How Procurement can support boardroom values
At the Co-operative Bank, Procurement’s engagement with the supply chain helps the board to maintain high ethical and regulatory standards.
Boards should consider that, far from coming from a narrow specialism, senior procurement people tend to have a broad range of backgrounds and experiences.
Richard Beaumont, Director of Commercial Operations at the Co-operative Bank, was an army officer (and not in the Royal Logistic Corps) for 14 years before moving into supply chain.
At the Co-operative Bank, which was split from the larger Co-operative Group in December 2014, Beaumont is in the process of establishing functions across a broad portfolio including procurement, cost reduction and estates (which includes Health & Safety, facilities management, security and so on), which were previously shared services within the group.
“I report to the COO who reports to the CEO. The COO is also on the executive board,” he says.
Unlike in manufacturing, where the cost of a product is directly related to procurement, most of a bank’s spend is indirect. “It’s more about the general approach to managing cost and providing services,” says Beaumont.
“The relationship with the board is not about them telling us what they want from each contract – it’s about providing support to every board member that is trying to reduce costs.”
The relationship with the board is about providing support to every board member that is trying to reduce costs.
Values and ethics
For a bank there are many areas of procurement in which the regulators have an interest, Beaumont notes. The Co-operative Bank in particular has very clear values and ethical policies that cannot be upheld without engaging the supply chain. So the board has to take an active interest.
“In effect, values, ethics and regulation are overseen by the board so that we can focus on developing the right supply to support the bank,” explains Beaumont.
“In one sense, the aim is for procurement to become operationally invisible – we are not an impediment, we are providing the suppliers and the execution tools that will uphold the values of the board without requiring a direct relationship.”