The CPO’s strategic role in delivering value
The evolving world of services procurement and the strategic role of the CPO.
With Stephen Day, Chief Procurement Office, Kantar
00:00:00 - Making procurement a career destination by design
00:06:00 - Is the procurement professional promoting its value well enough?
00:10:33 - The importance of brand values in the supply chain
00:15:20 - Services increasing share of the procurement spend
00:24:00 - Pivoting the procurement conversation to value
00:40:30 - The bravery required to benefit from supplier feedback
00:52:00 - Better understanding relationships, values and the world of work
01:03:00 - Are CPOs ready for the challenge?
Transcript
Auto-generated. Please excuse any minor errors.
Jonny Dunning [0:00]: Okay, and we’re off. So, I'm delighted today to be joined by Stephen Day, who is the Chief Procurement Officer of Kantar, and some great topics we've got lined up to discuss today, but thank you very much for joining me.
Stephen Day [0:14]: My pleasure. Nice to have the opportunity to chat to you.
Jonny Dunning [0:17]: Excellent stuff. So, we're going to be looking broadly at the topics of the evolving world of services procurement and the strategic role of the CPO, which I know is a subject that you're very passionate about and you've got some really, really interesting views on. Before we dive into the detail and look at these topics, would you just be able to give a bit of background on you, what you do, your journey through the world of procurement?
Stephen Day [0:43]: Very happily. I'll say right from the get-go that I think that my career has been very lucky. Although someone once reminded me that luck is where opportunity and preparation come together. So, it was a good reminder that actually maybe I did get that by design rather than good fortune. But you can probably tell from my accent, I'm originally from the Midlands, born and bred there. Did my first university degree there and actually as an aside, my eldest daughter has just started at the same university I went to and the one that I met my wife at. So, it’s funny how life comes around.
Jonny Dunning [1:21]: Oh, excellent.
Stephen Day [1:23]: But I started Rolls-Royce Aerospace big traditional manufacturing business and then very quickly graduated through a number of procurement roles over the years and I think two pivotal things happened to me in my career. The first one was, I was able to make the leap from doing procurement into supply chain and I think everyone on this call will know that that terminology over the years is blurred into what supply chains talk about procurement.
But I did actually go into running operations for a mobile operator that became T-Mobile is now become everything everywhere. And simultaneously did a master’s degree at Birmingham, and a chap called Andrew Cox, and now the professor there was a guy called Chris Lonsdale – super, super, experienced. Can’t say that I've got the best grades in the world, but what it did do is, again, kind of opened up my mind to the broader contents of what procurement was all about, and then very fortuitously in fact, some good sponsors and some good mentors really.
So, I worked for a woman called Liliana Solomon, she's at T-Mobile, she then went to Vodafone Romania. She asked me to go there, so I spent three years in Romania, working for Vodafone, and then got affiliated with a chap called Detlef Schulz and NinianWilson that went on and drove the Vodafone procurement company. So went back to the UK, then went to Luxembourg, did three years there and then more laterally I've worked in Pearson the publishing company. I've just recently joined Kantar, which is a data analytics business recently acquired by Bain Capital, so now driving a more traditional kind of procurement transformation in a business that is pushing very hard on the doors of data and insights and analytics.
Jonny Dunning[3:22]: Excellent stuff. That is really interesting. So, obviously, you talked about your journey and as you saw the signs of some good fortune as you sayvery closely associated with good preparation and the right skills, the right attitude. But do you think that for most chief procurement officers or your kind of peers, when you look at that group, do you think most people started out with the intention of getting into procurement?
Stephen Day [3:51]: Well, it's a really, really topical subject actually, because now as we're kind of building up the procurement capability in Kantar, it still seems to me as we reach out to folks and we're kind of got interviews and things like that. And for a lot of kids coming out of either college or university, procurement still does not seem to be a destination place that people want to go to.
I get the impression it's something that people stumble into or kind of find their way into it, more by look rather than by design and that's a great shame because if you think about the melting pot of the procurement function, it's where so many things come together that represents what a business does. Many businesses have relationships with supply chains where they're buying products or services, adding value to it, and then I'm selling it to customers.
If you think about that process, are you buying well? Are you using suppliers that have the right security controls, the right diversity inclusion, the right supply chain themselves? Are you delivering it within the financial model? Is it the right quality? Is it support and product design, product innovation? Are you able to execute and get it into the customers in a timely way?
It's such a rich area that you can explore your category. I think Jonny, to be perfectly honest with you, I still don't think it has the prominence it really should and I wonder why because the CIPS has stepped up over the years. Everybody has understood through COVID, how critical supply chains are and I'm left wondering whether we as a profession just aren't talking about it loud enough.
Jonny Dunning[5:39]: Maybe that's the case, maybe procurement needs a kind of a rebrand in some way. But I think the way you were discussing that there, it's entirely strategic and it has an impact on and a relevance to so many different areas of the business that you need people with a fairly adaptable kind of skillset. Clearly, there are some core competencies to that, but what you're talking about is the strategic value, rather than maybe what some people at face value would make more look at it just like the transactional.
Stephen Day [6:22]: Well, it's a super, super question. Now, I'm very fortunate in Kantar because undoubtedly Bain Capital, the guys that own our business, absolutely understand the relationship between a well-managed procurement function and its ability to drive value. But I think you touched on a delicate point. I suppose it's one that we should confront early on, is really, is the procurement profession doing a good enough job of doing the elevator pitch with the CEO and the board, or is it in some cases reverting back to type and talking about, as you say, the very transactional nature of procurement?
And let's face it, busy CEOs have got a thousand things on their agenda, listening to whether you have procured to pay compliance is not exactly the thing that's going to get their interest. However, I firmly believe that if you pivot it to something that resonates with what the strategic objectives of the business are, your ability to get in there and influence it is going to be a lot stronger and you can go back to the previous conversation.
