Mending a fragmented function. Colt Technology discuss how they repaired a disjointed procurement unit
Nov 26, 2013 2:22:00 PM
CG: Today I am joined by Grahame Ball, Chief Procurement and Supply Chain Officer for Colt Technology Services Group – a FTSE 250 provider of integrated compute and network services, headquartered in London. Thank you for joining me today Grahame.
GB: My pleasure.
CG: Grahame, could you tell me a little bit about your background and your current role?
GB: I'm a supply chain professional by discipline and by training. I’ve always been in supply chain roles. When I say supply chain, I mean supply chain and procurement, to me the terminology is almost interchangeable. I’ve worked for a number of major blue chips such as Microsoft, Diageo, Arcadia, and Alliance Boots amongst others. I'm a business graduate from Aston University and an MSc from Cranfield University in Logistics and Supply Chain Management so I think I am qualified to talk about my subject.
I’ve been with Colt since 2005 – when I was asked to come in and set up a strategic procurement function. Over time, the role has evolved rapidly. When I first came in, Colt didn’t really have an integrated procurement function. We had people doing procurement, but not in a particularly coordinated way – with about 6 people spread around – doing a mix of pan European and local procurement activity. In 2009, given my logistics background and the various skills of the team, I took on responsibility for our physical supply chain which up to that point had resided with operations.
So at the end of 2009, there were about 30 people in total in the procurement and supply team. Today, we have around 55. So we’re a function that is growing in Colt. In my view, we’re a team operating at close to full strength, with a very clean delivery model and service proposition – which has moved completely away from having people, located across our 14 European countries.
As a function we have been through various organisational models. In 2011 to align to Colt’s wider go-to-market strategy – which split our focus into (a) major enterprise customers, (b) small and medium enterprise customers, (c) data centre customers and (d) infrastructure services, we decentralised a number of our support functions including procurement and supply, to those business units retaining a small, central team providing policy and governance: a centre led model.
We tweaked the idea for about a year, but I started seeing some dysfunction between the central team and the business unit teams. A lot of the synergy that you often get from having all your teams together, pulling in the same direction, was being lost – with the teams that we put into the business units being pulled in different directions because of competing priorities. So at the beginning of 2012, we brought it all back under central control.
Under the old model, we were partially leveraging Colt’s shared service centres in India, Barcelona and Romania. So for example I had nobody based in Colt’s Romanian centre, but I had two or three people in the Indian centre and that was it.
In 2012, when we decided to bring it all back together again, we began a three year planning cycle – looking at the various capabilities within each of the shared service centres, which are actually mature centres of operations. In India for example we have more than 1000 people, a quarter of Colt’s total workforce. I decided that I was going to design a delivery model focussing on the core skills in each centre. For example IT and network equipment procurement built around the team in India (Bangalore and Gurgaon) – including a Director overseeing these spend areas.
So I’ve now built a team of around 12 in India providing procurement technology expertise, category planning and strategic sourcing expertise. We have another team managed by finance doing the more transactional P2P, supplier on boarding and PO creation.
After India I looked at Romania, again, the thinking was around how I could leverage the infrastructure Colt had already built. With a team based just outside of Bucharest, I was looking to augment our analytical capabilities. We had played around with a third party software analytics platform that didn’t really work for us so we decided to do it ourselves with our own governance, processes and a custom taxonomy. As of today all of our procurement spend goes through this analytics team, giving us a pretty good sense of our total cost base. Furthermore, the Romanian team run frequent spend refreshes and the spend cube is available for the category teams to form the basis of their category plans.
Finally, given all this restructuring, a small, senior, central team in London has been developed to focus on strategy, planning, governance, and strategic relationship management.
CG: What are your top objectives for next year?
GB: Alignment is the absolute number one. By alignment I mean making sure that what my team delivers (whether it’s savings or efficiency improvements) are aligned to their stakeholders and that the impact of the procurement and supply function is clear.
My number two is engaging with the business. Even though I know most people in the business, we’ve still got to do a better job of getting close to our stakeholders. So we spent a lot of time this year mapping our stakeholder communities. These are fairly generic stakeholder maps but they enable us to view our stakeholders holistically, putting us in a better position to act proactively. Historically we’ve been very reactive, which hinders us building relationships with our stakeholders.
CG: How broad do your maps extend across your business and how deep do these maps go down?
