Laura Faulkner: "You do not outsource risk. You do not outsource responsibility." ©Peter Spinney
Laura Faulkner: "You do not outsource risk. You do not outsource responsibility." ©Peter Spinney

Nationwide CPO on risk, responsibility and doing the right thing

Nationwide’s Laura Faulkner believes the CPO’s role is about being a business leader – vital in protecting the organisation against risk, and able to add social as well as commercial value. “You've got to make sure you are doing the right thing,” she says.

At 6.59am on Monday 15 January this year, Laura Faulkner, director of supply chain management and chief procurement officer at building society Nationwide, was leaving her hotel room, ready to tackle the week ahead. She shut the door behind her, and immediately got a phone call from a colleague: ‘Are you listening to the Today programme? They’ve gone into liquidation.’

The ‘they’ in question was contracting giant Carillion, which provided a range of facilities management services – including cleaning and security – to Nationwide. Around 250 Carillion employees worked for Nationwide, with a further 1,500 engaged throughout the supply chain. One week later, the Carillion employees would be directly employed by the building society, with a plan to protect the jobs of those in the supply chain too.

In the months before Carillion’s collapse, Faulkner’s procurement team – “like any procurement team should have been doing” – was tracking profit warnings, doing due diligence and working closely with their services provider. Once the profit warnings started looking more dire, Faulkner and her head of property (Faulkner runs property services as well) took a paper to the executive committee. “We laid out a plan of how we would do things, how we would continue the service and what we would do about the staff.”

Once Faulkner arrived at the office on 15 January, the situation was operated as an incident, with members of every key part of the organisation “around a table for five days solid”.

By the Wednesday, the board risk committee had signed off a plan, presented by Faulkner, to take Carillion’s staff in-house and contract directly with its suppliers.

“Being able to tell staff face-to-face across the UK that their jobs were safe was very emotional, for everyone,” Faulkner recalls. “At the same time, we started communicating with the circa 200 suppliers that Carillion dealt with on our account, sending the contracts to say they would be working directly with Nationwide. It’s quite amazing when you do an incident. People tend to forget it ever happened and you get on with making it work.”

For Faulkner, despite the scale of publicity surrounding Carillion’s demise, the situation is no different from any business continuity plan. “Every procurement team should understand if something goes wrong, what should you do next? It’s either making sure you’ve got an alternative supplier, you’ve got the ability to insource, and that you’re doing the right thing – by your company and the staff at those firms. We had two objectives: ensure the services and do the right thing.”

Taking responsibility

Doing the right thing is a theme that comes out of our conversation loud and clear, when SM meets Faulkner at Nationwide’s London offices (its main HQ is in Swindon, and Faulkner lives in Glasgow). On outsourcing more widely, for example, she is adamant: “You do not outsource risk. You do not outsource responsibility. You’ve got to make sure you are doing the right thing. When you start to hear noises about [sub-tiers in the supply chain] not being paid, that’s when you’ve got to start taking some responsibility as well.”

Nationwide’s mutual structure (the building society is owned by its members) and emphasis on doing the right thing was one of the key attractions for Faulkner, who joined the organisation from RBS, where she headed up supply chain services, in November 2016. “It is palpable within the company,” she enthuses. “What we do is driven by doing the right thing for our members, while being financially safe, secure and relevant.”

Being able to expand her scope out of pure procurement was another draw. From her first job as a graduate buyer at Polaroid (“I remember… the production lines would go down if I couldn’t get development fluid to the site. It was my problem.”), Faulkner has always worked in procurement. At Nationwide, however, her role, which reports into the CFO, includes also heading up supply chain management and property services, making sure every one of the company’s 700 branches, as well as its HQ, admin building and data centres, are running smoothly.

While Nationwide had never had a CPO before Faulkner joined, “there was a growing appetite for what procurement could offer”. She adds: “It wasn’t a blank sheet of paper, there was a good team here. But we needed to make sure we were linked in further with the business.”

Sustainable transformation

Like all financial services organisations, Nationwide faces a “seismic shift”, with the rise of digital and the launch of Open Banking, all set against a backdrop of tight regulation and evolving risks in areas like cyber crime. Open Banking was created by the Competition and Markets Authority in 2016 as a way of driving innovation and competition in retail banking, aiming to attract new providers and technology providers to the market in order to create more innovative services for customers. As Faulkner says: “It’s a challenge to remain relevant in an ever-changing market.”

To support the business through change, her procurement strategy is focused on four critical areas: value, resilience, service excellence and innovation. On value, much is about getting back to basics, she says. “We have an efficiency programme running, but it’s not cost cutting. It’s about making sustainable savings through efficiency and doing things in a smarter, better way. Procurement is needed to ensure we can deliver things sustainably.”

Work has been done on category management, with a refresh of all categories, and a focus on “understanding the market, understanding the business strategy and where the business is going”, as well as on pulling together accurate spend data. A new category where Faulkner feels procurement has an opportunity to add significant value is the cloud. One of her team is part of Nationwide’s cloud working group, becoming a subject matter expert. “Building the category has given her a framework to help tell a story to the business, to say: this is where we are, this is where we can get to, and this is how we do it,” she explains.

Supporting innovation

The value strand also involves working with the organisation’s existing supply base. SM meets Faulkner the day after a successful supplier event for operations and IT, where IT and cyber strategies were shared with 15 key partners. “[The strategies weren’t] presented as a fait accompli,” she says. “But to say to them: this is where we’ve got, what do you think you can do to help us? It wasn’t all about cost, but how we get these partners to drive our strategy forward, delivering value for members. We’ve been working on bringing the supply base closer to us, so we can be seen to be listening to them.”

