Some people knew exactly what they wanted to be when they were young. They may have dreamed of being astronauts, teachers, or professional athletes. You may even know someone who is doing something they dreamed of doing as a kid. Who would’ve thought of building a career in procurement?
The honest truth is that most people don’t dream of going into procurement as kids. Many people don’t even know what procurement is until they start doing it. If you’ve found yourself in this position, we have great news! A career in procurement can be varied, exciting, and fulfilling. Today, we’re discussing everything you need to know about how to build a meaningful career in procurement.
On this episode you’ll hear:
- What sorts of people would enjoy a career in procurement
- Why specialized training is important
- What it takes to rise through the ranks
- Timely considerations about the Brexit situation
If you’re pursuing a career in procurement and want to make sure you’re on the right track, then this is one episode you won’t want to miss!
Transcription of This Episode
The Gross Profit Podcast is your one stop shop on the path to profitability. Each week we share authentic advice on the positive practical steps you can take to make the company you love more profitable. If you’re looking for a positive plan to help you avoid common spending mistakes, control costs, and increase your profits, then this is the place for you.
I’m Ryan Cowden and this week we’re joined by James Kennedy and Paddy Barr. In this episode of The Gross Profit Podcast, James and Paddy share their secrets for establishing a successful career in procurement. Some people knew exactly what they wanted to be when they were young. They may have dreamed of being astronauts, teachers, or professional athletes. You may even know someone who’s doing something they dreamed of doing as a kid. The honest truth is most people don’t dream of going into procurement as kids. Many people don’t even know what procurement is until they start doing it.
If you found yourself in this position, we have great news, a career in procurement can be varied, exciting, and fulfilling. Today we’re discussing everything you need to know about how to build a meaningful career in procurement. On this episode, you’ll hear what sorts of people would enjoy a career in procurement. There are many different paths to procurement and it attracts people from a variety of backgrounds and specializations.
Next we’ll talk about why specialized training is so important. If you do your job well, you should be able to cut expenses by about 10% and do other things that strengthen and protect your company. Then we’ll discuss what it takes to rise through the ranks. We’ll offer a powerful set of strategies and things to work on that will set you up for success in your organization. And finally, we’ll share some timely considerations about the Brexit situation. We’ll share some specific insights on what to look for as you prepare your business for the unexpected.
If you’re pursuing a career in procurement and want to make sure you’re on the right track then this is one episode you won’t want to miss. There’s a lot of actionable advice in this episode, so grab something to write with, because you’re going to want to take notes. As always, I’ll be back on the other side to wrap up any loose ends. So without any further ado, here’s our conversation with James and Paddy.
So hello and welcome back to the gross profit podcast. My name is James Kennedy. I’m the CEO at Procurementexpress.com. On this podcast we talk about and interview industry leaders surrounding the topic of procurement and improving the margins at your business. Today I’m very happy to be joined by Paddy Barr. Paddy has a 20 year history working in supply chain and procurement as well as a performance coach for business leaders. And we’re going to talk today about what it takes to get ahead in the field of procurement, why you might want to get into it, how to get into it, who’s it suit, what are the advantages, et cetera. So Paddy, thanks very much for joining me today.
James. Good morning. Delighted to be here.
So tell us, I’ve alluded to this illustrious career, so maybe you could just tell us a little bit about your background and what you’ve done thus far.
Yeah, I was very fortunate, James, in that I’ve worked for three companies that were really committed to developing people and enabling them to grow and frankly be their best selves. So I worked for British Airways, Diageo, and Microsoft. I’ve spent the bulk of my 25 plus years in business involved in the sourcing, supply chain, outsourcing, supplier management and was very fortunate to have worked all over the world. I was based in the UK, based in Ireland, based in the United States and frankly did business in Asia, Africa and all over Europe. So very fortunate in that regard and very fortunate that those companies invested a lot in the development of their procurement people and their supply chain people because they saw the value that it drove to the bottom line.
