The modern Chief Procurement Officer currently occupies a space within enterprise hitherto unheard of in years gone by. The CPO and the procurement team are now armed with an incredible array of insights and skills that embolden the aims and ambitions of the business units. This shift heralds the procurement function as an integral strategic tool far more sophisticated than a merely savings-led practice. Procurement now has the ability and freedom to align itself to, and inform and strengthen, a company’s goals, through the provision of a 360-degree vision of a company’s operations. As a result, the origin stories of many modern CPOs are not following the traditional path of working their way from the top to the bottom of the procurement function. Many modern CPOs now have an array of skills and expertise that underscores this shift.
Jonathan Sims is Chief Procurement Officer for the UK and Ireland business of the French multinational electric utility ENGIE. However, Sims is not a procurement guy through and through. “I came into procurement a little later on in my career, having only been in procurement for about eight or nine years,” he explains from the ENGIE offices in London’s Canary Wharf. “I’m a commercial surveyor by background. A development surveyor and I worked in that field for about 10 years before moving into mechanical and electrical engineering in a work-winning role before ending up in strategic business projects. And one of those change programs was around procurement.”
Sims’ work involving the procurement function was the springboard for a number of increasingly senior procurement roles that led to his current position at ENGIE. “Procurement lends itself to a lot of transferable skills,” he explains. “So, as a team, even through to our group CPO, many individuals have had a very transversal route into that role. I think the generalist skill set lends itself to procurement and I think as long as you have that kind of business acumen and an affinity with people and suppliers, then it’s a great function to work in. The ability to make a significant fiscal impact on a business and to have that breadth of reach across people, teams and functions appeals to me significantly.”
The UK arm of ENGIE turns over £3.6bn with 17,000 staff while ENGIE as a group is active in 70 countries with a turnover of around £60bn and 170,000 staff. Sims’ role is responsible for all procurement within the UK operation that has a procurement team of around 60, split across five operating divisions. The team manages all aspects of procurement of goods and services where they spend approx. £1bn annually. The procurement community at ENGIE needed a little bit of a reinvigoration at the time of Sims’ arrival in 2018. The way procurement was positioned within the organisation “probably wasn’t correct” according to Sims with, from an engagement perspective, people who were not as engaged as other central services teams.
Sims managed to retain and develop a significant proportion of the staff he inherited, with a clear succession plan for the next two or three years in terms of where they were going as individuals and how ENGIE could get them to that next level of procurement excellence while driving performance. “For me, having that succession plan within the business is fundamentally important. I think for a number of key roles, when I joined about 15 months ago, we didn’t have the right succession within the business and we’ve changed that significantly. So, all levels, myself included, we have a clear line of sight for who will be taking that next role. That’s something we’ve looked to drive across the wider group business whether the opportunity is within the UK business unit or another global business line. It’s based on robust competency mapping and some really clear and insightful people assessments, which is particularly important. We’re launching a strategy with the business where the key stakeholders have contributed and feel very much an integral part of that.”
Retaining key talent has been one of the most important challenges for Sims at ENGIE with an historically “higher than desired attrition rate” amongst procurement staff. “It’s a very buoyant market for senior procurement individuals at the moment. So, creating that clear pathway where people could see the next three or so years of their working life at ENGIE, while enjoying incremental milestones of development linked to reward, was really fundamental. Once we got that stability in the team, we could then really start to take things forward.”
Integral to the procurement strategy at ENGIE is early stakeholder engagement. Sims’ primary focus in the first few weeks involved concentrated stakeholder engagement with the divisional chief operating officers, the commercial directors and the key stakeholders within finance, many of whom felt a little remote from previous procurement strategies within the organisation. Sims’ strategy was very much building a transversal cross functional team with non-procurement execs as sponsors for each strand of the strategy. “I think that really helped us get traction and slip under the skin of what the key stakeholders in the business wanted,” he says. And Sims feels fortunate to have garnered senior sponsorship from the CEO of the UK and Ireland business: “That really helped us drive that message through the wider business.”
ENGIE’s three-year strategy is Rethinking Procurement and one of the major focuses for Sims is around its Supplier Of Choice Strategy. “That’s ensuring we’ve got the right relationships with the right suppliers in the right place to really make a difference for our clients,” he says, “so we’re engaging suppliers in a mature and considered way. We need to stay at the forefront of innovation and our clients are demanding much more than just a compliant price. We really need to be demonstrating over the duration of a contract, how we’re going to fundamentally enhance our offering and deliver a better result for them. Responsible procurement remains at the heart of everything we do, making sure that we’re eradicating any potential risks of modern slavery within our supply chain, while mitigating any risks of counterfeit product or child labour.”
The biggest element to the new procurement strategy lays with people, as seen in some bold new ambitions in that area. The Competency Matrix maps all procurement people to one of the seven strands of the strategy. “Working through 70 different competencies, we’ve understood how best placed that particular individual is to support a particular strand, or aspect of the strategy, be it innovation or responsibility or supply chain consolidation. All members of the team have objectives set specifically to a strand of the strategy and then from an overarching perspective, we have an executive director that’s non procurement who leads in a particular area, plus one member of the procurement SLT. To some extent it’s cascaded through the business and we’ve had some key conferences along the way with the procurement community to share how we’re launching the strategy, what it means for them and how we’re looking to evolve that over the next 12 months.”