Listening to suppliers is also central to the innovation pillar of procurement’s work, with the ‘Insights on Nationwide’ programme actively compiling feedback and ideas from the supply chain. Innovation is critical if Nationwide is to deliver on Open Banking requirements, which require a high degree of digitisation. To support the delivery of Open Banking and Nationwide’s wider IT strategy, Faulkner and her team are working with a number of smaller suppliers from the fintech sector. And one of the procurement team is to be seconded into the innovation team, to support them as they build relationships with smaller firms.

This is a big win for procurement, Faulkner feels: “It’s a great reflection on the team that [the business] is asking for people to be seconded. They see the value of what can be done. It’s a change in mindset about what a procurement person needs to do: it’s not about getting the best value out of a big deal, but doing something really smart around IP, moving fast and making sure we are not too bureaucratic or killing innovation.”

Procurement is working closely with legal to put short form contracts in place and explore different ways of contracting, as working with smaller and more innovative suppliers becomes more common. “The mega-deals are not necessarily how we will be working going forward,” believes Faulkner. “We need to be agile, using niche suppliers. I think the age of mass leverage may be coming to an end. We need to be getting the same kind of commercial value from smaller firms, working more in partnership.”

This all means balancing risk and reward. “We have to protect Nationwide and ensure we are resilient moving forward, but also make sure we are open to new ideas,” she says. “We need to move faster and agility is key. But [responding at speed] doesn’t mean going any less deep into commercial due diligence from a risk point of view.”

Third party risk is a big area (“There’s a growing understanding of how reliant we are on people that are not within our own organisation”) and Faulkner is soon to take a paper to the board risk committee on how Nationwide is managing it. She adds that it’s the first time in her career she has seen third party risk as a board agenda item. She is also collaborating with her peers in other financial services organisations on supplier assurance: “We are continually focused on making sure we are ready for the next thing that could happen in our supply chain.”

Be a business leader

The fact Nationwide is a mutual means “doing things in a slightly different way”, which has an impact on procurement.

“We are not beholden to shareholders, so we price for our members and invest in the services,” Faulkner explains. “The member value piece is really key, and that’s where procurement comes in. It’s about spending our members’ money wisely – every pound is their pound. We need to be able to hold our heads up and say we are doing things the right way. We are not a charity, but we are built around the model of doing the right thing.”

That is why, she iterates, procurement needs to go beyond “the run of the mill activity” and ensure value, so that Nationwide can continue to reinvest for its members.

An example of that investment, and something else Faulkner is involved with beyond procurement, is Nationwide’s Oakfield project: a multi-million pound investment in housing, which the society is building with Swindon Borough Council. The site will be home to around 200 properties, to be built on a brownfield site. It is a not-for-profit project in that all profit will be reinvested in other Nationwide initiatives. Building is due to kick off next year and Faulkner is one of the project’s directors. “I am there to ensure we have a commercial view, and the procurement team is heavily involved in working with contractors,” she says. “We aim to break even. It’s a blueprint for how things can be done, pushing the housing debate forward.”

Faulkner’s director role on the project is a great example of her stepping further outside traditional procurement. She is also taking part in Nationwide’s Member TalkBacks, where executives travel the country, answering members’ questions, somewhat like an AGM. “If we can’t justify what we’re doing, to members, we shouldn’t be doing it,” she says. “It is interesting to have someone like me representing the company. I am not just hidden in the back office doing my job.”

She feels the CPO role is “about being more of a business leader now”. “You’re a business leader, not just a procurement person. [At Nationwide, I’m] not pigeonholed into just one role. If more companies could do that, they’d get more out of procurement professionals. We have so much to offer. We understand the business strategy, we understand the market outside, we are commercially driven…bring all that into a business role and your company would see more value.”

In her teams, she looks for a “curious mindset”, and encourages them to take time to learn outside of the organisation. “If they don’t know what’s happening outside of the organisation, who else will have time for it?” she asks. “They don’t need to be the technical experts, but they need to be the market expert. They need to be able to bring the outside in. You can’t be too internally focused as a procurement person. You need to be as well networked outside your organisation [as within it].”

A focus on and an understanding of sustainability and doing the right thing is also critical, she adds. And it’s something that is brought to life after our interview and photoshoot, when a security guard, formerly employed by Carillion, approaches Faulkner. “Are you Laura?” he asks. “I want to say thank you. Thank you for giving me a lifeline.” Faulkner and the security guard both tear up.

And in that one short moment is a powerful example of the social value procurement can bring, given the right focus.

Laura Faulkner’s career journey

Buyer to CPO: procurement at the heart of business

1996 Joins Polaroid as a graduate buyer. “It gave me a good taste for the impact procurement could have”

1998 Joins GSK as a sourcing group manager, where she “really learnt [her] trade”

2002 Short spell at EY as a purchasing manager for property and professional services

2002 Joins Royal Bank of Scotland as head of resources, legal and travel solutions

2006 Takes career break for children 

2008 – 2009 Various project roles at RBS, around integration and organisational design

2009 – 2011 Head of performance improvement at RBS

2011 – 2014 Holds head of procurement and head of sourcing roles across the bank

2014 – 2016 Becomes head of supply chain services at RBS, first on an interim basis before getting the top job

2016 Joins Nationwide as director of supply chain management and CPO

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