Why doesn’t procurement have its prominence vis-à-vis sales, marketing, or finance? One can only conclude that those professionals are better at doing those elevator pitches and really selling the value proposition to the boards than procurement has been able to do thus far. Quite honestly, that's on all of us, either aspiring CPOs or CPOs to continue to promote the values and what our function can deliver.
Jonny Dunning[7:53]: Yes, especially when you look at it as you get more and more digital transformation, so more and more of the stuff that should be automated, can be automated, and that elevates to a certain extent technology can enable that elevation from a transactional approach to a strategic approach. Because when you look at it, systems that are capturing these processes and capturing this data, procurement then own that data and that's incredibly powerful, and more and more businesses are appreciating the value of data and it's what's driving businesses forward.
So, the opportunities are definitely there for that to be recognised more and when you're armed with that data, I was thinking about this when I was looking at one of your articles on The Strategic Role of the Chief Procurement Officer and you're armed with all this data and actually you know so much about the business.
Stephen Day [8:44]: Yes, exactly.
Jonny Dunning[8:46]: You're really getting a behind-the-scenes look at everything, but you've also got that kind of inside and outside view because you're dealing with all of the suppliers as well.
Stephen Day [8:56]: Listen, you can tell by my grey hair I've seen a few decades now of procurement stuff and I've come from a world where I'm not embarrassed to say that you had to book out time on a computer in the office, to a time where the ubiquity of accessing computer power is unbelievable. I think what's also happened is that the tools and the data that CPOs have now, to tell a story about their procurement function, what it's doing is so powerful.
Just to give you one example, as we think about diversity and inclusion for the first time in Kantar, we're able now to have a point of view of the 40,000 suppliers that we do our business within North America. How many of those are owned by minority-owned, women-owned, veteran-owned businesses. Incredibly topical issue, right?
Well, for the first time we can now tell and by the way it's a very small percentage so we've got a lot of work to do there, but that for me is the kind of pivot that procurement supply chain function should be making with the data that they have in hand because now you've got a conversation with a CEO that says, as you think about driving diversity and inclusion, it's just not about what you're doing with your workforce, but it's also what you're doing in your supply chain. Certainly, you're bringing something more to the CEO as they begin to start thinking about how they're going to wrestle with those topics.
Jonny Dunning[10:30]: Yes, absolutely. I think the recognition of the importance of diversity and inclusion and a company's overall ethics and values as it applies to the supply chain, that's fascinating and very encouraging actually. Because when you get people coming out of university, young people approaching the workplace today, the brand values of what a company is all about and their ethics is extremely important to people.
It's one of the most important things to people coming into the workplace, they want to align with that. Extending that to the supply chain, absolutely makes sense and actually, I think it goes both ways as well because there are going to be certain suppliers where they may be a very valuable supplier and actually, they need to know that your ethics match up with theirs as well.
Stephen Day [11:21]: I think so. Again, I think one of the things that we're going to see through the experience that we've been with COVID, undoubtedly, it's exposed the fact that extended supply chains must have been great from a pricing perspective in terms of securing supply. It's been actually quite ruinous for some industries. Look at the disaster that we've had in the Suez Canal recently and now, if you look at the consequence of that, in terms of the availability of supply, it's going to be really problematic.
Look at the chip shortages that a lot of the electronic manufacturers are having and they can't access capacity. It tells me that what's going to happen is that we're going to see more onshoring and nearshoring rather than extended supply chains and quite honestly, there is a shortage of capacity with the nearshore supply chain. So, what's going to happen is that suppliers, for the first time in a generation are going start choosing the customers they want to do business with rather than vice versa.
If those suppliers are smart, they're going to be wanting to work with customers that -- I think suppliers are going to want to choose companies that represent their values, where they're going to learn, where there's going to be innovation and growth for them, beyond just making good margins. Suddenly, the whole thing changes quite fundamentally and I think what you stand for as a company, what your ethos is, has to be greater than just historically might have been a very buyer/seller transactional relationship.
And I think DNI is one of those topics where I'm seeing a lot of acceleration and thank God for it because my fear in the past couple of years was that it would be nothing more than a passing phase and nothing would really change. But what I'm seeing now is a lot of energy, in terms of really institutionalizing a mechanic and approach that is looking to really encourage diversity inclusion supply chain and Kantar is no different in that.
Jonny Dunning[13:39]: Yes. I think it's fascinating when you actually break that down into a bit more detail, and again, something else that you've commented on in the past is around cognitive diversity. Different ways of thinking. Diversity it's broad, it's about having different approaches in all areas. I totally agree with that in terms of you need different types of people with different backgrounds and different approaches to give you the broader view if you're trying to achieve an objective and you've clearly set out your objective as a business or as a group or as a society, you need the input of all different types of people to really get the best possible progress and outcomes.
That absolutely applies to supply chains as well, in the sense that, with what you were talking about in terms of potentially like more onshoring and nearshoring and stuff like that. That is inevitably going to open up the opportunity for smaller suppliers as well and more innovation and more diversity in your supply chain. I think that's something, particularly when it comes to services procurement, is very important indeed because ultimately services procurement is an extension of your company's workforce.
Whereas obviously, your entire supply chain is an extension of your company as well. So, just the ability to see that, see the detail on that, and to be able to make the most effective use of that is crucial. And again, that sits with procurement and is really a very powerful indicator of the strategic role of procurement do have.
Stephen Day [15:24]: I agree completely. Yes.
Jonny Dunning[15:27]: Okay. So, just touching on services procurement in a bit more detail. In terms of your career, how much of your interactions would you say have been on the services side versus kind of like the goods and material supply chain?
