Karen White [KW], Group Procurement Manager at William Hill talks about the need for procurement to get the fundamental basics right and communicate the business benefits better.
CG: Hi Karen, thank you for joining me today. Karen, you are the group procurement manager for William Hill, what does this entail?
KW: Hi Chris, Pleasure. William Hill is a market leading betting and gaming company with over 2300 shops on the high street and as a result a varied portfolio of suppliers. I manage a small team of four procurement managers and third party spend of about £250 million net. As a team we set the procurement policy and framework for the business as well as working directly with the operational teams on key projects. The team’s remit is to look at cost savings, to manage procurement risks, and drive good practise throughout the organisation.
CG: Now, procurement in itself has been splashed over the front pages of every news paper in the UK for its role in the public sector. Yet very minimal has been said about procurement in the private sector. Is procurement in the private sector doing such a far superior job? Why aren’t we seeing as much coverage about private sector procurement as we are public?
KW: Public procurement is more visible at the moment because it is in the frontline of driving costs down for the Government and there have been some headline examples of where improvements could be made. I think if you looked closely at the private sector you would find examples of poor practise as well as examples of excellent practise, and I think that’s the same in the public sector. So I don’t think it’s necessarily that the private sector’s doing a better job I think it’s just less visible generally. I think the publicity being generated for the profession from the coverage is great and helps promote the function and the role it can play in both the public and private sectors.
CG: I guess the more procurement comes under the spot light, the higher the expectations are for procurement to deliver the results back to the business. In your opinion what do you think procurement is doing today to drive business performance?
KW: I believe that procurement is fundamentally about two things, firstly, managing and reducing costs, and secondly, managing risks associated with the supply chain and doing this well helps drive business performance. To do this well though procurement needs to attract the right calibre of people, people who can engage with and talk to internal stakeholders, understand what is important to the business and support this through what they do day to day.
CG: So communication and talent are two key areas that procurement should be doing better. What’s stopping them? What’s holding them back?
KW: I think the contribution procurement can make is underestimated so we do need to sell our function internally better and promote our successes. I have said that I believe procurement is about managing risk and cost for the business and if we focus on doing this and doing it well over time then recognition and support come from that. That’s why the current publicity about procurement in the public sector can help promote the function and raise it higher on the agenda. Fundamentally doing a great job on the basics and communicating that without overselling means greater investment in the function.
CG: When you say the basics, you’re talking processes, technology, methodology?
KW: I mean the fundamentals of procurement - working with suppliers and colleagues to manage and reduce costs and risk in the supply chain. Processes and methodology support and underpin this activity and technology can help enormously if used appropriately.
CG: What are your three objectives and areas of focus for the next 12 months?
KW: I’m sure you won’t be surprised to hear, given what we’ve talked about already, that our focus is on risk management and cost reduction!
As a small team we can’t support the business hands on with all its procurement activities so one of the things we have spent time on recently to try and manage risk is strengthening the policy, processes and guidance framework. A key objective for this year will be to roll these out and to make sure that they’re embedded in the organisation so that people have some good tools and the templates to buy better on a day-to-day basis.
We have identified a number of key cost reduction projects and are working closely on these with the business and allied to that, we have a particular project to understand our supply base better and reduce the number of suppliers we’re using regularly.
Our third area is to focus on improving our post contract performance with key suppliers.
CG: Understanding the supply base and cost reduction obviously are tied in together, are you thinking that’s going to be a shift towards cash management as well, so payment terms and in cash generation?
KW: I think the answer to that question is yes, but I think it is part of what we’re trying to do rather than a specific end in itself. We’ve got a lot of small suppliers and many have differing terms so obviously trying to get some consistency in terms and cash management helps the business.
CG: Given the current economic climate (which has resulted in higher market and supply chain volatility), how has downward risk management impacted William Hill’s overall business strategies?
