Scott Seaman-Digby Joint Managing Director Hawtrey Dene Group

A Supplier’s Guide to Procurement

Overview

•  Who We Are & What We Do •  A Typical Project •  Some Examples of Our Work •  The Power of Procurement •  We Can’t Do It Alone

Who We Are & What We Do •  Hawtrey Dene Group

-  specialist consultancy firm -  core services of:

-  Cost Reduction & Procurement Improvement -  Public Sector Consulting -  Risk, Security and Process -  Property Project Management

•  Clients in the private and public sector •  Established in 2010

Who We Do It For

Some Examples of Our Work

Print •  Told that £3.5m spent on print, with a ‘single provider in place’ who ‘provides

free resource in 2 FTE to help us’ •  Tracking to transaction level on the GL we established:

-  £6m spent on printed material -  7 live suppliers -  20 cost centres commissioning print work

•  Pre Xmas 2012 removed 22% of forecast balance of year costs based on prior year rate card with incumbent

•  Spring 2013 changed supplier post trading peak to new managed solution delivering incremental savings in first 3 months -  Open book pricing and fixed fees with minimum savings guaranteed -  Each job tendered to the market to maximize opportunity of marginal

pricing etc

Travel •  Incumbent supplier – in second year of contract •  General adoption strong and good online booking metrics •  Yet: stakeholder engagement poor and cost comparison by lead bookers all

too frequent -  Responses and explanations poor from incumbent TMC -  Little remedy for issues offered

•  Project to review market, review offer of leading TMC providers, propose new TMC with reduced rate card cost base and improved service levels -  Nine companies engaged with initially, shortlisted to three -  Beauty parade with the client – key questions by panel to each -  Focus on service, innovation and costs -  Sample trips costed and suggestions of alternatives requested

•  New provider exceeding savings forecast in first quarter reporting

The Power of Procurement

What Does Bad Procurement Look Like?

•  It doesn’t exist or the overall approach is fragmented •  There is duplication in effort and in suppliers delivering the same, or like,

goods and services •  There is no ownership, measurement or capture of costs •  There is no responsibility for addressing the spend on goods and services •  Things evolve and are not planned •  There are no contracts in place or agreed and reviewed rates or prices •  No central log of contract expiry dates or store of copy contracts •  There is no review process or management of suppliers and supplier

relationships •  It is unclear what is consumed, how it’s consumed or why it’s consumed •  There is no process for adding new suppliers to the company supplier list •  Financial commitment made with suppliers is ad hoc and bypasses finance

The Power of Procurement? •  Procurement is a process and one that must evolve and adapt •  There’s no tick list but different approaches to different categories •  There are key things that make a good approach to procurement and which

will deliver continuous improvement and sustainable costs •  A good procurement team will:

-  Understand and align with business goals -  Be flexible and adaptable -  Challenge colleagues and suppliers -  Be energetic and not give up -  Seek out new ideas and methods -  Ask questions and listen -  Facilitate and nurture change -  Be technically competent and qualified -  Understand value and costs, not just price

Openness

•  Procurement is not a means of blocking ideas or clipping the wings of innovation

•  It should be an enabler to growth and ideas, helping control and focus actions to ensure efforts are maximised and budgets stretched

•  Openness is critical and trust with stakeholders, suppliers and users is critical

•  It’s not rocket science, but sometimes it’s treated like a mysterious art

Procurement Dept.

We Hope We’re Different:

•  “I learnt something when I went to the meetings with the suppliers and Hawtrey Dene”

•  “They don’t just focus on the price” •  “They took the time to understand our business, it’s hard to remember they

are not internal” •  “They challenged areas we’ve just accepted for years” •  “They understand what good looks like and that the suppliers need to come

with us” •  “Chris got that both he and the supplier had to leave the room with their

heads held high”

One client stakeholder at a £300m UK company, at a meeting in front of their COO when asked ‘What has it been like working with these guys?’

We Can’t Do It Alone

Trust & Sustainability •  Suppliers form an integral part of reducing costs – or at least they

should… •  Too few clients trust their supply chains •  Making marginal gains and reducing costs is not (always!) about

‘beating up’ suppliers •  Working with the supply chain is the key to unlocking opportunity •  “What do we do that causes cost in the supply chain; how can we

change this?” •  The days of sending out 60 page tenders to unknown suppliers are

over… •  Often savings can be gained from incumbent suppliers if engaged

with effectively

The Reality

•  It’s very difficult to find a GOOD supplier •  Too many go from GOOD to bad •  What you see is NOT what you always get •  Understanding what makes a GOOD supplier is critical for suppliers…yet so

few seem to try to understand

•  What makes a GOOD supplier?