Stephen Day [15:39]: That's a great question. I spent almost 15 years in telecoms and you'd think that that's a lot of heavy lifting, physical infrastructure, which indeed it is. But even telecoms businesses have increasingly pivoted their supply chains more to services and software and things like that. So, I've seen a big transition away from just a fully focused hardware and physical supply chain into one that has a much bigger mix of services.
Just to give you some examples, it wasn't so long ago that Telco businesses would build their own networks. So, you needed the engineering organisation, but you then needed vans, you needed all of the ancillary equipment, and then you needed to buy the network kit that went with it. Well, most Telco businesses these days, whilst they may still buy the mobile operators, the radio access network equipment, for example, they're not deploying it, they're buying a suite of services that deploys that capacity for them.
So, that's just a very obvious example but one to signal how even a business like telecoms, which you'd think is all hardware, is actually pivoting to a world where it's a lot more services. And again, in billing, which is always a big topic in Telco,80% of that spend these days is services; people billing, customizing, billing engines, and building new capabilities within the infrastructure that Telco supports. And I would say, do I think that services procurement is as sophisticated as maybe a physical [17:25 inaudible]? I think there's still an awful long way to go.
And it's such an interesting area as well, because if you think about it, if you're buying labor-related services these days, how comfortable do we feel as a procurement profession, striking a bargain where we've reduced costs on a life-like basis, knowing full well that people don't necessarily get living wages and things like that? So, that's why I think this fusion of how you think about running your supply chain and simultaneously diverse and inclusion becomes super, super important because you can't build commercial relationships knowing that people aren't getting a living wage these days in my view. Why?
Because not only is it the wrong thing to do, but you don't build sustainable relationships with those suppliers. Oftentimes, they have the highest levels of turnover, the worst levels of quality, etcetera, etcetera. So, that's where I just think the sophistication of our sourcing methodologies around services can be so important in the future.
Jonny Dunning[18:38]: If you look at services procurement, I've heard it, people within the industry, within procurement talk about it just being left behind from a technology perspective, even compared to where it's like the contingent workforce and ultimately, it's a tricky problem to solve. It's complicated, services are all different, you can't just compare price on a life-like basis. But I think to your point that you're making there about cost-cutting, that’s a really thorny issue in services procurement in my view because if you were addressing cost-cutting, then you absolutely have those issues that you just mentioned and you need to understand what's going on in your supply.
But you also need to understand what you're getting for it. Because the idea of cost-cutting, we spent a hundred million last year, we need to reduce cost to make it 90 million this year. In no way does that take into account what the return is from the delivery of those services. You're getting some great consulting, some great outsource service delivery, all kinds of specialist services being delivered into the business. What's that driving in the business?
And I think that, again, ties into this strategic role of procurement where if procurement professionals can really understand their services spend and really understand which suppliers are doing a great job for them and where they're really adding value, then actually, it might make sense for the business to spend more on services procurement.
Stephen Day [20:08]: Yes. I've seen good examples and poor examples. Where the best examples work is where procurement really have a clear understanding of what the value proposition is of the services they're buying and how they lead to tangible outcomes for the business.
If you can really work that and I think as you say, you just become more sophisticated about thinking about what you're buying, and then it's not frankly, a unit rate discussion, it's actually, what is the scope of the service that you're buying and do you need to expand the scope or reduce the scope? Do you need to give the opportunity for suppliers to move into other areas of things that they may not have done historically, etcetera, and then it just gives you more bandwidth to have a richer conversation?
The other thing we've got to get more comfortable with and just perfect is, how do you productize services as well? I think in truth, there's a lot of repetition in terms of what we buy, and one of the things we're trying to figure out in Kantar with some of the services that we buy, is how do we productize it so we can make it more uniform and in doing so, have a much clearer relationship between the things that we're buying and the outcomes that it delivers?
And then we talked a little bit about systems. I mean then suddenly, your systems landscape becomes a lot clearer to run and operate as well, because you're productizing services, so therefore, things like your material master data and your records and all those things become a lot clearer to navigate and manage. And as I say, it comes back to the fact that I think that service procurement needs to be on a bit of an accelerated journey in terms of how it becomes more sophisticated in the future.
Jonny Dunning[22:03]: Yes, I totally agree. And ultimately, it comes down to data again. It comes down to understanding the information, but something that I really love about just where organisations can get on top of this data and understand what they're getting from the services that they buy, is it forces the organisation to think strategically. It forces them at the top level to say, where are we going? What are we doing? What's important? And it requires appropriate communication of that to all parts of the business.
So, every stakeholder within a business, who's procuring services -- when you're delivering to outcomes, you need to know where you're going, what the outcome needs to be and I think COVID has really driven a shift towards outcome-based work and increase the importance and shine a light on services procurement in some ways because (a) working to budget isn't good enough anymore. If we're spending 200 million on services, well can someone tell me what we got for that, please?
Because at the moment all I can see is that we spent it with these companies and these dates and don't even know what the projects were, whether they were on time, whether they delivered value, whether they were any good. So, it forces the whole organization to gear themselves towards what the outcome is. But the other thing COVID has done is it's increased the acceptance of outsource work delivery, remote work delivery, and actually, even if you've got your own staff working remotely and working from home, it does kind of drive that output agenda a little bit more.
Because if somebody is working from home and they've got childcare requirements or they're homeschooling during COVID, then actually to a certain extent it doesn't really matter how they're working or maybe not even when they're working. It's all about, are they doing a good job? Are they're getting what they need to do done and are they doing it on time? So, COVID's definitely had a big influence on this kind of transformation within services procurement.
But coming back to what you said about the kind of standardisation of productization of services, clearly within complex services there are going to be certain areas that are going to be within an organisation, a bit more cookie cutter. We see things where people are using, for example, requirements templates and things like that, which may have some variation around them, but ultimately, using the right technology, you can standardize things like that and procurement can guide it, but you can also standardize things like contracts.
