Starting from nothing can certainly have its advantages – but the idea of building a procurement organisation entirely from scratch is a fairly daunting prospect, even for the most experienced of executives.
That was the task that faced Emily Bates, Hope Construction’s head of procurement, but it was not simply a case of building a team and having complete control of spend from the get-go.
First, in order to achieve that level of control she had to exert the procurement team’s knowledge and expertise across the business and turn everyone into a seasoned buyer.
Formed in 2013 following the merger of Lafarge and Tarmac and the Competition Commission’s requirement that certain parts of both businesses were sold in order to create fresh competition in the market, Hope was named after a cement works in the UK’s Peak District that remains the company’s largest asset.
Bates has been with the company since day one and has been instrumental in laying the foundations that have helped shape the firm’s fortunes.
As she explains to Procurement Leaders, the process of bringing together two entirely separate businesses and moulding them into a coherent and successful unit was a unique challenge, but one that allowed creativity to flourish in the newly formed company.
“We brought 800 people together on one day from two different businesses who couldn’t have been less like each other,” says Bates. “We’ve gone from having no processes or procedures, no enterprise resource planning, nothing really, to where we are today, which is a really good position.
“What we were keen to do as a procurement function supporting the business was to not have a traditional procurement function. I didn’t want it to be an organisation bogged down in red tape. We wanted to come in with fresh ideas,” she explains.
With no data and the prospect of 18 months without the ability to run spend reports, Bates and her team needed to build relationships with internal stakeholders – and they needed to do it fast if procurement was to gain a foothold in the wider business and become a key influencing factor in the new organisation.
“We had to go out and spend time engaging with stakeholders to really get a sense of what the business wanted from us,” she says.
“What has come about, is an awareness of the level of skills required by individuals. We have one cement plant, four large quarries and around 150 concrete plants – the needs of our business are very, very different. We’ve had to adapt because there isn’t one style or one approach that fits the whole business.”
The challenge for Bates and her new colleagues in the procurement function was to create a buying organisation that was robust yet, at the same time, flexible. Their mission was to establish a procurement function capable of delivering results in a highly competitive market while maintaining that desire and ability to embrace innovation.
Perhaps the best analogy to use when describing the methods pioneered by Hope is to compare the approach taken to that of the Dutch national football team in the 1970s. Then, Rinus Michels’ Netherlands side played what became known as Total Football – a system in which players could slot seamlessly into other positions as well as their own, popping up anywhere on the pitch.
Almost 40 years on, Bates and her team are translating Michels’ thinking to procurement – thanks to a training system that gives workers across the business responsibility for buying.
“We’ve put in the tools to make life easier for our stakeholders,” says Bates. “As a business, we have a huge tailspend because we’re so varied in what we buy. As a function, we don’t have time to look at that tailspend because it’s just too big. It’s too widespread. There’s a lot of money but probably not too much we can add value on.
“We identified the need to upskill colleagues on negotiation. We’ve trained [them] on what the important things are and this is where we’re really adding value.
“[We] designed an internal negotiation-training package. Up against professional buyers, our commercial team struggled. So we organised a training package for the commercial function – more in-depth in terms of dealing with additional areas, such as working capital.”
The company hasn’t stopped there, with Bates and her team encouraging this approach across the business. Workers are now becoming versed on other key areas, such as simple legal matters, which can now be dealt with in-house, freeing up legal counsel to focus on larger, more important issues.
It’s this cross-functional approach that has resulted in procurement establishing itself at the heart of this aptly named company. With more than 80 of the company’s 800-plus employees having received buying and negotiation training, procurement has made its presence felt throughout the business.
With feedback suggesting the process has been an overwhelming success, the main battle for Bates and her team now is to keep pace with the demands being placed on a still-fledgling organisation.
“The problem we have is that we’re victims of our own success,” she says.
“We’ve trained about 10% of the workforce. It has now been internally certified by our HR and development programme.
“When you do the programme, you are now issued with a certificate. Even the HR function want a training course too.”
That, in many ways, is the ultimate compliment for an innovative approach that could represent the future direction of a number of procurement organisations. In just three years, Hope has come a long way, but Bates is keen to emphasise that a lot of the success enjoyed by the function has been borne out of its initial struggles.
“At the start, we spent a lot of time out in the business understanding what they needed,” she says.
“In some ways, that has given us an advantage because we’ve built fantastic relationships – we went in and really listened to what they wanted us to do. We then responded.
“We’ve added value as a function by putting infrastructure in to support the business. We’ve done a lot of basic things, such as introducing procurement cards and, although there’s nothing innovative about that, we’ve listened to the business and put in the tools that the business needs to succeed.”
Apart from the smiling faces that greet Bates as she arrives at work and the continual requests for the training to be rolled out further and more quickly, procurement’s biggest success has been its ability to bring greater value to the organisation at large.
“We’re adding value everywhere we go and we’re actually making our job easier because we’re having fewer invoice failures, we’re getting better deals – as a business this is the right thing to do,” she says.
“You’re always pushing on an open door. For every main commercial meeting, they now request a procurement person to be present and to go along to help them. We still have processes, obviously, and we still do everything properly, but red tape is kept to a minimum.”
Name of the company
Hope Construction Materials
Head of procurement, Emily Bates, heads up a procurement team of eight employees.
Nature of the business
Hope Construction Materials is the UK’s leading independent procurer of cement. The company was formed in January 2013 following the merger of Lafarge and Tarmac. Headquartered in Mayfair, London, the business employs 900 people across the UK.
The company generated revenues of £285.6m in the 12 months to June 2015.
This article is a piece of independent journalism, written by an experienced journalist and commissioned exclusively by Procurement Leaders.
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