Andrew Newnham, CPO at Marks & Spencer, talks to Supply Management about his approach to alternative thinking and the next step in procurement’s evolution.
Andrew, you’re a proponent of alternative thinking in procurement, but what does this mean?
When most people think of procurement, they think of process. If you were on a greenfield site you'd say we need to have a process, we need governance, to mandate, to be experts at negotiation, to run RFPs; we need to understand our supply database, we need tools – all those things are absolutely what procurement should be about. When you do those things really well, the next stage is to start managing contracts, negotiating as hard through the life of the contract as you do at the start of it; understanding the operations and aligning procurement to the business.
After this, a lot of people then invest in tools. I've got an alternative view on where procurement should head next. You need to bring influence, skills and insights to the way the business runs and how different companies do things to influence the business strategy, so you move from being really good commercially – at protecting the company's money and negotiating hard – to being at the forefront of influencing the business strategy. You do that with a commercial head on, with knowledge of how markets work and innovation from different suppliers that you've seen in different businesses. But fundamentally, alternative thinking is asking how can we change the way this business runs? How can we as a procurement team be seen as change makers in the business?
So how do you see the ideal relationship between people, process and technology?
Data's always important. You've got the commercial mindset, the procurement piece, the RFP piece, and you've got the contract management piece, which we call maximising performance. That gives you a lot of data. You do need to understand budgets, to understand spend and say, ‘I know how much we should pay for an Oracle licence and we are paying 3% less, or 7% more’ – that’s the bedrock of procurement. Then once you've got that data, which allows you to do a really good job, you use it to plot a landscape and a business process, you see the interactions and the handoffs between where suppliers are involved and where, in my case, M&S is involved.
You see the outputs and you see how those contracts are managed – can we do it differently? Could we in-source it, could we get rid of the supplier completely? Suddenly it’s less about choosing between Oracle and SAP, and it becomes how do we change the business process and how the business operates? I think that's a step above what people think of as procurement. It’s hard, don’t get me wrong. There are slightly different skills you need from a team, such as communicating with impact. It doesn't matter how good you are, how much knowledge you've got, how well you know the supplier landscape if you can't communicate with impact your ideas and influence people to change.
As someone who's worked in this field for a long time, how radical is this way of thinking?
I do think this is radical but it’s an evolution, it’s something that more and more people will be thinking about, as they consider what’s next for procurement as a function. What I'm saying is those traditional procurement values and objectives are the bedrock of what we do, but if you want to move procurement on, it's not just about tools and process. You have to think differently and become a change agent for the business. You have to be seen as one of the people that can move the business on.
And what about for those organisations that don’t have the resources, like you said. How can procurement enact alternative thinking without being shot down for being too risky?
I've been at M&S for three years and as a team we spent a lot of time getting the right level of process and governance, enough that we gained control and we could be agile. We spent time building up our credentials on delivering real P&L impacts, and helping the business deliver really good results last year. And we didn’t do a wholesale change of the team. When we've had vacancies we’ve brought role models in to show how things can be done differently, and in that way developed our team. And we've built that business partnering mindset, of understanding the business and the way it operates, and from there, it's much easier to challenge things. But you have to get the basics right first because that builds a platform from which you can deliver extra things, the alternative thinking elements. This is evolutionary. It's not like a revolution.
When you talk about making big changes, which factors do you think determine success?
You've got to be a great business partner. You’ve got to be trusted and seen as an expert in your field before you can start changing things. If you're not the one they come to on commercial strategy or when dealing with suppliers, then it's hard to move to the next step. Also being excellent in procurement in all its face assets, being a great business partner, good at influencing, communicating – and I come back to communicating with impact – in using data and your knowledge of the business to really change things. Another big step is taking responsibility. If you are suddenly part of a group making decisions and having to take responsibility, then it changes your mindset on making decisions and you see it from somebody else's point of view. The first step is to think creatively, to think about how you unlock better benefits for the business, rather than just nailing costs.
But I suppose it’s in the nature of procurement professionals to be risk averse, unless you’re at a level of seniority where you have to make those decisions.
That's right. We do a lot of work with personality insight models and as a function you need a broad range of skills people who are detail and data-oriented, who are probably a bit more risk averse, but over time, you also need to develop and invest in people who are action-oriented and people-motivated. Not all of my senior team are total procurement specialists. They've come from different fields, so they can see things from the business point of view and they're a little more likely to take a risk, to make things happen, and deliver change. You need both types of people and in this way over time you can bring a slightly different mindset into senior roles. But that can bring its own challenges because you still need to be great at the traditional procurement skills, the business will always expect that, and measurement's difficult because you won't suddenly make savings out these things, but you might make a process more efficient, or get things done more quickly. It’s not easy, and it takes a lot of hard work.
Andrew Newnham will be talking more on alternative thinking processes at Procurement Futures, by CIPS, in February 2023. You can find more information at: procurementfutures.com