But the only way that you can move forward with this type of spend, is to actually capture that process and capture the granularity because again, it comes back to the data. When you're looking at standardizing requirements, how are you addressing that in terms of looking back at requirements you've had before? Is it a business question that you're asking stakeholders or is it something where you're trying to interrogate the previous performance and delivery?
Stephen Day [25:09]: Yes. Our business has so many different components to it. Our big insights business has a lot of what we call customization together with a lot of services that deliver annuity revenues. On the customized business, she's basically individual projects that get commissioned by the big brands around the world.
Some of the things that we're looking at the moment iswithin the multitude of individual commissions that we initiate, is there enough commonality that a project level, it looks random and variable, but as a quantum in terms of a volume level, if you look across all of it, is there enough consistency there that we can begin to start streamlining that and as you say, create templates and standardizations.
So, with the end result, the journey between customers commissioning things and our ability to execute that within the supply chain becomes a lot quicker and a lot smoother, and delivering a simplified process will also greatly aid the quality of what it is that we provide to our clients. So, we're looking at that and it's thirsty work. You have to do a lot of data crunching to get into it, kind of really understand what it is that's there and what the data is telling you.
Now, it's greatly aided by the fact that we are investing heavily in our supply chain data, improving all of our material master management, our onboarding processes, our reporting, and all that kind of stuff. In doing so, I'm pretty optimistic that we'll begin to start seeing a lot of patterns to what we buy that will then aid us in terms of simplifying what we do.
Jonny Dunning[27:03]: How much do you think procurement can really aid the stakeholders at the point of actually this kind of generation requirements capture at the beginning process?
Stephen Day [27:14]: Well, when I started my career at Rolls-Royce, I remember a training course that they put me on and it really resonated which was80% of the cost of something is in its design. So, by the time the draughtsman – that wouldn't even be a phrase many people would understand these days – but it's basically the guy -- again, remind myself to use more clear language. When the draughtsperson kind of put that into a template and then handed it over to procurement, you then hand it to the engineer, the engineer kind of replicates exactly what it is, is in that specification.
I think what's changed a lot over the course of the past 20 years, is that actually good procurement now is working hand in hand with, in this case, the engineering function to actually shape the specification from the get-go, so that you're designing cost reduction into the solution that you're trying to build, rather than handing it over to procurement, then saying, try and buy it at the lowest price.
Now, the good procurement in mind and now the metaphor for that in our daily lives kind of going forward 2038 is that it's incumbent on CPOs like me to work with the business ahead of when they think they need to start speaking to suppliers to really understand what it is that they are needing and what's that specification and how can we shape that specification, so the cost reduction is embedded in the thing that we take to market.
The challenge a lot of procurement people, Johnny, is that this then takes us into the world of cost avoidance rather than cost reduction. This is a daily battle for us all because most financial organisations can readily measure the difference between the price that you bought something from today versus the price that you'll buy in the future and very easy mechanic to calculate. The challenge is that if you're paying all of your muscle into making sure that you shape the price of something in the future with a new design, so inherently that cost reduction is there from the get-go, becomes very difficult to measure.
And often we use the phrase cost avoidance, you've avoided having to pay a higher price. Problem is, it's not seen in the P&L from the get-go so it makes it very difficult to measure and activate. So, then you have to think very thoughtfully about how you change the parameters of the measurement of the procurement function against what may have historically have been the case.
So, now, do you measure the cost of your procurement against the revenue, for example, of the business? Is the gross margin changing? Pivoting those conversations are really, really tough, but it really reshapes the whole resin d’être, why you have a procurement function in the business and I’m pretty convinced that if you can make that pivot to the beginning of the conversation, you suddenly become a really valuable capability for the organisation.
Jonny Dunning [30:26]: Yes. It’s fascinating and it’s really that cost versus value conversation, isn’t it? And I think when you’re dealing with things like procuring goods and materials, it’s a bit more binary as if it’s kind of – if you look at catalog buying, for example, price is much easier to use as a tappable criteria and cost. When you get into complex services, it’s a mistake for organisations to just look at two consultancies and say these guys are cheaper on a day rate for senior associate because they might take three times as long or they might do a bad job. It’s more complicated than that.
And this is where again, the information needs to be captured on, who am I engaging? What are they doing? What are they said they’ll do? Did they do it? Did they do a good job of it? How much did they say it was going to cost? How much did it actually cost? All these data points can really feed into that. And yes, because it’s totally strategic and if an organisation wants to really be able to answer the question of, what is the most effective use of our resources?
That’s going to tie into the permanent headcount, it’s going to tie into contingent workforce, it’s going to tie into services supply chain as well. And that strategic workforce plan is part of what you’re talking about in terms of prior planning and predictive strategic work to say, what is it we need to do and how do we need to do it? And actually, how best do we shape that? So, I think that’s absolutely fascinating. One question that raises for me is when you look at the design of requirements like that, when you’re looking at it in advance and you’re putting some strategic thought into it and building those cost-savings in efficiencies in the first place.
Totally agree. It’s a pragmatic way to do business, doing business properly. How do you then within that process, you’re doing that in advance, what’s the value and how do you see the dynamic of bringing in suppliers to help further shape those requirements? Do you see that as something further down the line?
Stephen Day [32:41]: It’s interesting actually because we have a couple of examples of that going on in Kantar and obviously, I’m sure if there are any people watching this podcast, Johnny, I’m sure this will be something that they’ll be thinking to themselves, which is if you have a supply that comes in and helps you define the spec, to what degree have you got impartiality if you want to test it in the market place? How do you know the spec hasn’t been over-embellished?