Some Good Supplier Traits

•  Clear, Regular Reporting •  Openness •  Transparency •  Open book offered •  Sharing knowledge •  Offering new ideas •  Proactive on costs •  Innovative in approach •  Always ‘Finds a way’ •  Keeps in touch •  Meets demands •  Exceeds expectations

•  Understands client business •  Shares risk (and reward?) •  Protects client interests •  Prepares for meetings •  Empathises with client •  Gets that Win:Win works

A GOOD Supplier

The GOOD Supplier

•  Is an expert in their field •  Understands emerging issues and how they help/hinder client •  Works to mitigate or exploit opportunities positively •  Acts as client’s critical friend •  Shapes change and sets limits •  Instigates ideas and follows them through •  Has front end engagement experience of the client world

-  e.g. works on the shop floor at peak to understand client’s world •  Has a knowledge of the stakeholder engagement in service or use of goods

they provide •  Regularly looks at themselves through the eyes of end user/public/client

Suppliers and Procurement

How to Delight a Client‘s�Procurement Director (or consultant) 1.  Ask questions and listen

-  You’ll stand out if you engage totally when your client speaks to you 2.  Set out to help your client (go back via the point above)

-  Ask them, how can what we do help you achieve your goals? -  You’ll be a rare supplier once you’re singled out as always trying to help

3.  Be a real person – people do business with people -  You’re allowed to be vulnerable, authentic, transparent, even afraid -  It’s not always about playing a game or putting on an act

4.  Don’t preach or hard sell – tell a story about how you helped another client -  Obvious sales patter, however well-honed, is a turn off

5.  Be passionate, show you care (see point 3) 6.  Try and delight your client – deliver something nice, unexpected –

randomness is remembered 7.  Say ‘I’m Sorry’ and ‘Thank You’ as often as you can

The Power of Gratitude •  Your client wants to know they’ve made the right choice of supplier •  They wants to know that they aren’t being foolish when they defend you to a

colleague •  They want to feel that they are special to your business and to you •  They want to be able to rely on you and to know that you are there – even if

they don’t call you •  They pay you, so you should be delivering, but they also want to feel

gratitude that for them, you go the extra mile •  If you know there’s a saving to be made, offer to share it – don’t wait to be

asked •  If you get the chance and it’s relevant, when you need to say thank you, hand

write a card and post it – everyone likes to get post •  Don’t make them feel too much gratitude – they’ll think there is too much

margin your side if you go overboard

It Can’t Always be Plain Sailing

Know & Set The Limits

•  You need to have clear boundaries with clients •  Tempting though it is, you should maintain some distance •  The person you meet to discuss the contract may not be your main contact

afterwards – adapt the client relationship accordingly to each individual •  Remember – the person who did the tender might not manage the account or

contract, but they will still be watching what you do… •  Just because your contact is happy – that doesn’t mean it’s all plain sailing –

ask for deep feedback

•  As a GOOD supplier, you need to drive the agenda and request: -  Regular contract reviews – quarterly ideal -  Cost and usage reviews – quarterly or as requested -  Update with the Procurement Director - annually

Again, What Drives Your Client? 1.  Knowing they have a good price – maybe not the rock bottom, but in line with

market averages 2.  Knowing you’ll respond when asked, quickly and effectively 3.  Knowing that you will flag opportunities – not wait to be asked 4.  You are a light touch to manage – asking them ‘what do you need me to do

to…’ – procurement people are always busy! 5.  You drive the review agenda – don’t be smug if you’re not asked to present

annually on what you’ve done – be afraid and ask if you can 6.  Give your client the ammunition to defend your corner – tell them how you

helped X, saved Y, changed Z for the better, reduced C, grew B – tantilise and surprise them

7.  Admit when you make mistakes and own up early – if they look silly because they didn’t know they will never forgive you

8.  Keep your procurement contact in the loop even if they are not the lead stakeholder post tender (point 7 applies again – no surprises)

Contact

•  If you have questions ask away •  Or you can call us and Karen will usually be able to find

me •  We’re happy to provide phone or email advice

www.hawtreydene.com enquiries@hawtreydene.com 0207 244 3121 @hawtreydene facebook.com/HawtreyDene

Scott Seaman-Digby Joint Managing Director Hawtrey Dene Group

A Supplier’s Guide to Procurement