Suez is at the forefront of a resource revolution. Richard East explains how taking the wider view has transformed the business into a valued environmental service.
The amount of waste a business produces and how much it recycles has become front of mind for many CPOs, but at Suez it is a three-decade-long obsession, and is at the heart of the business transformation from landfill company to recycling expert.
The process is much more complex now. The company still collects rubbish, but it doesn’t just dump it. “The premise is that every bit of waste we handle has a second life. It will be reused in some way or, ultimately, it can be used as fuel,” says Richard East, CPO of Suez Recycling and Recovery UK (Suez R&R), part of the global utility Suez, headquartered in Paris. The goal is for there to be no more waste, he adds.
Suez is one of 30 companies making up the Alliance to End Plastic Waste, which formed earlier this year, pledging investment to develop innovations to prevent ocean plastic waste and improve waste management and recycling. And Suez UK’s CEO, David Palmer-Jones, is chair of another industry alliance formed this year, the UK Resources Council, which is working on a plan to submit to the government to help create a circular economy.
“As the demand for recycling grows and legislation becomes more stringent, the country needs infrastructure to cope with the challenges,” says East. The greatest need is for facilities that can reprocess plastic into other forms, such as pellets for re-use in the manufacturing process, he says.
Suez has 300 operational facilities around the UK, of which only four are active landfill sites. The rest is made up from energy from waste sites, transfer stations – where waste is loaded on trains bound for energy recovery sites – and materials recycling facilities, two of which were opened last year.
Here the materials like cans, bottles and plastics are sorted then sold on for reuse in other industries, either exported or used domestically. Any household waste that is not recyclable – and that can vary depending on the location, East points out – is burned to create electricity: “This is using waste at the end of life to create fuel, including converting plastics into pellets, that kind of thing.” Including energy from the methane captured from dormant landfill sites, Suez generates about 45,000MW of energy a year.
East joined Suez two years ago, after a few years working for a water utility in Australia. He saw business parallels and was keen to join a firm that was tackling a problem with an aim to do good. Recognising that what was now a very complex business that had undergone significant change over a long period, East ran a “classic 100-day review” and found that, while the procurement team of 22 knew their jobs, they were largely performing a reactive service.
“I was determined to put some planning practices in place so we could be more proactive,” he says. “We had to go further back upstream, and get involved in discussions before the business took a decision to buy something.”
There was no way of getting around the complexity of the business – they had to go out and talk to the internal stakeholders they were supporting, visiting sites around the country and understanding the operations they ran. And by engaging with the business early they could create a good, reliable plan.
“Agreeing that plan with the stakeholders took away a lot of the reactivity, and we were able to get ahead of the game and be ready for future engagements,” he says. It also countered a criticism that procurement was not connecting with reality. “Our plans are informed by reality.”
Leading from the front
East believes in the importance of good leadership behaviour. “It is a case of showing, not telling,” he says. “It is about courage, and imbuing what you do with a passion.” Being able to express and share the impact you can have on people’s welfare is key, he says, and focuses on communicating and taking a genuine interest in his team’s activities and recognising good work.
Through the two years of his procurement transformation, he is pleased to report that most of the team have stayed with him. “Yes, some people are comfortable with the more traditional view of procurement being in a back office,” he agrees, but it comes down to a balance between giving people direction and helping the transition, giving them reinforcement and support.
In parts of the business that were disconnected from procurement he would offer to start the communication process, creating the scene before handing over to the category manager to talk operational detail: “We talk about what we are trying to do, our objectives, the vision for the team, and where we can help, and then it becomes a dialogue about reaching a mutual understanding.”
East operates a 70/20/10 training process, with 70% learning on the job from East and his three team leaders, 20% learning from peers and stakeholders in the business, and 10% academic training. Some of the team are going through CIPS qualification, and others are already qualified.
Procurement in the UK is centralised under East, who also meets monthly with fellow CPOs from around Suez to discuss global objectives and work on common purchasing activities, such as fleet and IT, where lateral contracts are in place, with country specification handled locally.
The UK business alone has a turnover of about £800m, with procurement in control of a spend of £250m. Another £150m is spent outside the department, he says, which includes spend on sludge and waste transportation, rail freight, sea freight, insurance and some aspects of haulage by subcontractor buyers.
While pushing every purchase through procurement is just not feasible, East is looking at whether any parts of that £150m spent outside procurement should be brought into the department. “It is done by subject matter experts, and I am not doubting they have the expertise,” he says. “They have that knowledge of the market – it is more a case of are they doing that commercial activity that fits in with our overall expectations around how we do our procurement generally?
“If we can provide a centre-led approach, with good tools, education and the systems people need, we can agree with them what the strategy is, and ensure there is a high degree of resilience in how we go about our procurement right across the business.”
Engaging the business
It’s always good when parts of the business are keen to engage with procurement, he says. Energy, for example, would approach procurement when looking at a long-term operational strategy: “Power plants need boilers, turbines, all the ancillary equipment like valves and pumps, so managing those supply chains is very important. And we can help make sure they have access to the markets, and have the spares ready during maintenance, so being part of that planning process is really important.”