All of those things are on the downside but on the upside is the fact that it kind of accelerates your thinking in terms of scope, it kind of accelerates your thinking in terms of plausible outcomes that can be delivered, but it gauges the supplier early in the process of what it is that you need in your business. So, there’s kind of pluses or minuses. I think the foundational piece when you’re in those type of situations is making sure that you’re comfortable with that supplier.
There is still passes [43:48] them value for money test, and of course, we can debate what that looks like. Are they lower quartile, middle quartile, or upper quad quartile in terms of cost? I always think you need that fundamental process in place just to assure anybody that asks, did you get value for money? I can see a lot of value particularly in the new services that we want to bring to market, of bringing in supplies early and helping you deliver things quickly.
And you’ve used some language there about shaping specifications, shaping outcomes, things like that. I’m a big fan of that. I think it’s great if you combine supplies to really clear outcomes and you can contract in a way, which means that there are clear milestone payments, associated quality, and things like that. Big fan. Incredibly difficult to do.
Because really, in my experience is very, very dependent on the purchaser being really honest with the supplier about data, the size of the ask, the quality of the systems, the quality of the people internally; and where I’ve seen it go horribly wrong is that as a purchaser, you weren’t candid enough about what it was like within the business, what are the challenges you faced, and all those kinds of things.
And I think if you’re going to have a really, really good relationship with vendors, you have to be really honest with them and candid and really be less penal about whether they failed or not but actually getting to more conversations around, what are the things that you’re not doing that is inhibiting their ability to be successful? It’s a big change in mindset because most procurement folks and I’m sure – being many examples of where I’ve done that – were more interested in preserving our companies and making sure that we minimize any potential cost increases, regardless of the fact that we may very well have caused some of it.
Jonny Dunning [36:00]: Yes, and I think really when you look at that the variability in a project once it’s up and running and if it’s not quite as advertised, this is where the change request – the variation process comes into it. And from our point of view, that’s something that people get very excited about, it’s just the ability to capture change request as part of that granular process because it’s a fluid situation. Things change, stuff gets delivered late, the client/the end customer might, for example, make the project late, and therefore, it looks like a milestone’s late but it’s not the supplier’s fault.
If you can see that information in real-time, then you can react to it to correct issues, but also, you might have a consultancy that work on a project for an organisation and it takes twice as long as they originally predicted. But actually, if you’re scoring quantitative metrics and also scoring qualitative information, then you might also know that it took Deloitte twice as long as they predicted, but they did a fantastic job, for example.
Stephen Day [37:00]: Yes. I can see that. I mean it’s interesting. One of the best examples I came across in my career was Heathrow Terminal 5. The story goes as I understand it, it came in on time and in budget, quite unprecedented for construction projects of that size. But what the foundational part of that was that all of the various actors in the process of building T5, was a consortium where there was some gain share at the end of the project based on the collective delivery of the outcomes, and I’m sure it’s more complicated than I portray. And I’m sure there are lots of people that deserve the credit for that.
But what it always struck me as, as really sophisticated thinking in a supply chain, and let’s face it, most construction supply chains are really adversarial, the quantity surveyor, the constructor, the supply of the materials, the architect, the owner of the project are all trying to stick it around each other where things go off [38:13 inaudible].
Jonny Dunning [38:12]: The blame game.
Stephen Day [38:14]: Yes, it’s that blame game. In that particular project, they were able to exercise something far more sophisticated. And I think it’s just a shame there’s not more of that in truth because I think it’s just a much more productive way to run and operate your business.
Jonny Dunning [38:32]: Yes. And everyone’s bought into the outcome. That’s the thing. I think when we talk about outcomes and we talk about milestones, it is complex and it requires flexibility. But as long as the interaction is captured, you can still retrospectively understand what’s been delivered, and whether a good job has been done, and whether there’s value for money, and what that’s contributed to the business.
So, for example, if in some areas, it has to be working under an agile methodology and you might proxy in sprints for milestones. Now, clearly, you don’t know exactly what’s going to happen in each sprint until you get to it by the very nature of that methodology. But you’re still capturing that process and you’re still measuring that process rather than, again, that situation where stuff is just very basic details are captured and then nothing else is really captured formally and the work just carries on, it’s very difficult for the business to keep a handle on it.
And I think, for me, being a business-minded person myself, I’m a big fan of pragmatism. What are we doing? Where are we going? Does everyone understand what the purpose of this organisation is? What our ethics are and what we’re trying to do? Does everyone get that? And is everyone driving towards that effectively? The more you look at these types of issues, you can see how procurement are a very pragmatic function that could really be centrally strategic to that.
Not just in the sense of driving the supply chain, understanding that the business needs to be asking for the right things, but also in driving innovation. And another thing that I think is really interesting is, what about all the information you can get from your suppliers? Because if you look at services suppliers, they’re really going behind the curtain, aren’t they?
Stephen Day [40:27]: Yes.
Jonny Dunning [40:29]: It’s like, I always remember when I was at University, I used to work in a five-star hotel in my holidays and I was like at conference and banqueting [40:39 inaudible] or work behind the bar or whatever it might be, you get to see behind the scenes. When you go and stay in a really nice hotel you see everything beautifully presented to you and all this lovely experience. You go behind the scenes, it’s a bit more gritty. And I think services suppliers get to see behind the scenes. Maybe there’s a real error of value there in terms of that feedback for procurement as well.
Stephen Day [41:02]: Yes, and I think it takes people like me and the profession to have a willingness to listen to what suppliers have to say and then a willingness and a bravery should I say, of actually sharing that with the business, warts and all. And you can imagine it’s difficult if you’re using a supplier to deliver a big technology project, and some things on the part of the business haven’t been done in the way that they were originally articulated, it’s very difficult to kind of share the supplies point of view on that with the internal stakeholders.