KW: Downward risk management is one of the most critical things I think procurement can contribute to the business, so it is high up on my agenda. Our efforts are focused very clearly on our key and critical suppliers and mitigating the risks we have identified with these supply arrangements and making sure that we have effective ‘plan B’s’ in place for a number of areas and different scenarios.
CG: What does your measurement and metric dashboard look like - what do you report on?
KW: It’s simple really, we report on the projects that we’ve completed and the savings we’ve made. In terms of savings, we report on cost reduction which is measured on an annualised basis (i.e. a year-on-year reduction) and it is this target we are measured on but we also report on soft and intangible or cost avoidance savings.
CG: What is your reference for good procurement? Do you look at external sources (what the market is saying or competition) or is it an internal measure?
KW: I think we do both really but for sure we are on a learning curve. The procurement team has only recently been established so we try and measure our performance by asking ourselves two questions: “Are we expanding our remit within the business?” and “Are we increasing the savings?”
I think there are a number of tools that you can use to look at maturity and good practise and we do need to benchmark more externally but that’s something I think for the future for us and we’re just focusing on trying to improve what we do internally first.
CG: When you put together these reports for finance, how often is the accuracy and tangibility of the numbers you present, challenged by senior management?
KW: We make sure that large savings are validated with the finance team so there are no disputes about them.
CG: When finance look at those big savings, how sceptical are they of the numbers you’re reporting on? And looking forward, the value you can add to the bottom line of the business?
KW: I don’t think people within this business are sceptical about what we do, I think because we sit down with finance and agree the largest savings, it becomes very clear that those savings are real savings for the business. In the past year we’ve grown the team to its current size and although there are still only five of us we’ve got that commitment from the senior management team and I think that’s a sign that they’re definitely not sceptical here about what we can do.
CG: In your opinion, what does procurement mean and what are the responsibilities of procurement?
KW: I think it can mean different things depending on where you are and the maturity of the team in the organisation. Procurement, for me, here at William Hill means a process of managing risk in supply chain, the process of buying goods and services and managing and reducing the cost of the services that you buy.
CG: Does the rest of your business including your CFO define it in the same way?
KW: We report into the business through Corporate Services, work closely with finance and have strong relationships with a wide group of managers and functions and I would say our senior management team, including the CFO, see procurement as a tool to manage spend and as one of the vehicles to reduce costs. The type of projects we have tackled, the hard savings delivered and the increased visibility is helping shape how procurement is viewed within the business.
CG: If they’re not too interested in the nuances of the supply chain, How aligned are your goals and objectives to those of finance?
KW: I think our goals and objectives are clearly aligned, I think our finance team are very focused on improving the bottom line through managing costs and I think procurement is seen as a key part of that for the business.
CG: How often do you meet with your CFO?
KW: I try and meet with the CFO monthly, and my team meet other members of the finance team regularly when they’re working on projects, to understand current costs, how the savings might be calculated and what that might look like, so we have fairly regular meeting with our finance colleagues.
CG: Do you feel, when you’re talking with the CFO, that you’re in complete control and completely understand what makes up your cost base?
KW: I think we have a very good understanding of the key supply costs in the business, but having said that I think there is more work to do and especially on what I would call our second and third tier suppliers. We do have a project which we kicked off last year to try and understand more about what those suppliers are doing and how those costs lead into the business.
CG: What else would you like to see from your cost or supply base on your dashboard in order to understand and control your cost base?
KW: We have a high level of categorisation of what our suppliers do but I think another level of granularity that helped identify the different types of service supplied by individual suppliers would help but we don’t have that at the moment with the systems that we have.
CG: What is one thing procurement teams in the UK, Europe and the rest of the world should be doing to be seen as strategic, indispensable business partner?
KW: I don’t think there is just “one thing”, but if I had to pick one it would be to get the fundamentals right. I think if you don’t make sure that what you’re doing is aligned with where the organisation is going I don’t think you can hope to make procurement an important strategic partner.