GB: We focus on around 10 influencers within each community – typically the most senior person of that business unit and their direct reports. We don’t dive much deeper than that or attempt to make this much more sophisticated.
CG: Right so it’s not really aligning to their objectives or pain points as such, more about mapping influence across the business?
GB: Partially yes, we do try and pick people who have a touch point with procurement - so we’re not trying to influence somebody who doesn’t touch us or doesn’t have any need for us. We try and make sure it’s the people that have an interface with the procurement and supply team and that we understand their issues. In terms of engagement, we have most of the key influencers covered – all take a different approach and have different needs / demands – based on our proximity, skills and expertise. Clearly as we become more sophisticated the alignment with their objectives will become tighter.
CG: When you say proximity, is some of this alignment/mapping happening out of your Indian and Romanian centres?
GB: Interestingly, because our whole business model is changing, some of our key IT decision makers are based in India. So my new Director in India is in the natural place to stakeholder manage those guys. Another example, Colt’s VP Operations and my Supply Chain Director are both based in Milan, and are working closely with the respective teams out there. I engage with our most senior stakeholders, the EVP community.
So are we experts at it? No. Are we doing anything that other people aren’t doing? Maybe not. But alignment is one of our top priorities and we are getting better at it.
The third and final priority for us is to get closer to our strategic suppliers. We’ve spent a lot of time on SRM and, similar to our stakeholder maps, we’ve also mapped our suppliers. We know who our strategic ones are. We’ve sent questionnaires to get feedback from them; we’ve started having more regular supplier reviews; we have an annual supplier day where we invite our supply partners, and we are more joined up as a business. So we’re better, in the sense that the business has recognised who we need to be close to, and we’re doing a lot of the stuff that you would expect from an SRM perspective. But have we really started developing deep relationships? Partly yes, partly no. So that is something that we still have to evolve.
CG: Are you supporting internal stakeholders in any new ways?
GB: I'm currently recruiting for a senior commercial specialist, who would report into one of my Directors, to overcome a somewhat fragmented bid support process and to build the relationship between procurement and sales. When we floated this idea with the sales team, they were biting our hand for it. Somebody who understands what we do, understands their language and can really make sure that we can align with each another.
CG: Quite a mix of skills?
GB: Yes it is. It is hard to get somebody who understands the sales and the procurement process – and the people within each. So I've found people who are great at managing supplier relationships and I've found some people who really know how to interface with sales guys. Finding both skills in one person is very difficult.
The thinking is that we want to hire people who don’t neatly fit into a typecast / stereotype of a ‘procurement’ person. I don’t hire category managers, I hire smart commercial people who’ve got some procurement knowledge and maybe have a specific area of expertise but aren’t traditional procurement specialists.
The preferred candidate is a commercial lawyer who is very interested in joining the team.
CG: Will this person be managing your legal providers and look for alternative legal solutions?
GB: That’s exactly what I don’t want them to do.
I just want them to bring a completely different perspective to the entire procurement and supply setup. I don’t want them getting involved with the lawyers at all - I want to see what a legal commercial brain brings. Whether it’s our planning, our delivery process or how we are engaging stakeholders – I just want to see what a fresh pair of eyes and new skills can bring to the table.
The usual category manager approach would be to ask ‘what categories am I managing’ and then go off and do the usual category thing. I don’t need that.
CG: What is your vision of what procurement and supply means for Colt?
GB: I want the impact of the work we are doing to be visible and support the overall corporate objectives. So in short, I really want to see the impact of the work we are doing on the bottom line.
CG: Do you think your function receives enough investment?
GB: I've actually received a lot of investment. Outsourcing the supply chain was a big investment for us because of the inherent start-up costs and up-front fees. I've added more people, I've added some smart senior people, I've completely restructured the team which carries a cost and we've done all that in a relatively short period of time. I'm going to invest more next year in people. I'm heavily dependent on systems so we've got a good investment in procurement and inventory systems.
CG: Finally, what is one example of unconventional thinking or an unconventional approach you or your team have taken (around cost management) that has resulted in a paradigm shift or transformational change on the wider business?
GB: More and more we are trying to align what we pay out with what we gain. That’s really our focus.
CG: And the suppliers are on side, because they’ve got skin in the game, are motivated to help you succeed?
GB: Yes, they could see what our model is and actually you can structure it in a way that if we secure a lot of customers, actually they’ll benefit more than they would have done with an initial capital purchase. But that comes back to my point about relationships.