Leave your ego at the door, disarm critics and build trust with transparency, says Kelly Irwin, award-winning procurement head at leading building materials group LafargeHolcim
A pair of shorts. That is the mundane item with which Kelly Irwin began her reboot of building materials giant LafargeHolcim’s Australian procurement department.
Talking to Supply Management, she recalls: “I joined the business just over five years ago, and when I had my first meeting with a senior manager, I was expecting to discuss strategic issues, but the first thing that came up was the company uniform – and whether they had to wear long trousers or shorts on our sites. This might sound trivial but if you’re working outside in Sydney in the summer, when it can be 90°F, long or short matters. I said to the manager: “I know I need to show you I can manage the small things if you’re going to trust me on the big things.’”
Irwin had proved her point. Looking back now, the head of procurement for Holcim Australia and New Zealand, says: “That wasn’t a change that necessarily saved us much money but it was important for us to show we understood the things that were really important to people, no matter how little they seemed.”
Understanding such nuances has helped her succeed in a profession which, she admits, she “fell into”. “I was about to start studying at university, with no real clear idea of what I wanted to do, and I saw an ad for a job that involved buying things and spending money. I thought ‘that sounds interesting’ so I applied for it and got the job.”
After gaining experience in the public sector, Qantas and building firm Boral, Irwin joined the Australian subsidiary of Swiss group at Holcim (which has since merged with the French group Lafarge) as head of procurement in 2011.
This was her first role in charge of procurement and she swiftly realised the magnitude of the task confronting her.
The procurement function at Holcim was known as ‘the complaints department’. To be fair, it faced some challenges. The department was nominally in charge of procurement across 280 quarries, concrete plants and precast production sites across Australia, many of them quite remote. There were four staff in procurement and 500 people in the business who could raise purchase orders. Many invoices were raised after the fact. Accompanying forms were often uninformative, referring back to previous purchases or saying ‘see attached invoice’.
No egos required
Irwin pulls no punches about the state procurement was in: “It was a very dysfunctional team, with no direction, very little engagement with the business, and wasn’t aligned to the company’s strategic goals.” Construction is a cyclical industry where, in the long term, it is always possible to distinguish between a rising market and a genius. The secret of enduring success for the industry’s procurement chiefs is to create a function that delivers value in hard times.
To align her department to the company’s strategy, global norms and a flat market, Irwin had to establish a centralised purchasing model. To do that, she needed to know what the business was spending, when, where, how and why. To achieve that – and to make the process more efficient – she had to reach out to the rest of the business and change perceptions. Hence the importance of shorts and long trousers – and rigorous, ruthless recruitment.
“The worst thing I can hear is someone saying ‘that’s not my job’. I don’t mean they have to do whatever it is, but success in procurement is all about engaging stakeholders. If someone in the business has a need, you should want to go the extra mile and see if you can help,” says Irwin.
To create a team that would go further, one thought was uppermost as she recruited. “The first rule here is ‘no egos’. I want people who see themselves as part of a team. If you’re not customer focused – and by that I mean your customers in the business – and you don’t respect everyone around you, you’re not for me.”
She sees it as part of her leadership role to make it emphatically clear if someone is behaving inappropriately and remind them of the company’s expectations. Yet she hasn’t had to call out too many egomaniacs in the past five years. Asked why that is, she laughs and says she screens them out in the interview process: “I think I have a kind of radar for them.”
Like many procurement chiefs, she hires on the basis that the formal aspects of procurement can be taught while getting on with people and understanding their concerns are critical. Today, she has a team of more than 30 staff, evenly split between gender and generations, drawn from 15 nationalities, representing different occupational backgrounds. When one of her team visits a site, they don’t resemble the stereotypical ‘I’m from head office and I’m here to help’ figure.
Engaging with the rest of the business required an intensive programme of calls, conversations and site visits – the latter, she says, were especially critical. “You can’t succeed in procurement if you spend all your time in head office. You have to protect your travel budget so you can get out to the sites and see – and feel – what matters to people and understand their particular challengers.”
