Driving commerciality through customer satisfaction at Daily Mail
Jun 20, 2012 8:53:00 AM
Nick Jenkinson [NJ], Head of Procurement at A&N Media (the B2C division of Daily Mail and General Trust) discusses procurement's changing proposition from process hungry ‘road-blockers’ to customer focused ‘Commercial Enablers’.
CG: Today, I am talking with Nick Jenkinson, Head of Procurement at A&N Media (the B2C division of Daily Mail and General Trust). Thanks for joining me today Nick – could you offer some insight into DMGT and your role within.
NJ: DMGT is a global media organisation operating in both the B2B and B2C arenas. Within DMGT, there are numerous disparate businesses; the structure is decentralised and the group provide empowerment and autonomy to the individual business units; as a result, there is limited interaction between many of the brands.
A&N Media is the B2C division of DMGT and its 2 main divisions, Associated Newspapers and Northcliffe Media connect with over 41% of the UK adult population. Under the umbrella of Associated Newspapers, there are publishing brands including the Daily Mail, The Mail on Sunday & Metro, and digital brands such as Jobsite, The Digital Property Group and Wowcher. Northcliffe Media is the regional publishing division and as such, produces a range of titles across the UK with a geographical scope from Hull to Truro.
I’ve been with the business for nearly three years. Historically, Procurement was an administrative function and as a result, the local purchasing teams were responsible for raising purchase orders against paper requisitions and ensuring the business requirements were met. In 2008, a shared services project was commenced which launched a new ERP system and created a Finance Shared Services Function– this helped drive the idea of centralisation and standardisation across the business.
The introduction of a group-wide ERP system devolved the requisitioning and purchase order process to end users and as a result, the local Purchasing staff were no longer required - so there was a need to remove or evolve Procurement. Thankfully, the decision was made to evolve and develop a more value-add, professional Procurement function with the aim of driving group-wide synergies. I was brought in to create, develop and head up the new Procurement team. After a number of months of embedding myself within the business, I developed a vision & strategy for Procurement and commenced the transformation required in order to restructure, reposition and reskill the team appropriately.
The team has now been in place for just over 2 years. All team members are focused on embedding deeper into the organisation - increasing our credibility, developing ‘Brand Procurement’ and growing alongside the business. Delivering savings is obviously a huge part of what we do, however, we are continually looking to widen our value proposition and really become ‘Commercial Enablers’ in supporting top line growth as well as bottom line reduction.
CG: With such a new team and relatively clean slate to build on, how do you go about splitting your time between direct and indirect procurement? And how high is indirect procurement on both your agenda as well as the wider business’ agenda?
NJ: Indirects are extremely high on the agenda. The true ‘directs’ are currently handled separately, we have our own print business and they are currently responsible for the ‘directs’ of Newsprint and Ink.
As such, my team addresses all of the ‘indirects’. The importance of each category depends on the business need, however, areas such as Marketing, Distribution and IT are key spend areas and thus, tend to be higher on the agenda and require greater attention.
Our indirect spend accounts for about 65% of total spend within the business.
CG: How do you measure the effectiveness of your spend on indirects?
NJ: As you mentioned, we had a relatively clean slate to build on here, so in the first instance, we needed to look at all areas and develop a robust opportunity pipeline which took into account a number of factors including availability of category information, stakeholder engagement, sourcing expertise and size of opportunity.
Our Business Plan sets out our success factors and provides ongoing performance measures to monitor progress against. These highlight the breadth of our proposition and in addition to qualitative targets include quantitative goals on areas such as Savings, Return on Investment, Influenced Spend, SRM, Risk Management and Customer Satisfaction. Therefore, whilst we recognise our proposition as being more than just savings, we accept that this is still a key part of our role and thankfully, we have successfully surpassed all targets to-date.
Having said this, it is widely acknowledged that ‘you can’t cut your way to success’ and so, whilst our primary focus has been cost reduction, many of our stakeholders are more focused on top line growth. Therefore, as a Procurement team, it’s also critical to ensure business alignment and deliver a flexible, agile delivery model which is capable of not only driving savings but also driving revenue generation and increasing innovation.
CG: How often is the accuracy and the tangibility of the results that you are measuring challenged by your senior stakeholders?
NJ: To be perfectly honest, very little - we have developed a good level of credibility within the business and have proactively sought to develop more governance and provide greater transparency - this has served us well and savings are clearly hitting the bottom line. We have regular review boards with the Finance community and my team are now actively developing close relationships with their respective FD’s and Financial Controllers – this is developing a joined up approach to savings tracking and delivery.
Ultimately it’s all about communication.
We’re quite a difficult business from a stakeholder management perspective, it was important to get the right people in with the appropriate interpersonal skills. We needed to ensure that we brought the stakeholders along for the journey and through the management of these relationships, the business case sign-off process has been made much simpler.
I’ve always been very realistic about the deliverables for my team and whilst we have clear savings definitions, my view has always been that if someone needs to ask if it’s a saving then it’s probably not so let’s save ourselves some time! If it is a true saving to the business, then ultimately we will report on it and agree it with the business and to date, this has served us well and has given us real credibility - this has now led to us being involved in the budget setting process.
CG: What are your three objectives for the next twelve months?
NJ: Firstly, there is a need to do the day job well – we want to be viewed as true ‘Commercial Enablers’ and this has to start with savings & revenue - we need to ensure all of our targets are met and that we continue to drive real business value.
The 2nd and 3rd objectives both relate to how we can do the job ‘better and faster’.
We are currently implementing our first Sourcing/Contract Management/SRM tool and I believe this will bring 2 main areas of benefit. Firstly, from a sourcing perspective, the team will undoubtedly gain greater efficiency and transparency. The 2nd point is even more important and relates to the fact that we will be able to offer our stakeholders a much more holistic view on our supply base and as a result, greatly improve SRM capabilities within the business.
