John Durrell talks us through his career background, from his entry into procurement to what he has learnt along the way, as well as his highlights so far.
I was originally in a strategy management consultant role so, like a lot of people, I didn’t go looking for procurement. Instead, procurement found me. I was introduced to procurement around the year 2000; I was at AT Kearney and everyone was suddenly distracted by an ecommerce boom. Luckily, AT Kearney had a fantastic practice in procurement and I found myself attending the briefs to fill some much-needed gaps.
For me, it was very exciting to be amongst people involved in developing cutting-edge procurement tools. Coming into procurement with a strategist’s frame of mind made me look at procurement from a more strategic perspective. However, as I moved into the operational side of things, I began looking at it from a different
point of view. I realised its vital importance and how much value it could add when done correctly. I realised how rarely procurement reaches its full potential, and I saw the opportunity within it.
I then became more involved with the operational delivery of procurement. The more I saw, the more I liked; I particularly enjoyed the way it improved things. Its tangible nature and practicality really stood out to me. I loved
how, when it was done right, it allowed me to really get into the inner elements of the business that drive profitability, customer satisfaction and long-term success.
I believe that next to marketing, procurement is among one of the most strategic functions and should be moved higher up on business’ executive agendas.
Building great procurement teams is what has given me the most satisfaction. Business is all about the people. Results do not deliver themselves; it is the people who deliver the results. That is why it is so vital to have the right people in the right places. I managed global teams and I had people from Singapore to San Francisco working together in harmony. Having a group of people who have never even met, yet still continuing to work together and face off against huge global suppliers is incredibly satisfying.
Also, starting up a company from scratch proved to be something I really enjoyed doing even though it was not a challenge I was initially looking for. I was a reluctant entrepreneur! However, I couldn’t see another way in which to serve the market the way it needed to be served, so I knew I had to do it.
Running a company is entirely different to running a function. With your own company, there is always something more you can be doing; it’s a very competitive world out there, and you always need to be finding ways in which you can improve and stand out. But, in the end, I really enjoyed it because I felt I was constantly learning, and I’m thoroughly glad to have had an impact on the market.
I see a lot of reluctance from people when they decide to outsource and I’m not certain they do it for the right reasons – it is almost as if they try to fix something that isn’t broken.
When you get right down to it and consider how strategic procurement is, most companies don’t want to outsource to outsiders. In many respects, procurement is part of the ‘brains’ of the operation, so why would you want to outsource it? I understand why some companies may want to outsource the transactional part of their procurement. I think it will be interesting to see where the value proposition for procurement outsourcing goes moving forward, as I personally am not sure what form it is going to take.
Private equity and procurement
The private equity world is very different from the wider corporate world. This creates a demand for different types of procurement support. Private equity is urgent. Everything has to happen in private equity much faster. I think it’s great to have that kind of business urgency within private equity because, for procurement to be truly effective, people’s minds need to be open to new ways of thinking. If people are pro-actively looking for new
ways to improve their business, it automatically opens the door for better procurement.
In the private equity space, procurement is seen as something that everyone needs to look into, but too often it is not just yet. Often, people see procurement as too difficult or too long-term or, alternatively, as a last minute measure that can help save a company. It’s a real shame because procurement can add so much value, and the private equity world has a lot of very smart individuals with complex roles. Too often procurement value-adds end up being missed out and left on the table.
I think procurement tends to slip off into a marginal role; if people truly saw the value of what procurement can provide, they would see how it fits into the bigger picture.
Generally, I think there are 4 situations within private equity in which procurement is absolutely crucial. Firstly, you need to make sure the company is performing well in order to achieve the best sales price on behalf of shareholders and investors. Secondly, operations need to be slick and efficient, so that customers get the best quality service. The third one is the ability to capture scale across both the organization and portfolio. Too often this is dismissed as being too hard but, once you begin to understand the structure of the private equity business, you’ll be astonished at the opportunity and good corporate practice that can be applied to deliver value across the whole portfolio. Finally, the forth situation is simply risk reduction. Procurement is looked on as delivering savings, but business and service continuity is still really important - having procurement helps create robust supply chains that are going to create competitive advance and work effectively within the uncertain nature of businesses today.
Interim vs consultancy
Is always a pertinent topic in the market place, with both being utilised for different purposes. They are different tools and fulfill different objectives. I have hired and managed both, and it is vital to understand what they can and can’t do, as well as what your own intentions and objectives are. For example, if you are looking for depth of category experience and have a particular tender that needs to be done, interim will be the best choice. With consultancy, you don’t get the same degree of ownership and direct accountability as you do with interim. However, consultancy could work to your advantage as what you do get is an objective view that will allow you to compare your current performance with a wider set of competitors, a larger data set and experience base, as well as a more open-minded approach to best practice.
Generally, you have to be prepared to actively manage consultants to ensure you are getting what you need. With interims, they tend to have a more specific way of working and usually have deeper expertise in what they do.
Current challenges in procurement
One main challenge in procurement, is that there are not that many truly great procurement people. What makes a brilliant procurement professional is the natural ability to connect with the stakeholders in the business, so they can understand the challenging issues and come up with solutions from the supplier end of the equation. Connecting with business issues is a rare quality, and finding people who not only have the capability, but the appetite, to do it is the main challenge.
It’s virtually impossible to judge whether or not someone is going to be a good procurement person from just a CV and cover letter. It’s important to realise that it’s not all about the track record; you want to hire people who are willing and capable of doing things that they may not have ever done before. I have hired people out of automotive and bought them into financial services, for example. Later they asked me what I had seen, why I had hired them! I have generally found this to be tremendously successful, particularly with regard to automotive technology manufacturing because the basics are deeply instilled and are portable into other industry sectors.
One of the main things I have noticed with recruiters is that they always have a job spec and they try to find people who fit the criteria of the job. They’re trying to find someone who is already the ‘finished article’ instead of finding someone who shows potential to become the finished article, a much tougher proposition. Of course, that is where many of the extremely high performers will come from, from having the opportunities, skills and drive to continue to raise their own performance. Ultimately, my job is to create the situations in which people who work for me can be successful, and that’s how I build exceptionally good teams. I also find this helps to retain staff – giving a new and exciting challenge is generally what tends to motivate people the most.
I think they’re a great thing to have. These qualifications define and professionalise the essence of what procurement is all about. It’s wonderful to see not only what CIPS has done worldwide, but how it can provide people with a platform to step off and deliver from. Having these qualifications can reinforce one’s confidence on the technical side of things, which will then enable them to make good judgement calls around interpersonal skills, management skills, strategic thinking, and analytics. However, it is important to note that there are great procurement people out there who don’t have qualifications, and qualifications don’t necessarily always guarantee excellence.
The future of procurement
I believe that the next step for procurement is to build stronger relationships within the business, and to use well-known and established SRM (Supplier Relationship Management) techniques. SRM is a great way to pull people into procurement. Procurement can provide essential commercial experience for a wide variety of people in sectors such as IT or HR. A couple of years in procurement can really broaden one’s skillset, and give a greater sense of true capability within business. However, it is essential to understand the basics before one can move onto SRM. It is becoming very common these days for people to try and do SRM without truly knowing what their contracts entail or what the business needs to have accomplished. SRM is much farther up the pyramid conceptually, and trying to attempt it before properly understanding it is like going to the Olympics without doing any training; it just won’t work.
Initially, the goal should be to achieve better management to existing contracts. To get this onto the agenda, it may call for a slightly different set of procurement skills, more industry knowledge and deeper operational engagements. The future is bright, but we can’t stand still. It is up to us to run to meet it.