John Lewis adds 50% to procurement savings

9 August 2016

Restructuring the procurement team at the John Lewis Partnership (JLP) has enabled it to focus on long-term strategy without any loss of reactive capacity, said its director of procurement.

When Paul Bestford first took the top procurement job at JLP, he told SM the retail company’s purchasing department was in its ‘teenage years’. In the intervening two years, he has restructured his team, separating the long- and short-term elements of the job.

The result is that in the past 18 months procurement savings have increased by 50%. Similar improvements have been made increasing both stakeholder satisfaction and internal business for his team.

Bestford, responsible for the company’s £1.5bn not-for-resale spend, said the restructure has had “a significant impact on [JLP's] profitability”.

This was achieved by dividing urgent tasks from the important ones. “Inevitably when you try to do both you tend to focus on the urgent more than the important, so by splitting those two pieces out we are able to focus on both at the same time,” he said.

Paul Bestford

“[Our] category management team focuses on longer term strategic programmes and a sourcing team focuses on rapidly turning around and supporting the needs of the business in acquiring goods and services – in a sort of more reactive mode,” he explained.

Although they are still working their way through the transformation, Bestford said they have already become ‘more mature’ as a procurement department. Not only have they become faster at reactively sourcing, better use of the category management system has given them information needed to better support the business strategically.

“There’s a greater appetite now than there’s ever been for what we can do to bring value to the organisation. But not only is there appetite, we’ve also now got something to say,” he added.

Bestford’s department has been largely unaffected by the recent Brexit vote, so far. “A large proportion of our goods not for resale spend is services, which are UK provided… so we don’t have such a large exposure to international exchange rates,” he said. However he said his team was still ‘obviously concerned’ and on the lookout for any future impact.

Wide tender

Bestford is interested in the potential of crowd sourcing, having already successfully used it as a procurement tool when sourcing a logo for internal marketing. Instead of giving the brief to a design agency, he put it on a crowd-sourcing site. “It went out to thousands of independent designers across the world and we selected the best one,” he said.

Not only was ‘it a fraction of the cost’ of a design agency, the process resulted in ‘a really fantastic design’, he said. He is looking into the process as a way to solve business and technical design problems, such as increasing the speed, sustainability and recyclability of consumer goods.

“We see it as a new way of tapping into innovators across the world very quickly and efficiently,” he said.

And John Lewis’s brand reputation helps when recruiting procurement staff. “We do almost all of our procurement recruitment direct through LinkedIn and our own search team and I think that’s largely possible because of the strength of the brand.”

He also credits a large part of this to JLP’s employee ownership model. “We don’t have a single owner behind us, we all own a stake in the business and that is very attractive to people… You feel like you’re working for yourself and not just some investors on the stock exchange.”

Bestford said he gets a real buzz from his work at JLP. “I’m enormously proud of the team that I lead here at John Lewis. They are a fantastically committed and talented procurement team.”

Paul Bestford will be one of the speakers at this year’s CIPS Annual Conference 2016. Find out more and book your tickets here.

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