Paddy, good. And of course for our US listeners might not be aware of Diageo is the brand behind Guinness. So yes, stereotypically you have two Irish guys. One of them has already worked for Guinness. But that’s part of the story. So tell me what in your history there, what struck out or what made you want to get into supply management? What have you seen happen over that time that inspired you to stay in the industry?
What I love about being involved in the supply chain of an organization is that first of all, everything you do has a direct impact on the bottom line. A company that engages its supply base through its procurement team is really optimizing a very, very critical resource. High performing companies are enabled by their supply base. Their suppliers enable them to hit their growth targets, their expansion targets, and frankly they enable them to be successful in the eyes of their customers or clients.
And I love the fact that we mentioned there, I worked for Diageo, one of the brands in the Diageo stable is Bailey’s Irish Cream. And who would’ve thought that a cocoa bean starting its life in Ghana becomes part of the chocolate flavor that ends up in Bailey’s, which ends up in a glass that somebody is drinking in Southeast Asia or North America or Europe. What those procurement people do is the procurement people enable the supply chain to make sure that it has the optimum product at the optimum quality at the right price to determine the longterm profitability and viability of your organization.
What was it like, if you don’t mind me asking, we have actually an office in South Africa dealing in Africa itself. It sounds like you went out there and did business there. What was the business environment like?
Yeah, in Africa, the first thing you have to think about is the culture, and we can’t talk about Africa as a generality. It’s a huge continent and there’s many, many different cultures. And therefore the first thing one has to do is you have to understand, well which culture am I dealing with and which is most appropriate in terms of an approach.
I have found that by and large that dealing with businesses in Africa to be very positive, there is a tremendous desire to develop. There’s a tremendous desire to expand and generally speaking, there is a high quality, well-educated cohort of people out there who are looking to make the best of the resources that are there. However, one can’t be naive, one can’t be naive. There are different cultural norms. And in terms of what would be considered perhaps in the developed world, it might be considered nepotism or it might be considered bribery and corruption. So you have to make sure if you’re doing business in Africa that you are very clear about your ethics, your values, and what you consider to be appropriate and what you consider to be frankly less than appropriate.
So adjusting to the different norms is important and it’s important just for the integrity of your organization and the integrity of the product and the brands that you produce, that your supply chain matches your values and performs in a manner that is consistent with the values of your organization.
So have you ever been in a situation when a vendor or supplier has… To say it straight has been looking to offer a bribe or look for a bribe? How do you have to handle and how do you handle that when someone sort of hints or says straight out, “Well you know, the way things work around here is I need Kool-Aid money or I need whatever.” How do you handle that situation?
So I think first of all, yes I have been presented with situations where people have… They don’t normally say it out very black and white. Normally what you get is an indication. So, what would happen is somebody might ask you, “What do you like, what are your favorites sports?” And then they would go, you’d say your favorite sports, and then they might say, “Oh, do you know…” If you happen to say soccer, they could say, “Oh, do you know, I could get you two tickets to the Champions League Final.” Or, “We do corporate entertaining and by the way I can get you two tickets to the Champions League Final. And also do you know our local travel agent here will be able to organize flights for you.”
So before you know it, very subtly what they’re saying to you is, “Look, I can put together a package that might be worth two and a half grand if you went to buy it out in the street, but I’m willing to give it to you, of course, if you give me the business.” So companies will wrap it up in something that sounds lovely and looks plausible but could be construed or considered to be a bribe. And you know, the way I would deal with that is that I would say from a personal perspective that unequivocally no, I would not accept anything in the terms of a personal gift.
What I might do though is I might say, “Yes. The company will accept the gift and we will raffle that gift for charity.” Because sometimes you don’t want to insult the person, you don’t want to insult the person because they may not have meant it or intended it as a bribe. They may not have intended to be influencing you inappropriately. So, what you might sort of say is, “Look, that’s a very generous offer, but our organization would not be accepting anything like that. But what we will do is we will take it and we will raffle it for charity.” And in that case then, you’re very, very clear that you’re not taking it as a bribe or it’s not influencing your decision making.