But I think that’s where with courage, that’s where procurement really changes the whole resin d’être of the value that you can bring because allowing those kinds of conversations to be done within the boundaries of goods/supplier relationship management, I think adds so much value. And look, I mean, the thing that I think we’ve all learned over the past 12 months is we’ve all got to learn, haven’t we? I’m sure going into March 2020, where a fair amount of us who are sort of very skept about how the hell we work on Teams or Zoom.
Well, guess what? We’ve been able to. We’ve been able to adapt, we’ve been able to learn and I think that that learning for all of us is a continuous stream in all of our careers and my hypothesis would be companies would be a lot more successful if they just listened a bit more sometimes to what their supply chains have to say.
Jonny Dunning [42:42]: Yes, I agree. So, as you said, that is in some ways it’s a delicate conversation to have. Do you think that the most appropriate place for that conversation to start – where is the most appropriate place? Is it within the C-Suite in the sense that –?
Stephen Day [42:57]: It is. Yes, it’s people like me. I have to build relationships with the CFO, the chief information officer, the chief product officer, the chief technology officer, you got to build relationships with these people and you’ve got to kind of talk about the value that you can bring. You can bring them a view on the supply chain, you can bring them a view on what those vendors bring to the party, you can bring them candid feedback on things that have gone well, things that are done badly.
That’s where it starts. I’ve always worked on the basis that as long as the message is, I’m looking to deliver to the C-Suite are based on positive outcomes that I want to accomplish. It’s about protecting the business. It’s about alerting potential risk. Then I think there’s no reason why that shouldn’t happen.
I think what happens and what I’ve seen is that people get very defensive, the feedback or the messaging or the insight is used to hamper people’s particular projects or cast a shadow on their credibility or question whether they’re any good or not, where that gets used – complete failure. And people that do that frankly, like a country and an organisation. I would sponsor the idea that using supplier insights positively, strengthens the whole enterprise. And it’s good.
Jonny Dunning [44:34]: Yes. On an individual level, most people would accept that taking feedback and learning how to improve yourself from feedback, it’s very much part of the modern management process within businesses and this is just looking at that on a bigger scale in my opinion.
Stephen Day [44:54]: It is. Yes. Look, again, I think everybody that goes through the annual appraisal process, there’s always kind of the feedback thing and you either look forward to it or you treat it with a little bit of hostility and skepticism. Supply feedback is exactly the same, you either use it with positive intent or you kind of treat it with a bit of hostility and get very combative about it. Quite honestly, the most successful organisations that I’ve been engaged in and the most successful organisations that I’ve seen prosper have this kind of growth mindset and people think all that growth mindset is about revenue growth and all that kind of stuff. No, it’s not.
The growth mindset is about, are you receptive to people saying what you’ve got wrong or right? Are you receptive to learning new things? Are you receptive to taking feedback from a wide surrounding area of interest and things like that? That’s what the growth mindset is. And I think people get a little bit stuck on that, they get very defensive on the feedback and it’s like – I would also add though, feedback has to be delivered well. It’s no good saying Johnny, you did a super job but here’s the one thing you did great, here are the 10 things you did crap.
Quite honestly, frankly, if that’s the type of managers that we’ve got out there then they shouldn’t be managing. But like I said, I think that that growth mindset and being receptive to what supplies have to say marks out the most successful organisations versus the ones that are frankly, just going to flounder.
Jonny Dunning [46:47]: Yes, I totally agree because it’s what’s it all about, isn’t it? Is it about egos? Is it about taking a defensive view on it? Or is it about saying, how do we make this business as effective as it could possibly be? And I think when you’re talking about feedback to being delivered by it, I totally agree. I am always saying to my daughter, “Don’t just tell me the problem, come up with a solution” that approach is, you could be going to the C-Suite as a chief procurement officer and actually saying, okay, right, listen, this is some feedback that we’re getting, these are things that we need to be aware of… how could we all work together to maybe improve this?
And you might get some people saying, well, the suppliers are wrong, but as a C-Suite, surely at that level, the pragmatism can trump egos, and people could really look at it objectively and go, it’s all intel, it’s all data, it’s all information, I think it’s very valuable information and it ties into this whole point of innovation in the supply chain and the value of that because of the stuff going back in and if the suppliers never had a chance to make a suggestion, then you might be missing out on some really good input. And also, when it comes to innovation, I’ve heard this said before, someone’s post the thing to me and said, “It’s pretty hard for a supplier to deliver innovation when they’re in an adversarial relationship”.
Stephen Day [48:14]: Oh, absolutely. It’s so funny. When I worked for Phillips Medical Systems, just going back many years, on the one hand, I was told to beat the living hell out of the supplier to get a unit cost reduction, and then I was at the same time, I said, “And by the way, what’s the three innovations you’ve got for me?” That time I was too naive to really understand how that is so polar opposite, but I’m sure that a lot of that is still going on today.
But as you were talking, Johnny, this brings me back to the conversation of you talking about diversity because we’re building up a team in Kantar, a procurement team, and I’m very proud of the leadership team that I’ve built. And what’s really made me very proud about what they stand for, is that we are bringing on board and onboarding people new into Kantar to do procurement with -- we started to have a bigger team on that when we finish.
But everybody’s coming in with a real kind of growth mindset from very diverse backgrounds, very eager to learn and I think, it’s all very well talking about the growth mindset being open to feedback on all that kind of stuff. You’ve got to work very hard on the team dynamics to make that work and really make sure that you’re bringing in a team of folks that are really up for it and able to respond in the way that you’d like them to. Yes, I’m very pleased to say that I think at Kantar we’re accomplishing that.
Jonny Dunning [49:50]: Fantastic. And I guess the other side to that is the business needs to appreciate that, but the business are more likely to appreciate it if the procurement team are having this approach that naturally makes them more strategically valuable, where they’re not just coming in of the mindset of like, this is just a transactional scenario that I will come in and this is how it will operate, it’s just about cost reduction.
