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Procurement in Practice — bp exec focuses on ‘smartly architecting better outcomes for the business and creating more holistic value’ (Part 1)

10/18/2021 By

bp procurement
Mark Smith, personal photo

Continuing our series of one-to-one discussions with heads of procurement and supply from various industries, we were delighted to meet with a procurement leader who has an inspiring vision for procurement, its role in the organization and the people within it.

The procurement executives we’ve met during this series, where we uncover their practical challenges and success stories, have a forward-looking approach to the day job that reaches way beyond the transactional into the digital.

Mark Smith, Procurement Vice President, Digital & Talent Supply at integrated energy company bp plc., is a strategy and transformation expert with an impressive background in business enhancement at Shell, Accenture, Babcock International and of course, bp. He believes that talent will reshape the future role and perception of procurement into what will be a more self-serve and business-enabling process.

“I’ve always been interested in the architecture of procurement,” he says, “where the function is going and how we bring the right mix of technology, people and mindsets together to make the best possible contribution to the business that procurement can make.

“I truly believe in the role of procurement in furthering the organization’s ambition of becoming a net zero company by 2050 or sooner, and that has to start with understanding its commercial goals. My practical role is to oversee how we place billions of dollars of spend sensibly in the marketplace. But I always encourage my team to remember that in our day-to-day roles, it’s not wholly about procurement, it’s about procurement being an enabler for the business, and that should be our starting point.”

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Procurement’s chief priority goes beyond the tactical

The part of the role that occupies the majority of Smith’s time is “how to do ‘procurement’ effectively and with the greatest impact.”

“Historically,” he says, “doing that has been about how you get the best price, but there is a growing appreciation that we can do so much more. This is something I’m very passionate about and it’s my favorite part of the job. In procurement, you can question whether what is being asked for is actually needed; you can question whether what you are negotiating gets you the best outcomes; you can level up the way you use your spend to do good in the world, like investing in communities or helping the disadvantaged; you can help improve living conditions for the people in your supply chain, and of course you can grow revenue for your company through innovation. That’s a lot of levers you can pull with your spend when used in the right way.”

As most CPOs recognize, there are many diversions that prevent them from allocating time to this kind of strategy. The mechanical aspects of how their spend gets placed in the market, the processes and compliance of getting it there, managing the commercial risk, due diligence, handling escalations, making processes faster and more user-friendly, and making sure they support the business needs are just some. “Of course,” says Smith, “they are all super important. But we also need to have the right balance in place between the transactional and what we aspire to.”

“I’m a great believer in the fragmentation of the supply ecosystem, such that the traditional view of your supply chain stretching out behind you is a thing of the past. Today we recognize more and more that the companies that are your suppliers can also be your customers, or partners, or competitors. So I spend as much time as I can possibly create to look at how we can spot the various opportunities in this and helping my team to think that way too, because there’s no point believing in those higher goals if your team is working in a different way that prioritizes savings.”

The future is self-serve for internal customers …

For a lot of good reasons we have placed procurement between the business user and the supply to aggregate volume, negotiate deals, create compliance, cross check and eliminate multiple ordering, and to make sure we have regulatory provisions covered — basically our processes are set up to make everything safe.

“A big part of my time is making sure the process works as best it can,” Smith says. “But going forward, more of our role will be to systemize that process and to spend more of our time attracting talent, developing it and importantly retaining it. My great hope is that in my procurement lifetime we will get to a place where we’ve enabled systems like dynamic marketplaces, catalog-based buying and automated sourcing to give users access to the supply they need. Because I believe our first goal is to create access to supply in as frictionless a way as possible, so that procurement can step back and start to look at how we can smartly architect better outcomes for the business and create more holistic value.

“So while I spend more time than I’d like on the transactional, it’s good to remember that there’s a lot we can do with technology to put new category strategies in place that can be set up to operate without us touching it.”

… and for external customers too

While digital self-serve is well advanced in the consumer world, from online banking to booking appointments to shopping, in the B2B world it’s a bit slower. According to Smith “it’s easier to do in the consumer market because what people are buying is fairly standard, mass-market, commodity needs, and the data structures and APIs around that follow suit. But I believe it will inevitably come into B2B, it just requires a bit more market evolution.

“With L&D for instance, you don’t want to pick up the phone to procurement to create courses, you want a strategic partner to help you develop the right course for your people: the experts and the delivery of the course should all come via a platform in the future.

“So technology in S2P will definitely improve and even change procurement’s role. For me, it’s about investing the time in having it set up correctly, like your catalog and auto receipts etc., and when that happens, you can see phenomenal success.

“But maturity and evolution usually come with the external marketplaces that make it possible. I don’t think any procurement organization really has the bandwidth to put the effort into setting everything up to be system-enabled, because once you’ve put your catalogs in place and negotiated the pricing for everything you might buy, it’s time to start again. So self-serve will be the answer for external customers too, but there’s a bigger role to be played in the external marketplace first where you rely more on common catalogs for common goods and services.”

In Part 2, Smith talks more about how we can make self-serve work.

Read previous CPO interviews in the rest of our series: Procurement in Practice.

CPO - Chief Procurement Officer