The Manchester Airports Group Procurement Transformation Programme (Part 3)

The Business Benefits, Targeted Outcomes and Learnings

In our two previous articles, here and here, we outlined how the procurement transformation programme at Manchester Airports Group (MAG) was developed and delivered, leading to their CIPS award-winning performance. We will wrap up the series today with a look at some of the benefits delivered and some lessons from MAG that we hope have relevance to other organisations.

As can be heard in our podcast with Owens, which will be available soon, he maintains a strong belief in taking forward two concurrent agendas, operational excellence and transformation through continuous improvement - achieved through delivery in key focus areas.

In terms of outcomes, the programme delivered both ‘hard’ and ‘soft’ business benefits and maintained a “business benefits delivery” and “sustained fix” philosophy throughout. Significant “in-year” audited Savings planned as a minimum multiple return on the total cost of the entire procurement service have been delivered (there was no upper limit!), validated and signed off by finance and budget holder. Compliance, governance and risk reduction is harder to quantify but as an example of the benefit, there have been no successful supplier challenges to sourcing projects in the past 18 months. Contracts are logged, controlled and renewals planned through a contract management system and no longer “lost” when it comes to supplier discussions or disputes.

Procurement spend coverage has seen an impressive leap from under 25% in 2013 to around 90% now, with only very low-value spend outside procurement’s remit. Efficiency has improved and internal staff workload is monitored.  In two years, output of sourcing projects per year has grown from 80 to 350.

Let’s now draw out some of the learnings from this programme – what might be useful for others to take away from the MAG experience?

Credibility of the Leader – we said it in our earlier articles, but the fact George Owens had successfully led procurement transformation programmes previously and was a deep expert in terms of capital programmes certainly helped in a capital infrastructure-focused business. “George is a deep subject matter expert, it is not just theory from textbooks, he has the experience and has done it personally,” said Rob Williams from his senior team. That doesn’t mean that a first-time, less experienced CPO can’t drive transformation, but they will need to generate credibility somehow from personal qualities or experience.

Strategic vision – transformation must have a clear vision and understanding of where procurement is going based on a deep understanding of the business and its business plan. “We had a clear direction of travel for the programme. We understood where we were and where we wanted to get to,” said Williams.  Defining the role of procurement is key. It is fine for instance to stress the risk management and governance role of procurement but in a dynamic organisation the function can’t be seen purely as a “blocker.”

Senior management support -- we suspect one reason for the team and George’s success in the recent CIPS awards was the very strong stakeholder testimonials that they were able to provide as part of their entry. Having seen some of them, they are very impressive – for instance, from the CEO Charlie Cornish: “I’ve seen a real step change in the department and I recognise that Procurement is now positioned as a valu- creating strategic function.” That reflects the vital importance of gaining and maintaining support from top management for serious procurement initiatives like this. In turn, that requires procurement leadership to be able to lay out clear strategies that are aligned with the wider business and actually deliver on targeted value outcomes!

Working with other functions – that alignment also helps to generate successful working with other stakeholders. “Understanding their challenges/priorities as well as our own is important so you can align your vision to theirs,” as Jason Lowry from the team said.  And Owens was clearly more concerned about “what works” rather than maintaining conventional functional lines. As his Head of IT Procurement Tom Alford said; “Having me embedded in the IT function with a seat on the CIO’s management team and a dotted line to him has worked very well.” And another piece of wisdom from Alford; “You’re only as good as your last engagement with the stakeholder!”

Project management and delivery

But alignment is not enough without delivery, which requires a robust and professional programme management approach. Here is Lowry again. “We have real credibility in the business because we delivered on our promises, especially in terms of delivering large strategic projects.”  That has to be done through effective planning and through people delivering. As Alford put it; “George supported people, but he gets them to deliver – he is very output-focused, clear on what he wants individuals to achieve, and supports them in doing that.”

People

Owens was fortunate in being able to recruit much of his new senior team from scratch. There is no doubt that having the right people matters. “You can be a visionary but you have to make it happen. That comes down to George’s ability to select and bring the right people in and get the investment from the business.” So as a procurement leader, if you don’t have confidence in your team, you need to make some hard decisions – can I improve and develop the people I’ve got? Or do I need to replace?

In wrapping up our series of articles, we should stress that MAG is of course not the only example of successful procurement transformation, and everyone will be somewhat different depending on the organisation, nature of business and the function’s stage of maturity. However, we feel that these six areas have current relevance in the vast majority of cases. Finally, our thanks to George Owens (george.owens@magairports.com) and his team for participating, particularly those we interviewed personally, and we wish them every success for the future.

 

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