Five minutes with... Paul Kelly

1 January 2015

Reo is a US-based manufacturer of high-precision optical components, optical thin film coatings and optical subassemblies for use in lasers, materials processing, instrumentation, life sciences, avionics and defence. REO won the overall award at the 2014 CIPS Supply Management Awards for its collaboration with customer Selex ES on a contract to supply laser equipment for the US armed forces.

What’s the biggest challenge you face as a CEO?

Making sure you have the right people in the right chairs. If you have the right people then all kinds of things are possible. Close behind that is ensuring that everybody in your organisation is pulling in the same direction. That means setting a strategy, communicating it and keeping everyone focused on it.

How do you do that?

Accountability, plus communication, frequent contact and follow-up. It’s about making sure the things you say you are going to get done, get done. We’ve been working to a strategic plan over the past two years, and probably 90 per cent of the things that we said we were going to do, we’ve done.

How important is procurement to that strategy?

It’s important because that’s where we spend our money. Some of the best talent within the company should be there, because those are the people who are partnering with our key suppliers and measuring their performance. Now we need to develop a more global supply base, so that requires a different kind of person. We’ve made significant investment as part of our strategic plan to upgrade the capabilities of our employees. This is a profession, and we need to be sure that the people in those positions view it as a profession.

How can suppliers work with their customers to improve the way the buying operation works?

It’s about developing relationships, understanding customers’ priorities, and making darn sure that we fulfil their needs. For example, some of our customers are pushing us to share in the development cost of a next-generation product. The hope is that the product will fly and then you will have a piece of the supply chain.

We are also engaging with customers on the viability of what they ask us to do. We are trying to be credible in challenging them, saying, do you really want that material or that inspection, because this is what it’s doing to drive your costs higher. Our engineering folks support our supply chain people to have those conversations.

For example, we have developed an ‘optics college’ where we give customers a one-day seminar on the cost drivers behind optics. It has been really well received. I don’t know if we’ll get any additional business, but certainly the level of interaction and the people we are exposed to is significantly broader as a result.

Is there a risk in being that open?

There’s a risk but we take it. If you are open, if you get in trouble with that customer – and we all experience that – a level of trust is there, and they’re not ready to throw you to the kerb. You have some capital with them.

What is your leadership style?

I lead by example. Every other Wednesday I do reception, at breaks and at lunch, for our receptionist. Our employees think, holy smokes, the CEO is answering the phone? And I say, you betcha, and get ready, because I’m not sure what I’m going to ask you to do tomorrow. We also demonstrate to our employees that they are our most valuable resource. We have a physician’s assistant onsite three days a week – employees get free medical care, free prescriptions, and we get to do preventative maintenance on our most valuable asset. We do it on our machine tools, so why not our people?

What is the best advice you’ve been given?

Don’t underestimate the value of showing up. I’m a bit of a dinosaur here, but I believe there is real value in face-to-face communication.

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