That’s a very good way of handling it because lots of sales teams will view that a corporate box in a football stadium is nothing unusual.
And there’s a gray line there between, it might be, maybe someone wants to invite you out to see their office or to see their production facilities and it happens to be in a rather nice place or it happens to be near a golf course. Some people would see no problem with that, or maybe it’s part of certain industries would have that tendency towards them. That might be quite common in some industries where it’s quite normal. I know in some areas, to entertain your clients like that is not seen as something wrong. But in others, especially I guess in bigger corporate environments, you have to be very careful about that.
You have to be extremely careful. The other area where you have to be extremely careful is if you’re ever doing any business with a government institution. You could ruin the reputation of your business forever if a government believes you are trying to bribe or influence a government official or a civil servant in any way, shape, or form. And so I would always be advising people that you operate according to your values and you need to be very clear that is this something that will reflect well on you personally, and will it reflect well on your organization? Not what are the norms in the industry or what do other people do. You’ve got to own the decision. It’s your company, it’s your reputation. Are you going to be able to hold your head high and say, “Look, yes, this was an appropriate behavior.”
Yeah, and it happens. I remember…
Yeah, and it happens. I remember, many years ago actually, I was at the contract stage of selling a software solution to a company in a different industry, and suddenly we wound up… I wound up with the buyer on the other side, and we were standing in the car park for some reason. He was having a cigarette, and then he started talking about his holidays. And I was too naive and young to realize what was going on at the time. But I walked out of there realizing, “Hold on, this guy was telling me on the one hand, ‘Yeah, this could work really well for us. I’m thinking of going to New York the next year.'” It was a weird situation. I was too innocent, or not wily enough to realize what was going on. But it happens, you know? So-
Oh, it does happen, and I would actually just make clear, we started this conversation when you asked me about doing business in Africa, I would hate to imply that actually corruption is confined to Africa.
It happens all across the world, in every society, in every industry. So, it’s unfortunately… It’s something that you’ve just got to be aware of if you’re in the procurement career.
Yeah, it’s happens. I think it’s common. It’s common here in Dublin, and everywhere else around the world. There’s a little bit of a… I think we should bring it out a little bit, because this… It’s not like you have to be ready for when it happens. You have to think about, “Well, what are you going to do? How are you going to handle it?” I like your approach of offering to raffle it, because it doesn’t offend anyone. It’s in that gray line. No one gets offended. You have to build a relationship with these vendors as it happens anyway, because it would be very good… Could be the best vendor in any case. So, yeah, I like that.
Okay, so you’ve written a book as well as you’re experienced in supply chain of procurement. You’re a performance coach, and I see you’ve written a book here, which is entitled The Successful Career Toolkit. And I thought we could discuss some of the content in there in the context of building a career within a supply chain management time and procurement. So-
Maybe we could… I could just kick things off by saying, for starters, what sort of person if you like might be interested in getting into procurement? Is it… What sort of background might they have? That they come from finance, from ops, do you need to have a number of years experience? Is it something you can do out of college?
Okay. The beauty of procurement is in fact you can come at it from any background that you’re in. And the reason I say that is because you might be a sales and marketing person, but you will at some stage be maybe dealing with an advertising agency, or a creative agency. And there, in fact, what you’re doing is you’re buying, you’re negotiating, you’re buying sales, and marketing, and collateral, and you’re buying, but you’re a marketing person. You could come for a finance background, you could come from an operations background.
Frankly, you can come from any aspect of the business, because some, usually all, aspects of the business spend money in some way, shape, or form. Or deal with third party providers in some way, shape, or form. So, no challenge there in terms of your background. Different companies operate in different ways. So, large organizations will probably bring people in. I’ve seen people come in as warehouse operatives, who then become warehouse managers, who then get into materials management. And you can do part time courses that will help you build your skills and knowledge as you work your way up to become a buyer, a senior buyer, a purchasing manager, a purchasing director, whatever, all the way up to the top of the organization.