Where actually they’re thinking and they’re approaching this in a more holistic manner, the most strategic manner from the get-go. Even people who may be quite junior, if they’re schooled in that approach and they’re told that that’s an opportunity and that’s open for them to think like that, then I think that can make a huge difference. It must be very exciting for you being in a position to do that.
Stephen Day [50:39]: Well, it is. It’s probably the first time in my career that I’ve built something from scratch. I was very fortunate because there were some great people in Kantar that I could leverage off and we’ve been able to bring some very good people from the external marketplace into the business as well. So, got a real melting pot of new experience coming in and coupled with people that have been in the business for a while and it’s working out really well.
But like I said, it’s a bit like, you’ve got to build a team that has the sponge-like qualities of being receptive. And yes, like I said, I’ve been very blessed that I’ve been able to have that opportunity here. I’ve worked in other places where it’s very, very difficult. I was involved in a transaction when I left Vodafone – I won’t mention the business, you’ll see it in my LinkedIn – and it was really, really difficult. The people have been there 30, 40 years, and changing that mindset was very, very difficult to do and ultimately resulted in the sale of that business to somebody else. And I think that was probably a very good outcome because I think changing it with the folks that were there was going to be now impossible.
Jonny Dunning [52:00]: Yes. And sometimes there needs to be a clear catalyst for change, doesn’t there? And I think in that sort of situation, the acquisition of an organisation by another firm. That is a real catalyst for change and it enables that change. But I also think that outside of all the awful things that have come from COVID of which there are obviously many, there has been a real catalyst for change like you say for organisations and countries looking at their supply chains, for example, and there’s other things going on in the global market, certain kind of legislative changes.
For example, in the UK, the IR35 reforms where it’s looking at employed versus self-employed that’s making some changes to how work gets done. And I think those sorts of things are going to have effects. US is likely to follow suit, 1099 versus W2 kind of legislation, similar things in Germany, other places in Europe as well that are looking. I think most countries' governments will look at this as saying, is this worker employed or self-employed? And kind of change that dynamic slightly.
But when you look at the supply chain on the services side specifically, I think the drivers of COVID and other factors that are shining a light on this area, it enables companies to justify having more engagement with the smaller suppliers as well, where otherwise, they can just be overlooked. And I think again, that’s where granularity of data and understanding of the supply chain, and what’s actually happening is important because whether it’s people changing how they work.
So, whether somebody was working as an individual contractor and then decides with the way the market is changing, they actually want to get together with some like-minded people and form a small consultancy, for example, or a small specialist provider, or whether it’s just smaller businesses coming through offering greater agility or more diversity. That is something that is definitely an opportunity within the long tail. Do you think that’s something that gets overlooked?
Stephen Day [54:19]: I would agree with you that COVID’s been in terms of how we’ve responded to that has been really fascinating. It’s given us an insight into people’s lives. I can’t tell very much from your study, but you can probably tell from the list of my books that I’m a bit of a historian. The Hitler/Stalin book on my left-hand side, I should say, just to be clear, is not a reflection of my leadership style. For a lot of us, it’s given us an insight into part of our lives that often people have no idea.
You’d have no idea that I have an interest in history, well a bit of a passion actually, and I see that with my colleagues as well. So, I think we’ve got a much better understanding of our colleagues, I think in some cases. I have four children but they’re older but I’ve got colleagues to have younger children who run in and out and I think the positive things are it’s helped us remind ourselves that life’s more than just work. We’ve got families and all that kind of stuff.
And I’m not a fan of work-life balance because I think in truth for all of us, we’re constantly got this thing going off. So, I think Jeff Bezos doesn’t use that phrase, he just says, it’s a continuum, sometimes you take a Friday off, sometimes you work a Saturday, all that kind of stuff, it’s kind of a ying and a yang going backwards and forwards rather than this idea that it has to be 50/50 because our careers aren’t like that. So, that’s been great.
It’s really interesting, I was talking to my boss yesterday because we’re thinking about when people come back into the workplace, one of the feedback I’m getting about the way you and I are talking is that actually for teams, it’s actually made teams a bit more inclusive because we’re a very wide geographical business, I’ve somewhere in Asia Park, somewhere in the MEA, somewhere in North America, and I have my team in London. Historically, what would have happened is we would have been in an office in London.
The guys from other parts of the world would have been on a screen and by and large, they would have felt as a side to the conversation because they weren’t really part of it. Well, now, we’re all on teams, it’s given a quality to the opportunity for people to express their points of view in a way that historically wouldn’t have been the case. So, that’s been super, super positive and I think also, frankly, you prioritize where the value is in the things that you want to talk about. So, tons of positives there.
And having said all of that, of course, I’ve never been an advocate of having another global pandemic like that just to make sure we’re a bit more productive and a bit more inclusive in the workforce, quite the opposite. But I do think that there have been some positives as you say that come out of it, no doubt.
Jonny Dunning [57:18]: Yes, it just feels to me like it’s leveled the playing field a little bit and you’re having more personal interactions. You can see from my light fitting that I’m not massively into DIY for example, got it set up like some sort of weirdly angular whites of command center here in my loft room. But yes, it brings a personal element to it, you’re seeing people more in their normal clothes, they’re [57:47 inaudible] part of a big shiny office and the big corporate structure around them and I’ve really like that. I’ve really enjoyed – just felt like that – more personal interactions.
And as you say with getting your team together and allowing everyone to really be involved in a conversation, just really doesn’t matter where you are or it’s irrelevant, it’s just your part in the conversation. And I think just going back to the point you made about work-life balance, I think that’s a really interesting point and a very good point.