Visits helped change perceptions – suddenly procurement weren’t just those people in Sydney who were imposing rules and sending you forms to fill in – and paved the way for the shift away from a diffuse, sometimes ad hoc purchasing culture, to a centralised approach that saved money and freed local managers to focus on important stuff, like serving their customers.
There was, Irwin admits, “some pushback” against the centralised model. Some sites had been ordering things the same way for so long it had become habitual. Transparency was essential for trust to be built and without trust the new strategy could not succeed – even with the enthusiastic buy-in of the Global Procurement function, Executive Committee and the CEO. Irwin says helping stakeholders understand the total cost of ownership made a difference: “People needed to see the impact on their bottom line.” The programme soon began saving money. So far she estimates the new model have yielded savings of around 10% of spend in the last five years. In 2015, the quest for greater efficiency led to a 16% reduction in the number of suppliers.
Driving new business
Transparency and trust motivated Irwin’s procurement team too. “One of the team said to me: ‘People play harder when they know the score’,” she says. Her staff could see they were winning – and were inspired by it: in 2015, a survey of Holcim Australia found that procurement had the most engaged employees in the business.
Their progress received official validation when the function won the company’s Internal Customer Excellence award in 2013, the first of three successive such successes. Irwin says: “I remember sitting at the awards the year before – I hadn’t been at the company long – and thinking I’d like us to win that award. A year later, we did. Let’s just say, if there had been an award for most enthusiastic recipient I’d have won that too!” Last year, she was chosen as CIPS Procurement & Supply Chain Management Professional of the Year.
Many procurement heads complain privately that they are only invited into boardroom conversations when something goes wrong and, as a result, are only ever deemed to be as good as the last bad thing they did. This was the predicament facing Irwin when she took over ‘the complaints department’. Yet in less than five years she has established the function as a strategic partner in the business. The next thing, Irwin says, is to help the sales force win business.
The rationale is simple. “We’re selling to organisations where procurement departments will influence the decision, so why shouldn’t we, given what we know about procurement, help our sales force tender more effectively?” asks Irwin. “We know what procurement people are looking for – and we can help them with pricing so we can be sure we’re winning business we can make a profit on.” Several of her team are measured on their ability to help sales win business.
Irwin says: “Sustainability is an important focus for LafargeHolcim. We aim to create value for all our stakeholders. Sustainable development, value creation, sustainable environmental performance and corporate social responsibility are integral to our strategy. Our approach to sustainable development includes how we work with our suppliers.”
Irwin says that one lesson stands out for procurement bosses aspiring to become strategic partners. Resistance to change can be managed if you’re savvy enough: “Find out who’s blocking you the most and over-service them. When you’ve won over your biggest critics, they’ll become your strongest allies.”
In the 21st century, procurement heads stand or fall on their ability to manage change. Whatever challenges await Irwin and her team, one policy will be constant: no egos. Whenever a vacancy needs to be filled, she – and her managers – will have their ‘ego radar’ switched on.
The year in which Lafarge and Holcim merged to create a group that supplies cement, concrete, aggregates and asphalt to the building, infrastructure, distribution and retail, oil and gas and affordable housing sectors, with net sales of £23.4bn.
The group has more than 2,500 plants worldwide, including 1,600 in ready mix concrete, 600 in aggregates, 180 in cement and 70 grinding plants. It does business in 90 countries.
The number of tonnes of installed capacity, making LafargeHolcim the largest cement group in the world.
The number of staff working in R&D for LafargeHolcim, with regional development labs in seven countries and a central research centre in Lyon.
LafargeHolcim sites in Australia, where the group has 3,000 employees, more than 30 of whom work in procurement with Kelly Irwin.
Amount of savings generated by Irwin’s procurement team in Australia. They control an annual spend of more than £500m.