Richard Beaumont – Getting Procurement On Track at the Co-operative Bank

There were a number of common themes at the recent ProcureCon event in Berlin. Innovation was certainly one; and that clearly is an area where some of the more leading-edge firms are focusing time and effort. But also interesting were sessions from CPOs facing the task of bringing procurement functions up to a higher level from a somewhat weaker starting point.

Richard beaumontThe most “extreme” situation being faced by any of the presenters was probably Richard Beaumont's challenge. He was previously a very senior procurement leader at Rolls Royce but is now Director of Commercial Operations at the Co-operative Bank. We won't revisit all the trials and tribulations that organisation has gone through, but it is now separating out from the wider Co-operative Group which includes major retail, travel and funeral businesses. And Beaumont's background both as an officer in the British Army and as a McKinsey consultant is probably going to come in handy given the challenges he faces.

The Bank also has to convince the regulators that it knows what it is doing, get its cost base in order as a standalone company, and generally re-launch itself to a potential customer base that has enjoyed various lurid stories about the organisation. So it is into that environment that Beaumont has stepped, taking on responsibility for not just procurement, but also estates and overall cost reduction.

The separation from Group is one major issue for him. That is one of the downsides of the “shared service” concept in large organisations – when one part of the group breaks away, it can cause problems. Here, the Bank has had just two people TUPE'd over from the Group shared procurement function, and there is a huge task in terms of getting specific bank spend data, and novating or re-creating bank contracts from what were all “Group” agreements. Beaumont believes the third-party spend is around half a billion pounds a year, for instance, but getting some clean and accurate data is an urgent priority.

Given his lack of resource, Beaumont has decided to seek external assistance and is on the verge of appointing a procurement outsourcing firm to work with the Bank across most of its spend categories. He will retain a small intelligent client function, but it is likely to be a pretty extensive outsource. However, as he puts it “I don’t see this as the high risk strategy; trying to do this ourselves would be much more risky.”

His presentation sparked some debate around that strategy; it’s fair to say some folk felt building his own function might be preferable, but I think most of us felt that in his situation, he really doesn’t have much choice. Recruiting good people is not quick or easy, and he doesn’t have the luxury of taking a year or two to build that team, as well as putting in place processes, policies and systems. All the element needed for a strong  procurement function need building, and quickly.

So some ready-made expertise will allow him to satisfy the regulator (who takes a close look these days at banks' key suppliers and supplier management), and start to deliver savings and value as the organisation works to get its cost base aligned to that solo existence. I suspect most of the audience agreed with the approach, as well as thinking “good luck” and wishing Beaumont and his team well. We add our good wishes to that and will follow his progress with interest.

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