By sharing success stories from around the business, backed up by facts and data, those who have not engaged before can see how procurement can help. “It takes away a lot of debate,” he says.
The role of procurement is like that of a salesman, where you have to demonstrate the value of what you bring, he suggests. He employed an analyst to join the team – “an absolute whizz in systems” – to develop a series of dashboards showing KPIs for the category teams, and also to share with internal stakeholders.
They now have classic dashboards such as the top suppliers for a category, what compliance looks like, and how much contract leakage there is. A recent Brexit risk dashboard is proving of interest to all internal stakeholders.
“And now we can get the best from our existing systems and platforms, and our analyst is using Microsoft 360 to develop new ways to analyse things,” he adds.
“Almost two years on, our team has a much better degree of control and we can take time to think, strategise and discuss what objectives we have in mind.”
While working in waste management still has some stigma attached, the perception has shifted, and there is pride in what people do now. It is a noble business, says East: “You can see the way we do things is ultimately doing good. For us, it is walking the line between being a fit commercial organisation that generates a good profit for shareholders, and is also a good corporate citizen.”
Moving away from landfill as a business model has gone hand in hand with growing encouragement and incentivisation for recycling, particularly in Europe, says East. And he feels within the company a mixture of strategy and determination to make an impression on the world, to be a good custodian. The public’s awakening to the issues of recycling is pushing things forward too. “Simply putting something in the bin and forgetting about it doesn’t make people feel good now,” he says.
“This puts pressure on our clients, a lot of which are in the public sector. A lot of the expectations of the community are communicated through the public sector, and they want to see their partners like Suez being responsible with the materials collected from their community.”
He also sees a shift in public sector clients’ requirements to focus as much on social values as cost: “They want evidence that we are good custodians of SMEs, are responsible in terms of the impact of our supply chain, and are not buying into goods or services that are affected by modern slavery.”
The company has over 4,000 suppliers – a lot of SMEs and micro-suppliers with highly regionalised spend – and visibility down to tier four in the supply chain. He continues to engage with suppliers, and improve relations: “We have needed to grow a number of supplier contracts, to put arrangements under better commercial control and then manage those contracts effectively.”
The team has just aligned to the sustainable procurement ISO 2400, and committed to building requirements into future contracts: “With new suppliers we are looking much further into what they are doing with their materials.”
Pace of change
East says that slow and steady is the right pace for a company in constant transformation. “We don’t want to create a huge bow wave of change overnight because business continuity is really important. Suez has gone through radical transformation as an organisation over the past 30 years.
“With all those transformation topics – systems, planning, tools, people – we haven’t taken a big bang approach, but a steady approach. Making sure we have the basics right has been at the heart of our transformation. And we are going through a transformation now that is embodied in different initiatives going around the business.”
He is talking about targets for improvements, changes to end-to-end processes, looking at lean-as-a-concept – and his own procurement ambition to be a best-in-class procurement team by 2020. To achieve this, he has already set a benchmark by asking internal stakeholders how they are doing, and this year will see the start of the CIPS Procurement Excellence Programme and the CIPS Corporate Award programme.
He is also looking to benchmark against competitors and organisations of a similar stature. By then he hopes they will have direct or indirect influence over every pound spent on external goods and services.
“There will be procurement DNA in everything we do and spend,” he says. “But if we reach our procurement ambition by 2020 and we haven’t brought people along with us that makes us a bit of an island. So we have to sync our transformation with the other business transformations.”
And steady is the only way to do that.
SM asked Richard East about recycling…
What should companies focus on to ensure they recycle properly?
Firstly, consider the circular economy: everything has a value, both to purchase and to dispose. Do you know the full costs of your bought-in plastics over their life span? Can you source recycled plastics as part of the products or services you are buying? Ask your supplier – there will be opportunities to set mutual objectives to incorporate sustainable materials in what they do.
As a non-consumer-facing business does changing our plastic use matter?
We are seeing pressure growing on producers and consumers to incorporate more recyclable materials into their products. Look for innovative alternatives that are still cost effective – packaging and plastic would be a good exercise for value engineering and analysis!
What steps can procurement take to ensure responsible recycling?
It’s important to engage a reputable service provider if your waste is not already collected by your local authority. They can help you meet your obligations for responsible waste management, which in turn will underpin your organisation’s commitments to the environment. Provide good recycling facilities in offices and factories, and talk to your suppliers about their waste management.
How do I persuade my CEO it is important to recycle?
There is a lot of research that shows recycling pays dividends. The impact can be felt commercially but also in the reputational benefits to your organisation, being a good corporate citizen and perhaps being prepared to goes over and above mere compliance with legislation. Demonstrating how responsible you are as an organisation will make you distinctive and demonstrate strong values that will be attractive to your customers and stakeholders. It can be a differentiator between winning business and losing it.