There are of course challenges linked to any transformation, especially where people and work culture are concerned, with change management often cited as the number one obstacle. “I think the first few months were particularly crucial around that because there was a lot of change in a very, very short period of time; including change in personnel at senior level within the procurement function. There was definitely an aspect of winning hearts and minds, while moving very quickly to turning what we said we’d do into tangible action with people going through that Competency Matrix.” The manifestation of this action were individual training plans and incremental steps, so staff were being rewarded for delivery. “I think that helped to build that positive messaging. And I think the sponsorship we’ve had from the exec level and how that’s repositioned procurement has been particularly useful. I don’t think procurement had that profile within the business previously. The Competency Matrix has created some real expectation in our people. We’ve got a lot to deliver on over the next 12 months to make sure people really feel that those commitments we made last year are being borne out in their development. That’s a real pressure.”
Procurement has always been deceptively people driven while from the outside appearing very much, the opposite. Sims’ early conversations with stakeholders around how things had operated previously, had been incredibly savings orientated and yet had struggled to perform against savings. “The way we moved things forward last year was very, very people driven. One Target, One Team is a new initiative that has helped procurement at ENGIE to fully harness its new agility. It was us trying to break away from people feeling constrained and restricted by a huge individual savings target. We broke that down into a set of initiatives that we’re going after as a team. We attack that as a team. We deploy the individuals with the best placed and most appropriate team members leading in that certain area. But we deliver that target collectively and success or failure is determined by that rather than one individual feeling they’re exceeding and another individual with a different set of addressable spend or more complicated dynamics feeling unable to make the same level of contribution. For the first time in a number of years we exceeded our savings targets. So that said to me it was the right approach.”
“Hopefully the team is more engaged in that method of working and feeling that they’re contributing their talents more effectively and more appropriately. But it takes a lot of maturity to do that. Other stakeholders potentially can feel that there isn’t the same level of accountability perhaps. We’ve been quite effective in working through that, but it has been a challenge. People centrally didn’t have an individual savings target, but we delivered that collectively through initiatives, so people understood what we were going after, plus they didn’t necessarily feel the personal burden of having a number over their heads. I think that drove a different mindset and culture and ultimately, we’ve been better for it. I think it’s demonstrating to the business that we’re more than just a savings department. There’s a lot of intellect within that team, a lot of ability to add far greater value to commercial, to finance, to operations. We’re definitely on that journey to emphasise that.”
It is hard to escape sustainability, no matter the sector, and for an energy company it pretty much drives every aspect of ENGIE’s focus going forward. The past six to nine months has seen the company position itself at the forefront of leading the zero-carbon transition, creating some new challenges for procurement. “It creates challenges in terms of the types of suppliers and subcontractors we should be working with,” Sims explains. “It also affects how we engage with them and what solutions we co-create together. There are also challenges in terms of what we’re doing with our people; how we’re retaining them, while mapping their skills for a changing marketplace in zero carbon. For procurement professionals, this is a different set of metrics in terms of how we’re looking at success. It’s put particular focus on what we’re doing within responsible procurement and innovation. We currently have a £4m innovation fund in the UK where we’re actively looking to invest in organisations to drive new solutions. And that’s something that’s very, very new for us. It’s also created changes in terms of our overarching systems and processes.”
Project Mercury is a completely new ERP system that ENGIE is developing jointly with Capgemini, partners in that space. Project Mercury will effectively change the way that ENGIE does business. “Mercury will help us become a truly data-driven business with data driving the right decisions for the business and more robust procurement decisions based on science.”
Jonathan Strelitz, Head of Category Management is also looking forward to the benefits of Project Mercury. “We’re about to embark on a £17 million transformation program by bringing our five ERP systems to one. This is a fantastic opportunity for us. We are now leading the P2P work stream and embedding that within Jonathan’s strategy. So, it becomes almost like the DNA of the strategy in terms of how we move that forward. It then allows us to embrace that within the whole team, so everybody has an understanding of that program.”
With procurement evolving so much outside of ENGIE, and within, how does Sims remain at the forefront of what’s going on in this transformational space? “Our partnerships with a number of organisations have really helped that,” he enthuses. “Externally, we’ve got a strategic partnership with EcoVadis and they’re really supporting our Responsible Business Development Initiative within the UK, which is where we’re forming a strategic alliance with more than a thousand organisations to build a community investment fund, where we’re going to invest in the communities we serve. Our ongoing relationship with EcoVadis is fundamental. Our Mercury Change Program will be really, really pivotal this year to start to change the way that we buy and enable us to make better decisions.”
Sims has also taken on the Solutions Director role for the P2P aspects of Mercury. “Having procurement stakeholders really embedded in that process, positions procurement differently within the organisation and enables us to really shape that process rather than it happening to us. Sometimes we inherit some systems and processes that we wouldn’t necessarily have created in those ways.”
There is a lot of transformation taking place within procurement at ENGIE and so how does Sims gauge his departmental success? “The level we came from at the start of last year was fairly low compared to other central services teams within ENGIE, in terms of engagement. We were about 16% less than other central services teams and we made a huge step forward in that engagement score last year. So, this is something that happens every single year, which is very, very important for the wider business. We made a 16% improvement in one year, which was a huge step. And I think you can see that in the way that the team present themselves; they’re enthused, they’re engaged, they’re all very ambitious and they can see where they’re going within ENGIE. I think it’s probably one of the strongest procurement teams I’ve ever worked with. We’ve got people being seconded into international business units and I think that’s really starting to create a positive message. Plus, we over-delivered on our group savings target last year, which again shows that we’re backing that up with business results. The procurement team are now involved in cross-functional initiatives, working with business and innovation teams while being identified as stakeholders that can add a lot of additional value. For me, it’s about having that desire to continually keep moving the function forward. We’re always looking for that next iteration in how we improve. We’ve had recognition at group level, from a supply chain perspective, for best practice being deployed in other business units through relationships we’ve developed and nurtured in the UK, and that gives me a warm feeling. We’re really making a positive change.”