I kind of see it as tying back to what we were talking about earlier around purpose because ultimately, you were talking about the thing of like sometimes you might work a Saturday and sometimes you might take a day off or it might not be quite so hectic or whatever it might be, you might go pick the kids up from school. COVID definitely feels like, it’s made that more acceptable, but if somebody’s values and view on the world are aligned with the purpose of the business that they work for, work feels less like work to a certain extent.
Stephen Day [58:51]: Absolutely. I think that’s so interesting. And I think that’s probably what Bezos is talking about, which is this idea that if you think that you want to split the seven days of your week into a way which gives you perfect harmony, that’s probably missing the point. The fact of the matter is we’re all at different stages of our careers, different stages of parenting, different stages in our family life. The one thing that probably we should all lean into, is the work that we’re doing, are we really enjoying it? And like you said, does it give us purpose?
And I think if it does, quite honestly, the extra discretionary hours that we put in doesn’t feel like that much of a task, certainly in my experience, it doesn’t and certainly, I’m not finding that at Kantar. Yes, there are tough days, but do I buy into the purpose of the company and the mission and change that we want to go through? Absolutely, I do. It’s interesting, you talked to lots of people, they had their jobs, etcetera, etcetera, and yes, I feel sorry for them.
Again, I won’t be ashamed in saying, there have been points in my career where I found myself in the same place, and actually, my journey into Kantar was off the back of leaving a business I didn’t really enjoy working for, but I would encourage everybody to have a bit of courage because ultimately it comes good.
Jonny Dunning [1:0:19]: Yes, and it’s really interesting to see the trends in young people coming into the workplace and how work is structured for them now, the opportunity is just so different, going to the job for life days of 60 years ago. We transition through this massive growth in the contingent workforce with more flexibility and independence for people and then you’ve seen the growth of the gig economy and this move towards more outcome-driven scenarios where there is big service providers delivering outcomes or whether it’s individuals delivering on an outcome basis.
And I think it allows people to focus more on what they’re interested in and what they’re good at and an aligned purpose. They’re necessarily just thinking, I need to work for a big company in this sector and do that for 40 years because that’s the standard part.
Stephen Day [1:1:12]: Listen, my eldest daughter is 19 and my next daughter is 18, I just think they’re entering a world of opportunity and I think it’s changing. For a lot of employers, the relationship is fundamentally going to have to change because employers have got to think more about what the proposition is to the employee. We’re living in a world where the percentage of people coming into the workforce is getting smaller and smaller, so people used to talk about that war on talent.
People don’t talk about that language so much these days, but actually, I do think that’s going to get even worse in the coming generations and it’s so interesting. I think people are looking for purpose going into the companies that they are looking to work for and frankly, if employers can’t offer that, then they’re just not going to attract the type of people they need to thrive and prosper.
Jonny Dunning [1:2:15]: Well, I guess that composition for talent also extends within different functions. So, if procurement functions can really sell the idea effectively of what good strategic procurement really can be in the value, the drive, and what it’s like to work in that environment, and to be at the center of those type of interactions; that’s something to be considered as well, as is what you mentioned earlier about the competition within the supply chain for talented suppliers.
Stephen Day [1:2:49]: Yes. And then we’re going to try an apprenticeship scheme this year in Kantar for procurement people, so we’re going to bring a couple in and you can test it, see how it goes. Because one of the things I feel really passionate about is that procurement is a great place to have a career in, but I don’t think, going back to some of the earlier parts of our conversation that it resonates with people or it necessarily thinks as a destination that people can go to, so I’m very optimistic. Stephen Day won’t change the world but maybe for a couple of people are great opportunities for a career that they never thought was necessarily something that they want to go into.
Jonny Dunning [1:3:33]: So, listen, you got some really I think, very forward-thinking views in this area and you’ve got a very clear idea of what a chief procurement officer’s role within an organisation can be and should be. In terms of the industry moving more towards that viewpoint, firstly, do you think that most CPOs have that viewpoint? And secondly, do you think the chief procurement officers, as kind of a community, are ready for the challenge and the opportunity that awaits them?
Stephen Day [1:4:10]: It’s a mixed bag. I’m very fortunate. If I think of the people who sponsored me through my career, a guy called Detlef Schulz, that lot of people will know, somebody called Ninian Wilson. I’ve had some great sponsors in my career, so I’ve seen the best of the best. Obviously, I’ve seen a couple of things that I didn’t think was very good. So, like every profession Johnny, there’s good and there’s bad.
And at the same time, there are people like you, there are other people that are bringing technologies and solutions to the marketplace and I think that is accelerating kind of pro-tech if I can use that phrase. So, I think we’re moving in the right direction, but I do think there’s a bit of a call to arms. I think we can do more and we can do it quicker, and I think we can work harder to bring in more folks into it as a destination, as a career rather than the place that they stumble into.
And I think we can do that by really positively promoting how important supply chains are from a diversity and inclusion perspective. Because my going-in position is that if we own that and drive it, suddenly, we’re expanding what we can contribute to a company beyond just, can we save money? And I’m very hopeful that that will really resonate with folks and really begin to make them think about this as a place to come to rather than end up in.
Jonny Dunning [1:5:45]: Fantastic. Excellent. Well listen, let’s round it off there. I really, really appreciate your time. Absolutely fascinating insights and great to chat to you about all this. And actually, I think it’s quite an inspiring view on this and certainly, hopefully, something that resonates with other procurement people. Certainly, makes sense to me. And as I said, I find it quite exciting because it’s all about the possible, isn’t it?
Stephen Day [1:6:15]: Indeed, it is. Yes.
Jonny Dunning [1:6:17]: But anyway, listen, fascinating to chat to you, really appreciate your time. Thank you so much for joining me.
Stephen Day [1:6:23]: Pleasure, thank you.
Jonny Dunning [1:6:24]: Hopefully, catch up with you again soon.
Stephen Day [1:6:25]: Yes. Cheers Johnny, thanks for the opportunity.