12 December 2013
Fabienne Lesbros provides a personal account of how procurement at
Britvic has moved into a leading role.
When I took up the role of chief procurement officer at Britvic, I quickly understood procurement had to become one of the central functions of the business, as the cost of goods is so important to the profitability of the company. But faced with an environment of highly volatile commodity markets, the business needed to mitigate the rising cost of goods and look into the sustainability of its raw materials.
The procurement function was historically positioned in a supporting role, mainly working on delivering a large number of marketing projects linked to brand activity, looking at things within a very short window of time, and not able to concentrate on the purchasing basics. The team
was supporting some business needs, but not the needs of the business overall.
It was clear things had to change, and this journey began three years ago. I described the vision to the team: back to basics; then on to strategy; and then somewhere beyond the strategic to a brand new visionary platform of a commercial department. The message has been pretty consistent all along, and things have more or less unfolded according to plan.
Going back to basics
Back to basics very much consisted of ensuring procurement best practices were redefined, and embedded. This included spend analysis, market knowledge and assessment, contract management, supplier segmentation, risk assessment, cost structure, benchmarking of costs against markets, and understanding the overall main business needs. The introduction of category management was a key milestone. This started to pave the way to strategic thinking and strategic sourcing.
We introduced category management successfully, and embedded it with the support of a third party supplier Future Purchasing. I wanted to take a blended learning approach, with some traditional classroom events, some on-line and some individual coaching. Together we designed the programme.
As a result, my team underwent a functional skills development programme around the key category management themes of annual category portfolio planning, strategic sourcing and stakeholder relationship management. Part and parcel of category management is project and programme management, and really emphasising the behavioural ‘soft’ skills.
Involving stakeholders across the business requires serious planning, management and a demonstration of consistency and professional rigour across different category teams. To achieve this, I invested in an online collaboration tool. For the team it contains a library of all the technical tools and techniques but crucially provided our category managers and buyers with an online project management tool to manage their projects, with their stakeholders.
Quickly the business began to notice the look and feel of Britvic procurement had changed. Stakeholders were proactively pursued on important business matters as opposed to being the ones making requests of the procurement team. Market information was provided to them to guide them on the correct business choices. And they were also asked to be decision makers on long-term strategies. They were impressed by the consistency and level of professional rigour across different category teams.
The team at Britvic is spread between the UK, France and Ireland, with a plc umbrella working closely with business unit teams. Raising the skills of the team has been a key pillar of the transformation of the procurement function. As strategic thinking developed, so did the additional soft skills which go with it. This was the tougher part of the journey. Giving people the confidence they could influence and guide – as opposed to limiting themselves to waiting for – customer demand. The team discovered they could work on things they had never done before. And guess what? The more we turned over stones, the more the customer wanted.
Within 18 months, it became apparent that the business was losing out on opportunities identified by procurement because of a limit in the capacity of the procurement team. People were not able to work their spend fully or explore opportunities for lack of time and resources. For example, not being able to work on a recipe re-formulation or to explore a lead on a new technology on packaging. Procurement generalists in business units needed to be backed up by category specialists. The only way to do this was to buy in the expertise in the form of experienced and skilled category managers. The procurement function promised a return over three years of 15 times the investment it was requesting from the business. The ratio was calculated category by category, based on the opportunities we knew we could not explore. This was a tough discussion at the top level, but it was clear they wanted guidance and leadership from the function, in order to influence the future business model.
Once recruitment was complete – we had hired nine additional heads of category – and with the key specialisms in place, we were ready to launch the big ticket items for the company: a sustainable sourcing initiative; a complexity reduction programme; long-term sourcing strategies; and development of new partnerships throughout the world – all while maintaining the same level of delivery on the everyday activity.
Now our people are active members of all the leadership teams in business units; they provide guidance from a macroeconomic point of view; they bring ideas to all functions to impact the bottom line; and they add value. The procurement function has now become a revenue stream for the company. We impact the profit and loss with initiatives which are truly above budget. Our procurement projects have been ranked in the top three among all the critical strategic projects the company needs to work on every year, two years in a row. This is being decided cross-functionally, with my peers, when we build the annual operating plan together. We are on the map! This ensures great focus and benefits for all the stakeholders.
Cross-functional work will be key in the years to come. Procurement either leads the projects they have identified for another function, or is asked to be a core member in projects from other functions. We are becoming part of the way stakeholders work on an everyday basis. We work with them, not just alongside them.
A new level of development
So where will the future lead us?
The team is now in its second year of delivering the return on investment promised as part of the procurement transformation. The team, so far, has delivered more than expected. We have delivered half of the target in the first year, and tasked ourselves with more on top of the original target for the next two years. But it is far from financial deliverables only. The team has really improved on strategic thinking, has managed to think outside the box and do things differently. Influencing stakeholders, as a skill, has been key. So what next?
Procurement transformation is becoming business as usual. The next step of our vision is far bigger than us, as procurement becomes an integral part of the commercial proposal.
A lot of senior procurement professionals are often preoccupied by the fact the profession has not yet achieved a place on the executive committee or at board level. But I think people are making a mistake in comparing procurement with other functions. People are asking the wrong question. Procurement will only be considered worthy of a board position if the function is core to the business. What does core mean? Critical to the bottom line. Impact on profit and loss can be measured in two ways:
● Impact is linked to the product/activity a company delivers because this product/activity is directly linked to cost of goods or services, or
● Impact is created by procurement coming up with commercial ideas/proposals which deliver beyond their expected scope of activity or deliverables.
The idea now is to take the team to a new level of strategic development – to come up with ideas to enhance the profitability of their stakeholder’s products or services. This will require a lot of engagement with the outside world, whether by bringing in best practices used in other industries such as algorithmic trending for our key commodity pricing predictions or by developing something completely new from a technological point of view.
To make this happen, I will rely on two things – our people and our supplier base. We are only as good as our team, and are now entering phase two of our investment in our people development. We have designed a procurement curriculum, targeting all levels in the function. This is part and parcel of our talent management programme, and makes being in procurement at Britvic very interesting for the team members, and the whole programme is considered key in terms of being able to retain staff.
This further transformation cannot happen without the supplier base. We are very much tapping into long-term relationships to bring in innovation, but also looking at developing new ones which can impact the development of our products.
The fact procurement is fully integrated in the international growth of the business gives our incumbent supplier base more opportunities, but also opens the door to developing local suppliers as part of our corporate responsibility programme.
To make the change and send a signal to the business, I am considering renaming the function. I want people to forget that we belong to a group, different from them. I want stakeholders to focus on what we can bring to the table, and I want my team to focus on finding commercial opportunities for the company, alongside – and beyond – business needs. Isn’t it the best feeling to get something when you did not even know you needed it?
This is where I believe the future lies. This year, for the first time, we were acknowledged by our CEO as a critical pillar to the business success during his last address to the City. More and more companies are doing so. I think we have a window of opportunity right now. By bringing more to the bottom line, by working flexibly and ensuring competitiveness, procurement can become a function on par with sales and marketing. The opportunity to do far more is within our grasp. Now is the time to take it.