Gaining competitive advantage through effective supplier management at Norland
May 20, 2014 9:41:00 AM
Rachel Lee, Group Procurement Director, for Norland Managed Services speaks with Proxima about leveraging supplier relationships to create a competitive advantage.
CG: Today, I am joined by Rachel Lee, Group Procurement Director of Norland Managed Services; a leading provider of facilities, energy and project management services throughout the UK, Ireland and USA. Thank you for joining me today Rachel. Rachel, can you tell me a bit about your background?
RL: My role at Norland is that of a Group Procurement Director, I’ve been there for about six years setting up the procurement function, and aligning the procurement department to help support Norland’s growth.
CG: In 2013, CBRE announced that it was acquiring Norland. Can you talk through the reasons for this move; and do you think that it could be a sign of things to come in this sector?
RL: It was definitely a very positive move for both CBRE and Norland.
Norland has built an exceptional reputation for managing the technical engineering elements of occupier and investor portfolios; with a particularly strong capability in our management of critical environment facilities. By combining our complementary expertise, we will now be able to offer customers unrivalled access to a fully-integrated, best-in-class suite of real estate services across EMEA. It’s an exciting opportunity for our business, our people, and our supply partners.
Is this a sign of things to come? Probably; the market is definitely maturing in the building management area. We see building owners and building occupiers starting to really understand the benefit of having an integrated offer in real estate management services, and engineering management services together. It’s becoming a real key part of our customer approach.
CG: You mentioned that one of the groups that will benefit from this deal are your suppliers – who you refer to as ‘partners’. What is your approach to managing those relationships in a time of change?
RL: Suppliers are integral to our delivery. We are very open with them and meet with them regularly.
We keep them fully engaged with new developments within our business that could lead to real opportunities.
Our approach is built around working with them as our partners, so we try to get away from the term sub-contractors and talk about supply partners. To me it’s about becoming a customer of choice with suppliers and I am really seeing that delivering value now.
CG: What are your top drivers for 2014?
RL: Norland’s goals are around growth, customer retention and expanding our geographic spread. We are already working in markets like Europe, the USA and Singapore, so it’s about growth in those regions.
CG: What are the challenges standing in your way from achieving these goals?
RL: I think they would be around fully understanding our customer needs, and having a tailored focus to reach our customers. This concept is absolutely fundamental in our business because all our customers are different; their sites are different and their needs are different. In order to achieve this, we need a resilient and adaptable supply chain. This is definitely one of our main challenges because many suppliers are quite traditional in their own industry, and are not necessarily as customer-service focused as we are.
So a big challenge here is getting the supply markets to adapt and deliver the same level of service that our customers expect from us.
CG: How do you go about delivering this tailored service to your customers when I assume that all your partners are relatively the same or similar?
RL: Well, for example - one data center to another probably is very similar in how you would operate it, but the customers and our requirements could be different. So it might be the case that you have a low cost operator who just wants one of their data centers to be clean and safe, with assured power and cooling. On the other hand you might have another customer that wants all that risk managed, and may not be so focused on cost containment, but are much more focused on the look of the building. So it really depends on the customer and that’s why we have to tailor the service and ensure that the suppliers respond to the specific or unique requirements.
We start with a fairly stringent process before we select which suppliers we are going to work with. We take a look at their culture, their behaviours, how they treat their staff and how they respond to customers. We like to make sure they are aligned to our culture.
Once we’ve got to that stage where a supplier wants to work with Norland (and they can see the cultural alignment) they are very motivated to work with us - generally, we find that they will also be willing to invest their time in terms of development.
For example, we have done quite a lot of work with one of the world’s leading fire systems organisations - and as a result of the work we did with them, they completely remodeled their internal delivery processes - including putting in a helpdesk they didn’t have before. This ‘remodeling’ has helped them completely realign their offering which has enabled them to win business from other big accounts. Which is very rewarding.
CG: How do you communicate back to your business the value of these ‘softer’ projects which may not have any immediate monetary ROI?
RL: It’s all about constant communication with the right people, and that the right people are involved in the decision making process.