Finally, a key objective is to refine our P2P processes in order to improve the user experience and improve compliance. The ERP set-up which I inherited was designed by accountants for accountants and as a result, it works great as an accounting platform but has some key limitations as a Procurement platform.
Some key limitations include the fact that there is no categorisation of suppliers, no contracts or preferred suppliers kept in the system and no electronic invoice processing. As a result, we identified the requirement for a P2P solution – during this search, user adoption was absolutely critical; we wanted the Monday morning buying experience to be much more aligned to the Sunday night web shopping experience.
Consumerisation and the introduction of cloud-based technologies are key business priorities and as such, we needed a cloud-based solution capable of meeting all our procurement requirements whilst maintaining a look and feel which users can relate to.
We have recently signed off our chosen solution and therefore, the successful delivery of the latter 2 points will deliver us a closed loop cloud-based Source to Pay system: clearly, we still need to deliver but we really feel that our chosen solutions will be game changing in further evolving the Procurement function.
I believe that a focus on these 3 areas will further enhance our position as trusted business partners and further improve our credibility and reputation.
CG: How do you perceive procurement’s role, particularly within your industry, changing over the next three to five years?
NJ: From my perspective, I believe there are 2 critical areas which will influence the future of Procurement.
Firstly and following nicely on from the last question, is technology. In relation to this point, technology will impact Procurement and in particular, my team in a number of ways including:
1) As per the last question, using Procurement technology to deliver better, faster and more user friendly solutions
2) Movement into the cloud: Our business has a strategy of owning no data centres by 2015 in order that we can have a business model which can flex with our business requirements
3) Consumerisation: End users are becoming more demanding and knowledgeable about their choices available – the days of one laptop type, one mobile phone type are well behind us
4) Social Media: DMGT have recently launched an internal social media tool in order to aid collaboration – the aim is that this will become the primary means of communication across the disparate business units. Our aim is to use the tool to our advantage when communicating with stakeholders and eventually, suppliers.
5) Growth in digital media: Future growth in our organisation is heavily focused around digital revenue streams. The battle for my team is to get ahead of the game and upskill sooner rather than later – through this, we can begin to truly add value, understand the risks and understand the key cost drivers.
It’s really a case of how do we use technology to our best advantage and how do we get sufficient knowledge so we are seen as commercial experts in new arenas as well as current ones.
The second critical area is, to some extent, related to the first one and can be defined as Value. As I’ve already mentioned, we feel we offer a broad value proposition but I, like many other Heads of/CPO’s are still predominantly tasked on delivering bottom line savings. The challenge moving forwards is to truly broaden that proposition in order that Procurement are viewed as ‘Commercial Enablers’ and not process hungry roadblockers.
The aim for all Procurement team’s including my own is to move up the value chain and be less focused on Price/TCO modelling and more aligned with value. I believe this may mean we question the type of people required - there will be more focus on risk taking, creativity & entrepreneurial spirit and such individuals are unlikely to fall in love with a 5 stage Sourcing Methodology!
CG: Sounds like a challenge – trying to embed yourself in the business based on current categories while staying ahead of the game with the new upcoming categories. How do you optimise your team to ensure that they’re ‘experts’ within each of these categories?
NJ: A key difficulty we face is how to divide limited resources across all categories and projects.
We are constantly developing the sourcing pipelines to ensure we have greater visibility on spend and therefore, greater understanding of where the opportunities are going to come from - not in the next three months, but over the next twelve-eighteen months - and then making sure we’ve got the appropriate resource to support the sourcing effort. When recruiting the team, I was very keen to ensure we had the appropriate category knowledge but I’m also a firm believer that the knowledge transfer can occur much quicker and easier than upskilling and as such, if we have the right people then I’m happy to move them into new category areas.
My team aims to be involved in as many networks or wider information-sharing processes as possible, so that the category managers have a repository of information at their fingertips, giving them more time to get on with developing future strategies.
Our recruitment process took a long time as I felt it was critical to get the right people with the right skills, particularly in relation to stakeholder management. It is easy to take for granted but the reality is that many Category Managers who are extremely competent at the “procurement” aspect of their role (Negotiation, Category Strategy delivery etc) often don’t have the more difficult intangible, relationship based skills needed to manage internal stakeholders effectively.
As a new team, relationship development and the introduction of ‘Brand Procurement’ were critical in order to bring people along on our journey.
CG: Final question, what should procurement be doing to be seen as a strategic, indispensable part of a business?
NJ: I think it’s going to come back to the value point mentioned earlier.
All developed Procurement operations have developed their own Strategic Sourcing methodology and can quite happily take people through an RFP process but ultimately I believe many stakeholders are now looking for far more than this – they want to understand how you will help them meet their business objectives.
It’s all about what you are actually bringing from a value perspective. Obviously savings eventually diminish as there’s only so far that you can actually push the cost down and so it’s then about focussing on what else you’re delivering, and whether that’s revenue related or innovation related. As a result, in my view, Procurement will look very different in ten years’ time.
Right now, a much wider review is needed of procurement teams around the true value they bring a business and how they impact shareholder value.
Ultimately that’s what drives a business (and is high on the board’s agenda). From a sales’ perspective it’s quite easy to see how they feed into that but from a Procurement perspective it’s not always transparent and clear-cut. Procurement needs to show the board members how they can impact larger business issues going forward.
Innovation is a hot topic at the moment but I think risk management will also be very important going forward. The world seems to be changing on an ever-quicker basis and the more people rely on the supply market, the more complex and riskier those supplier relationships become.