. It’s prioritising your focus on what the business wants, which can change month to month, so you stay close.”
Procurement, for example, has played a key part in Virgin Media’s next-generation entertainment platform, TiVo, which stores up to 500 hours of TV, enables you to catch up on programmes you’ve missed, remembers what types of things you like and offers access to games, applications and the internet. Delivering this is a strategic objective for the business and one of Treon’s team currently “lives and breathes” it. “We’ve been highly involved with suppliers on this product,” he says. “Plans have to be joined up to bring this to market, minimise the risk and maximise the speed of the launch. It’s strategic, vital and delivering it is a business requirement. It is a test to our alignment to the business priorities.”
Joint working also extends to the relationship with finance. “There should be a triangle between procurement, the business and finance,” Treon asserts. “With that you hit the budget. We need to give the business choices and it needs to decide about the trade off between price and service levels.”
To further simplify the supply chain Treon’s department is working to rationalise its supply base by a third and identify its top 100 providers.
“It’s about working in a business-partnering way and understanding the challenges and pressures,” he says. “Procurement cannot cure everything, but it can play its part. Business partnering was always done at Virgin Media, but it wasn’t as structured as it is now. We’ve taken it to the next level. Now it’s systemic. We’re joined at the hip.”
CV: Amar Treon
June 2010 to present: Director of procurement at Virgin Media
Dec 2009-June 2010: Founder and director of Creative CFO Services
Sept 2008-June 2009: Senior director, finance and administration, Talk Talk Residential, Carphone Warehouse
Jan 2007-Aug 2008: Executive director, finance, AOL Broadband, Carphone Warehouse
Apr-Dec 2006: Finance director, internet access division, AOL
July 2003-Mar 2006: Head of planning & analysis, AOL
Dec 2002-June 2003: Sales director, UK business review team, Cable & Wireless
Sep 2001-Nov 2002: Director of portfolio strategy & planning, Cable & Wireless
July 2000-Aug 2001: Director of business planning, Cable & Wireless
Dec 1998-July 2001: Manager, group capital expenditure, Cable & Wireless
Sep 1989-Aug 1996: Manager at KPMG