A key part of this was to embed the procurement team into the six divisions of Norland, directly interfacing with the customer. The procurement team have a dotted reporting line into myself and a solid reporting line into the managing directors of their divisions. This ensures that procurement is an integral part of delivery for their respective division – involved in all the right discussions and forums and offering plenty of opportunities to make sure the business knows what they have been working on.
CG: What is your vision for the future of procurement or supply management in Norland?
RL: That’s really straightforward. It is about harnessing the power of our supply chain to give Norland a competitive advantage. That means becoming a customer of choice with the suppliers so that they bring us their ideas and innovations first before they go to our competitors.
Ultimately, it’s about being the best company to work with, from our suppliers' perspective – being seen as value additive to their business. In return we get the best value, their best ideas and their best people working on our account, which will help us to gain a competitive advantage in the market.
We have suppliers that walk into our building and feel quite comfortable to ‘drop into’ senior executives' offices to say, “Hi, how is business going?”. That’s the level of relationship we have with a lot of our suppliers now; and we know that doesn’t always occur across our industry, which really does bring a completely new level of service to our customers.
Furthermore, we hold an annual supply day, where our partners are encouraged to talk to our customers and share ideas and challenges with them. It encourages collaboration and has led to new business for the suppliers and for Norland. The customers can see how close we work with our suppliers and how this working relationship benefits both sides, which is very powerful.
CG: Norland's procurement function is in an interesting position in that it straddles both the purchasing and supply sides of the business. How do you take the lessons from both sides and turn them into best practice for Norland?
RL: Certainly we have had some interesting insight into the procurement function from the supply side. To be honest, we have come across some challenges. In our business it’s all about people; so it surprises me how often I see a procurement function, from potential customers, running a rigid RFP process that does not allow the level of dialogue that is often needed for customers and suppliers to really understand what the solution is, and what’s required.
Quite often we find ourselves at the end of a strict RFP process where we are not able to present other options or different ways of working. We are just expected to select tick-boxes and fill in documents. When I see this happening I sometimes wonder what’s going on with the procurement profession.
This is a key lesson for us, to ensure that there is flexibility in our approach, and ensure that the outcome is at the heart of the decision, not just running a process.
CG: What’s driving this process-led behaviour - Is it education? Business leaders' expectations of what should be done, or is it just laziness?
RL: It’s probably a bit of all three to be honest. I do think - and actually this could be a bit controversial - a lot of the people that get into the procurement profession are people that like processes and fail to see that sometimes processes aren’t applicable. I mean, of course it’s applicable if you buy commodities but not when you buy services provided by people.
CG: So then how do you upskill your team? What are some of the things you want to embed into your team to make sure they are having business conversations?
RL: Two ways really. One is where we use all the technical experts in our business, because there is always somebody that knows something, or a lot about a subject. But in the cases where we can’t always find a technical expert in-house, we use suppliers as well - and that comes back to having this open and honest relationship with our supply chain.
Secondly we leverage our existing suppliers and customers to understand their business and industry better – bolstering our own knowledge and insight. For example, to understand the lift manufacturing industry we will ask customers and suppliers to show us around their facilities and explain the technical and non-technical aspects of the product and service they are receiving and delivering.
This eases a large burden for us, particularly in areas where mechanical and electrical infrastructure requirements can dramatically vary from customer to customer.
CG: Finally, going back to your objectives of growth, retention and expansion, how big a priority is cost management in all of this for Norland?
RL: It’s a priority of course. At any point, a call from a customer might come in asking us to reduce our prices – but cost management is not the sole focus for us. I have worked in plenty of procurement teams where performance is solely measured on cost savings, and they get a bigger cost saving target every year. We don’t work like that at Norland, because a lot of what we do it is based around delivering an exceptional service.
Additionally, ensuring exceptional service is being delivered requires a completely different set of activities and outcomes. One of these activities for example, is to run regular seminars on our customers’ premises, and invite all the suppliers who work on that site together to talk to customer on what they/we can do better. Suppliers learn from each other this way too – further enhancing the collaborative environment we are trying to create.
Our focus is on service and value first, then cost – in that order.