The retail sector. By the way, the retail sector, the buyer in a large retail organization is king, because he or she determines the margin of that product. So, the retail sector invest very heavily in very high quality procurement training and development. And you can do diplomas, degrees, masters, all the way up in the academic scale if you choose. However many people, I’m going to say to a certain extent, sometimes fall into procurement, because they work in a small business. And they are the finance person, or the operations person, or the whatever, but they also have to do the dealing with the suppliers, and the sub suppliers, and things like that. So, they fall into it as part of their day job, and then as the business grows, they realize that actually I’m spending quite a lot of money here, or I’m managing quite a big supply base here.
So, there are multiple routes into procurement. And there are multiple things that you can do during your career if you decided you wanted to chop and change, because there’s plenty of support out there in terms of institutes of materials management, institute of procurement management. And all of the major universities will run diploma programs, degree programs, and masters programs. So, lots of ways in. It’s an exciting… The reason I like it is you get the cut and thrust, and the buzz of negotiating. You get the cut and thrust, and the buzz of product development, because most of your new product developments are going to rely on components, or services that are supplied in by a third party. You get the cut and thrust, and buzz of risk management, because your head is on the line if the supply base fails. Because inevitably if the supplier fails to to get the product down to the line, or onto the shelf, you don’t have a product, or a service, then to sell in your business.
So, I liked the accountability. I liked the responsibility, and I liked the dynamism that came with all of the things I’ve just mentioned. So, it’s an exciting career.
And I mean what’s the… I can see there how it puts you in a position where you’re across departments, because it’s going to impact everything. It’s a multidisciplinary role in a lot of ways, because you’re going to have to be dealing with all different aspects from sales to product development. So, if you were to give advice to someone who is working in any of those areas, and they wanted to sell the leadership team on getting that training for them. What size of business, or sector business, is it a slam dunk for you to invest in training for your staff? Is it a certain amount of turnover, or is there just some sectors where it’s a given? What would your advice be there?
Well, typically, just used as a rule of thumb, if you are providing or performing your procurement in a professional high quality manner, I would expect you at a very base level to save the business 10%. So, if your business has… If you’re spending a million euro, or a million dollars, a good procurement person should be saving you 10% of that. So, that’s just pure nuts and bolts of numbers. Okay? The second thing that a good procurement person is doing is protecting your business. Because if you haven’t got the components, or services, supplied, the probability is you then can’t supply your customers. So, a good procurement person is ensuring that the security of supply is such that it enables your business to succeed and grow.
The third thing a good procurement person is doing is looking at where you want to bring your company. So, if you want to double your business in the next four years, if you want to treble your business in the next five years, whatever you want to do, your supply base needs to have the skills and competencies to grow with you. So, your procurement person is actually doing the ground work to make sure that your supply base have the skills, and competencies, and ability to grow with you. So, there’s three things straight off the bat that I would be saying that if you were to go and invest in that procurement training, well, the return on investment is you should see savings in terms of the purchased goods and services. You should see higher quality, or improved security, of supply, because that procurement person will apply professional processes to the approach.
And also you should see that that procurement person is able to turn around and say to you, “Hey, look, I geared up the supply chain to be able to grow as we grow, so that it becomes an enabling resource rather than the Achilles heel, or a restrictor.” And a lot of the companies I deal with, they turn around and they say to me… They begin to realize the value of procurement when they go, “Actually, the reason I can’t grow my business is because actually my supplier is incapable of growing at the same rate.” And that’s when there’s the wake up.
Yeah, I often talk to people and say, “Listen, if you have a staff member that was earning $100,000 a year, would you have an annual review with them? Would you set targets? Would you make sure that they were happy in their job and performing well?” And they say, “Absolutely.”
But it might quite conceivably have suppliers who are doing an excess of that where there’s no management going on. So, if you put that effort into your staff, why wouldn’t you for the right suppliers put similar effort and expect similar rewards when managing a resource properly? Even if they’re not internal to your organization.
That is a brilliant way of summing it up. Love it.
