The CPOs taking procurement skills to a new industry
What are the challenges and opportunities faced by CPOs transferring to a new sector?
Moving to a different sector means getting up to speed with new acronyms, suppliers and a business strategy in an unfamiliar marketplace. But the expectations of CPOs are often the same regardless of sector: managing supplier relationships, delivering cost savings and ensuring that procurement support aligns with the business strategy.
So what are the motivations for moving industry, what advantages do newcomers bring to Procurement organizations, and what steps can CPOs take to ensure they hit the ground running?
Expectations of procurement that cross industry lines
In his various roles at IBM, Andrew Cannon-Brookes, now Global Head of Supply Chain Management at Standard Chartered Bank, was a self-described “active evangelist for the industry-agnostic point of view, when selling IBM’s best procurement practices from the tech world to clients in other industries”, but that was before he experienced the Ministry of Defence.
“I learned that there is a whole new world of complexity out there that often defies standard solutions,” he says, citing the challenge of forecasting complex engineered spares for which there was sporadic demand, as an example.
To an extent, sector of operation is irrelevant for senior procurement professionals, and organizations have the same expectations of the Procurement function no matter the industry, with a few exceptions, such as specific regulatory knowledge and understanding. “Quantitative value delivery is always going to be a high priority, irrespective of what industry you are in,” says Nick Jenkinson, Senior Director – Procurement at Astellas Pharma. “There is always a financial measurement that is expected for procurement to deliver.”
I’ve never actively looked for a new sector – it’s more about the role and what it entails. I think people who change industry usually want to learn something different and are happy to be stretched and develop themselves in different ways. It’s all about how curious you are as an individual. When you join a new sector, people expect you to know everything about it and develop your knowledge in light of other experiences you have had.
These expectations apply to the skills expected of senior procurement professionals. “A CPO’s skills are totally transferable – it doesn’t matter which sector you are in,” says Fabienne Lesbros, CPO, the Co-operative Group. “The senior leaders in organisations want an individual who has all the technical skills, soft skills and is a well-rounded individual. They want someone who can adapt to the internal organisation and the external context it operates in.”
The specific nature of the expectations of CPOs in companies depend on factors such as the business’ and Procurement function’s levels of maturity and the different skillsets of the people involved in procurement.
“Organizations might want procurement professionals to come in, play a relatively transactional role and go home again,” Jenkinson says. “That’s clearly not why I am in the profession. I see my role as a change-agent, joining the dots between the business drivers and what procurement can bring to it.”
The biggest challenge for CPOs moving sectors is proving that they have the credible skills and experience to demonstrate procurement’s value proposition. “Credibility is definitely the biggest hurdle that you have to get over straight away,” Jenkinson says. “The business stakeholders are not really interested in what worked in other industries or businesses – because they always feel their business, their industry, is different.”
Getting credibility means spending your first 100 days immersed in the business – interacting with stakeholders, widening the network of contacts who can help with understanding the intricacies, challenges and macro-economics of a new sector, attending industry events. “In Procurement we touch everything,” Lesbros says. “We need to understand the culture formally and informally, the new sector independent of the new organization and where the organization fits into the industry context.”
Having a clear vision is important too. “These days senior procurement professionals are expected to guide a company and bring a fresh external perspective, so at some point, quite quickly after the first 100 days, people will expect you to have a point of view and be able to explain what your vision and plans are, and you will be expected to elaborate,” Lesbros says.
Swapping sectors can be a bold move, Cannon-Brookes says. “Thriving in a completely new environment is a test of character, strategic thinking and leadership skills. It can teach you valuable lessons in humility, listening and the power of your support networks, reminding you not to take them for granted as you get more senior.”
I don’t think I have set out to work in a particular sector. It’s been more about the role, the opportunity and what the particular organization has to offer. I like to learn and I like to challenge myself. Moving from one company to another in the same sector, you can get there a lot quicker. I enjoy being out of my comfort zone – all of a sudden you are sitting in meetings where you don’t actually understand everything that everybody’s saying. When you are the key procurement person in the room, you have got to learn those things very quickly.
Challenging established mindsets
The biggest advantage to businesses of hiring senior procurement talent from different sectors is their ability to bring fresh, external perspective. “As an outsider, you can start without any existing baggage and have that clean slate to implement practices from outside,” Cannon-Brookes says.
As part of a supply chain team at IBM China in the late 1990s, he pioneered export sales of components and assemblies to other regions, despite their initial misgivings about the quality. “Ultimately, we delivered premium ThinkPad laptops to over 80 countries from China, configured to order in less than 10 days,” says Cannon-Brookes. “But change of any kind is difficult, whether you are coming from within or outside. You have to have the courage of your convictions and a real sense of belief that there is a better way.”
And you need to act on this quickly. “Within 100 days we go native, adopting the mindset and culture and falling into the norms of the business. So I tell new team members to write everything down when they start so they can go back later to what they wrote,” Lesbros says. “The fact that you are new and not chained in by beliefs or habits is a big advantage because you can notice the gaps.”
Lesbros used some of her lessons learned about packaging in the pharmaceutical industry when she joined Britvic, and has brought with her from the FMCG sector knowledge of simplifying processes and getting things to market faster.
The art of selling is also critical in challenging established mindsets, Jenkinson says. His experience of procurement of the automotive sector’s transparent commercial model and high level of supply chain maturity helped him understand the importance of fully open markets based on cost modeling, rather than market prices.
“The overlap between procurement and sales has become more blurred as time has progressed, particularly in indirect procurement,” he says. “The most challenging part of the role is not the value delivery but the business engagement and selling what the value proposition looks like.”
Working for IBM, I had the opportunity to ‘hop’ between different industries – technology, manufacturing etc. – without having to change employer. There is no easy way to get up to speed quickly with sector-specific dynamics, regulatory frameworks or technology as the amount of reading can be overwhelming. You have to trust your team to guide you through the details, but be prepared to challenge the received wisdoms as they do so.
Creating a strategy
So a CPO’s vision when they join a new sector is crucial in demonstrating their credibility to challenge established mindsets. “One thing I look to do is find the positives about procurement that are unique to the new organization or industry – great skills, systems or methods which have been ignored by other sectors,” Cannon-Brookes says. “These can be placed at the center of a distinctive strategy and show that you appreciate the nuances of the industry and the legacy of your predecessors.”
Equally, what is innovative for one industry may be common practice in another, Jenkinson says. “Generally, businesses want an attractive and broad value proposition from procurement. It could be related to a wide range of deliverables including value delivery, risk or supplier performance, for example.
“This value proposition needs to support the business strategy, otherwise it will fail. And you need to have the right people, governance, systems and processes in place so that the touchpoint of procurement is a valuable experience wherever stakeholders are situated in the business.”