A piece of the traction

2 July 2008
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03 July 2008

Neil Rogers, chief purchasing officer at BT, is overseeing a 13-point 'traction' plan as part of an overhaul of procurement. Jake Kanter finds out how it is going

The purchasing team at BT is aiming to establish itself at the heart of the company. This, according to the new(ish) CPO, is vital if his department is to maximise its effectiveness. Over the past six months the company has overhauled its procurement operations - and CPO Neil Rogers says there is still a great deal of work to be done.

When he took on the role last September he initiated an independent 60-day assessment of the department, its stakeholders and suppliers.

It revealed to him two big deficiencies - that purchasing lacked innovation and flexibility and it was not lined up with the overall business.

He has developed a 13-step plan of action - called "Traction" - to transform the way procurement operates. And top of the list is ensuring buyers understand the company's needs before approaching suppliers.

"Every time we go to market now, we have a three-way agreement between finance, the operational piece of the company and procurement," he says. "And at the end of the process, just before we commit to a contract, we have a sign off."

Purchasers are also aware of the 10 priorities for procurement this year and how they will impact on BT's overall costs and market position, although he would not reveal what they are.

They are also focusing more on category strategy and have moved away from "limited value" tactical procurement. "£8 billion goes formally through us to our suppliers, so we should be able to shape categories if we get our act together. It's taking longer than I would like, but I'm allowing it to take longer because the engagement with the lines of business is critical."

A recruitment drive has also helped this process. Rogers has taken on staff without traditional procurement skills from within BT to generate a "churn of fresh ideas".

He wants to maintain a cycle of employees coming through the department to keep it fresh and innovative. He also plans to place buyers at the centre of the company's drive for new global business, where up to 50 per cent of a bid can include involvement from third-party supply.

The link will enable procurement to manage risks such as pricing and competitiveness. Rogers said there used to be only a "sporadic" understanding of how this third-party supply operated, but now this knowledge is "very good".

He believes this has helped to improve the reputation of the function. "Historically I couldn't have got high quality people from inside BT. They'd have seen it as the kiss of death to their careers. But they don't now."

The recruitment initiative is also strong outside the UK. BT has three offshore purchasing centres in India, China and Hungary, which will eventually house nearly half its buyers.

These centres push for savings and manage suppliers in their respective regions. They will also play a role in the "huge" increase in e-auctions for commodities such as fibre optic cable and copper.

This year alone the company plans to run 120 auctions with global vendors, targeting savings of around 80 per cent across the board.

Overall, Rogers is pleased with the progress, but is keen to keep moving forward. "I think we've got about 12 months to go. But if we ever consider we're done, I think we've failed. The demand is there to do deals that will transform the cost base and the operation of the business. That's a better problem to have because at least we're playing in the right space."



SMjul2008

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