Okay, so how about… You mentioned there’s a career path, it seems like it’s pretty accessible. It’s pretty accessible in a lot of organizations. A lot of organizations if you’re working there, it’s something that you can get some training on fairly inexpensively. I know a number of the courses are available online, and institutions are not prohibitively expensive. Then once you start off, how do you get to the top of the… What are the attributes for the people who have to get to the very top of that ladder, the top line positions, or the chief procurement officer? What does it take to rise in the ranks?
I think first of all there is a… There are some what I would call general business skills, and one of those would be that you need to see the bigger picture. You need to be able to see the purpose of the organization you work for, and the critical success factors of the organization that you work for. And then what you need to do is translate those back into, “Well, what do I need to deliver?” So, the first thing I would always be saying to people is being very, very clear about what success looks like. So, we want to be very clear about what success looks like, and then we need to be able to communicate that to our supply base so that the supplier base know and understand exactly what is expected of them.
And what you are going to do to help them to get where they need to be, and what they need to do to help you get to where you need to be. So, clarity is absolutely critical. Stephen Covey in his book, when he wrote The Seven Habits of Highly Successful People, he talked about beginning with the end in mind. So, when I talk about clarity and critical success factors, should never start anything until you know what success looks like. So, I think that would be a general business skill that I would think people should start out with. I think the second thing-
… I think people should start out with. I think the second thing is is you need a collaborative instinct in invariably you need to be able to work with a diverse group of suppliers who are operating in different industries, who have different ways of working, and you need to be able to flex, to be able to adjust to those different working styles and different ways of working. And in some cases you want them to adjust to your way of working, and in other cases you might have to adjust to their way of working, just depending on what the product or service is.
You need to like the cut and thrust of a negotiation negotiation that’s are not simply horse trading and banging your fist on a table. There is a real subtlety and value to understanding when you should be paying more for something and when you should be paying less for something. And that old expression of being, what is this it? Penny wise, pound foolish. Or on the other hand, you need to understand well actually look, if I look after the pennies, the pounds will look after themselves.
So there’s a balance in your commercial acumen to know, look, when is the right time to pay more and when is the right time to pay less. And really what you want to do is, you want to make sure that your supply base are not just capable of supplying you today, but they’re going to be capable of supplying you in one, two, three, four, five years time. Because really what you’re doing is, you’re building for the future.
I think you need a little bit of an entrepreneurial flair. In procurement and supply chain it’s about the numbers, the bottom line is you get held accountable to hitting savings targets, you get held accountable for enabling the company maintain its profit margin. You get held accountable for putting in place the foundations for a longterm success. And you need to feel comfortable being held accountable and you need to like that kind of thing.
And I suppose then I would, without going on forever, I would talk about, look, relationship management is critical. How you manage the relationship with your suppliers, how you manage the relationship with your internal clients, and in truth how you manage your relationship with your end customers, are really very, very, very critical skills. And relationship management, therefore, can be a fabulous enabler in terms of making you very successful. Or it can become something that that holds you back.
So what I heard there was really, it’s about the soft skills. Sounds to me like you’re saying, you need to be actually fairly outgoing, enjoy dealing with people, enjoy, yeah, not necessarily being able to roll with the punches a little bit, it sounds like it actually, and go with your gut. So yeah, when you put it that way, it’s sounds like an exciting… If you just described it like that. We need people who are outgoing, willing to go with their gut, enjoy dealing with people, and have an entrepreneurial flair, that sounds pretty attractive.
Yeah, that’s a nice way of describing.
Okay, just to wrap things up, Game of Thrones is over, which means that the only thing I have to watch is the Brexit drama I’m following every day. And you and I met at a Brexit forum based here in Dublin. So what are the issues you see businesses don’t have to… should now be considering when it comes to their supply chain and Brexit. What’s the big piece of advice you would say for European businesses specifically and UK companies, that have this coming on the horizon? What’s the minimum you should be looking at doing?
