Driving Fujitsu’s growth agenda: aligning business supply with business development
Apr 30, 2012 2:50:00 PM
Andrew Croston (AC), Chief Procurement Officer (UK and Ireland) at Fujitsu discusses how building business-wide communication, collaboration and relationship strategies into the functions overall operations, procurement has been able to act as a true partner to finance, operations and business development teams – embedding itself into the very core of the business.
CG: Thank you for joining me today Andrew. Before we start, congratulations on making Fortune Magazine’s “world’s most admired companies” list.
AC: Thank you. It’s very positive for us as an organisation, we’ve got a number of key things that we are focussing on and it is great to see recognition around certain pieces such as ethics and responsibility (both as a supplier and an employer) – in addition to returning money to our shareholders of course. So they’re good plaudits really, and we do live those values.
CG: Could you tell me a bit more about yourself and role within Fujitsu?
AC: Currently, I’m the Chief Procurement Officer (CPO) for the UK and Ireland. I’ve got a team of 65 people, managing six main categories, which are hardware, software, services, telecommunications (telecoms), professional services and corporate; basically, everything considered indirect and direct. Globally I am the procurement lead for software, telecomms and strategic / complex supply agreements - essentially looking at the “big deals” (over about $50 million US). We adopt a framework approach to managing these, generally they will involve some major suppliers with whom we have significant spend, and also customer bids as well.
I report to the Chief Operating Officer (COO), and the objectives of my team & myself are clearly defined to ensure our deliverables support & underpin the business strategy for our region.
I’ve been in post here for about 16 months. Prior to that, I was commercial director at DEFRA for two years, and that was really a transformation turnaround of the function, which was a little bit archaic. There was no sourcing platform and 75% of the team were contract staff.
I put a plan together to turn it round in a year, which is what we did, and then we ran it for a year and I really felt I’d done my job there and moved on.
Prior to that I was at the Olympic Delivery Authority (ODA) - which was a greenfield site. I joined them in 2006, worked there for three years, setting up procurement, which was in a similar state to DEFRA – so the role was about putting some proper policies, processes and technology (focus on e-tendering) in place. A big piece of the work at the ODA was the launch of CompeteFor, a contract and opportunity portal and repository for the Olympics. We had 15 opportunities on there when it was launched and by the time I moved on, we’d put 5,000 opportunities on it and had 150,000 suppliers signed up.
There was a trickle-down effect (filtering down through the supply chains) - once big suppliers like Balfour Beatty got on board which resulted in three hundred buying organisations coming on board. Ultimately this was a great way for SMEs and other businesses to tap in and get a part of London 2012.
CG: And were there ever plans to divest or keep this portal active post Olympics?
AC: It’s got a lot of inherent value in which Government departments should be using to take their opportunities to market, which would also really help the SME agenda.
CG: What are your key challenges over the coming years?
AC: I have a two year transition/transformation plan which includes people/ talent, systems and process development, in addition to delivering on key business deliverables. Since I’ve been here, we have increased the hard saving contribution that my community delivers by 34%, we now put the emphasis on price reduction and cost reduction as opposed to soft savings, value in kind, cost avoidance, although these elements still have a significant part to play in ensuring the competitiveness of our business.
In terms of challenges, we have recently gone live with Ariba in the UK, with a view to a global roll-out (I have just returned from Germany to present to the other procurement leads). So this is a big challenge for me, as the lead for the Ariba roll out, and there are some aggressive targets involving implementing the technology in a new location potentially every two months.
The next challenge you would expect me to talk about, cost and efficiency, in which we’re looking to better leverage our global spend, taking into account things like global price variations and contracts.
We’re very keen on the SME agenda and I am the champion, leading this activity. We’ve got some really fresh thinking and I’ll be doing a UK tour of our SME community throughout year. We’ve got 800 organisations who fit in to this category out of a supply chain of about 1,350. I’ll be presenting to them on how to trade with us, how to bid better for work, how to take advantage of apprenticeship schemes etc.
We also run annual and quarterly events across the supply chain, with attendance from different sized firms and different mixes. These are often very innovative, thought provoking events in which the last one generated over 50 ideas of how to work best together - and not all of them were about the price.
CG: In respects to tackling your challenges, how closely do you work with your CFO and finance team?
AC: Very close. Our CFO is very supportive of the work we do. He looks after treasury and I’ve worked very closely with treasury around supply chain finance and the way that we finance some of our deals. It’s really important to be close to finance.
We meet regularly, formally and informally, and we have regular reviews to fine tune the direction that we’re operating in – which gives us some agility for what we’re focusing on.
In terms of the overall relationships between finance and operations, it’s working for me at the moment so I wouldn’t change it really. I get the benefit of the sponsorship from the operations side and I also get sponsorship from finance. The CEO also sits in on the monthly reviews, which offers a different spin and angle on things too.
Part of my responsibility is to help win deals; that’s slightly away from finance, but it’s critical for the lifeblood that we keep winning new contracts, so that brings us together on the operational side and puts us on the business growth agenda too.
CG: We recently conducted some research into the spend behaviours of the FTSE350 – which found a mere 13% of revenues is being spent on labour while a whopping 68% is spent on non-labour costs. Do these figures surprise you? How do you ensure you are receiving the maximum value from this large portion of external expenditure?
AC: The labour number is surprising, maybe a bit low - I think we’re heavily dependent on labour because of the nature of our business as we’ve got a lot of people who are delivering technologies etc. The FTSE is a pretty mixed bag of organisations but I would have expected labour costs to be slightly higher than 13% - which means there’s a lot of cost elsewhere.
In terms of extracting value (starting with innovation) from the external spend, we have a regular board that’s run with our technology officers which considers what new technologies and innovations are available to us (in addition to our own R&D centres in Japan and Germany). My team & I actively engage with both suppliers and the board to understand new solutions and their scalability, applicability to our customers and our own business.
I see my role as almost a facilitation one between our business and the supply base – making sure we have the appropriate suppliers to work with my internal customers. So the value extraction then is around really good relationships, becoming the ‘customer/supplier of choice’ etc.
We are keen on collaboration and having a mutually beneficial relationship with both customers and suppliers, encouraging a fluid, dynamic partnership able to change direction easily and quickly. This ensures growth in my eyes.
CG: How do you immerse or embed yourself (and your team) within your customers?
AC: I’ve got a very small relationship team who man various ‘towers’, getting a feel for all of our clients and key customers, ultimately embedding some level of resource literally next to our clients or via a shared service type operation.
Most of my category management team don’t reside with any particular clients, but if we take the finance shared service operation for example, I’ve got two procurement operations people embedded within that team, managing the day-to-day communication, data flow and knowledge sharing elements etc.
In terms of customer levels, we are doing this for about 15 top-level internal customers and potentially hundreds of external customers, where necessary.
CG: If you were to take on a greenfield site tomorrow, what would you do in your first 90 days?
AC: I’d make sure I got under the skin of the business direction and strategy – and start to align with both.
I’d look at some of the operational challenges, cause and effect, and apply a few things from my own toolkit, that I’ve deployed in the past that have worked, while developing an overall framework.
In terms of implementation, I would identify the quick wins and deliver on them. By the end of 90 days I would have a clear strategy of how I was going to move forward and what I was going to achieve.