Well, first of all, I mentioned earlier in the call I said one of the key things a good procurement person does is, they look at the security and the robustness of their supply chain. Brexit is a real live test to the business continuity and disaster recovery of most supply chains. If I bring it down to Ireland, we know that somewhere in the region of 75% of the products that come into and go out of Ireland, go through the UK. So all of us are now realizing that, wow, is this what the supply chain means? People are waking up to supply chain and procurement and going, “Okay, what are the procurement being done about it?” So I think what, first of all, a good procurement person is always making sure that he or she has alternatives.
Specifically for the critical items that they purchase. There are certain items I would be saying that you need to categorize what you purchased as critical items, there are strategic items. And in those areas you need alternatives. And that’s not easily done by the way, so I’m not suggesting it’s easy. And then what I would say is, those alternatives cannot just be theoretical. So you need to make sure that they’re live alternatives, that you have tested the alternatives, and that frankly if needs be, you have to be prepared to pay a little more to have the security of supply, rather than be held hostage. To give you an example, I know of a number of commodities that Irish companies rely on, and 100% of that product is coming from outside of Ireland. So we need to make sure that the routes into Ireland are held clear. And usually that falls on the procurement or supply chain person to sort that out.
So it’s not an easy one, but I think we can all learn from it. And we need to be finding alternative suppliers on mainland Europe, or at least working with our suppliers who are based in the UK and collaborating with them to say, “Look, how are we going to solve this problem?” And there are many different ways in which you can solve the problem. Some companies will take product in on consignment stock, some companies will increase stock, other companies will reduce stock actually, to be honest with you. Some companies will move and source from mainland Europe. Some companies will build the product or component themselves, they take the piece of work back in-house. So depending on your business, depending on what you can afford, there will be an appropriate course of action.
However, the one thing that does concern me is when I talk to people and they say, “Oh well we don’t know what’s going to happen, so therefore I haven’t planned for it.” Unequivocally we do know what’s going to happen, we know it’s going to be one of two scenarios. It’s either going to be a hard Brexit or it’s going to be a soft Brexit. So you can plan for both scenarios. And the high caliber procurement and supply chain people that I’ve been dealing with, have put in places plans for both scenarios, and then depending on whichever one comes about, they’ll pull the lever then. The low caliber procurement and supply chain people are the ones who are sitting there going like, “Well we don’t know what’s going to happen, so I’m just going to wait and find out.” That will be one where I would be concerned.
It sounds to me like there’s a career making opportunity for people working in supply chain right now, or people thinking of getting into it. It’s maybe a good time, it’s never been better because of these issues.
Absolutely. And it will continue to be as most companies do more and more outsourcing, you need more and more procurement and supply chain skills, because you’ve got to manage those suppliers that you’ve just outsourced to. So there is a very strong demand in Western Europe for high caliber buyers and purchasing people. Very strong demand at the moment.
Very good. Well Paddy, thank you very much for taking the time to talk with us. I’m sure our listeners appreciate your insight. I find it very interesting myself. If anyone wants to get in touch with you, where can they do that?
My business website is Barr Performance Coaching, and my email is [email protected]
Great. Well thank you Paddy. If you are looking for more advice on how to improve your procurement strategies, or improved the margin within your business, yeah, you can go to book.www.procurementexpress.com, and you can get a free chapter of our upcoming book, which you can download. And then when the actual book itself is published, you get notify by email. In the meantime, thanks very much for listening and we’ll see you next time.
All right, folks, there you have it. That wraps up our conversation with James Kennedy and Paddy Barr. They shared a ton of valuable insights and advice today on what it takes to build a career in procurement. We also shared some tools and resources, which will all be linked up in the show notes. Don’t forget to click on one of those links to get a free chapter from the book Profit Leaks by James Kennedy and Garret Carragher. I hope you enjoyed our conversation. Please consider subscribing, sharing with a friend, or leaving us a review in your favorite podcast directory. Until next time, best of luck in all that you do, and we’ll look forward to seeing you on the next episode of the Gross Profit Podcast.