Gareth Nugent at Discovery Networks – Tips on Working with Smaller and Innovative Suppliers

I was sorry to miss the CIPS Conference two weeks ago because of the mega-procurement event clash  – just as I was sorry to miss the ProcureCon Europe event, the Basware and Coupa conferences and the Bloom northern event (but at least we have Bloom London to come on the 16th, featuring my keynote).

The short write-up on the Supply Management website certainly made the panel discussion with Margaret Gibson of Clydesdale Bank, Paul Bestford of John Lewis, Chris Holmes of Novartis and Gareth Nugent of Discovery Networks sound like a good session. The theme was around the need for procurement leaders to look for innovative, new suppliers, not just focus on supplier rationalisation, a process that too often leads to the bigger firms winning out and a consequent loss of dynamism in the supply chain.

That’s a subject dear to our hearts, so we thought we would follow up with the panelists, and Nugent was the first one we tracked down. He worked for the BBC for years, so we have crossed paths before, but now as Senior Director International Procurement for Discovery, he has a role within a fascinating business.

Many of us will know the Discovery Channel, but I confess I had not realised the firm has bought Eurosport and has the exclusive pan-European distribution rights to the Olympics post 2022, no less;  they will sell national rights to TV stations around the continent. The firm is looking to develop more premium content, and as well as their core income sources (advertising and rights) is also looking at new “B2C” routes. So, for instance, this might mean revenue from new digital platforms such as Eurosport Player and shorter pieces of content distributed via Facebook or Snapchat as well as traditional TV programmes.

In terms of the supply base, this means that Discovery is very much looking for innovative suppliers, particularity in technology areas linked to their strategy. “This isn’t a question of somehow favouring smaller, younger innovative firms – it is a necessity. The capability we are looking for resides in those businesses, not the giant firms, so really we have no choice”, says Nugent.

That’s an interesting point; for some firms (and much of the public sector) supporting SMEs and start-ups is sometimes seen as doing those firms a favour. But here, this is essential for Discovery’s future success. But Nugent has had to adapt some of the more traditional procurement views and approaches to make sure he can operate successfully within this new paradigm.

So in some cases, Discovery will actually take a financial stake in the supplying firm if that is a good way to secure supply and perhaps gain some upside on the investment too. Where that option is not chosen, Nugent is often looking to put in place shorter contracts than might be usual, and including break points, rather than the classic 3-5 year technology contracts that many firms favour. “That enables us to try out these suppliers and to experiment”, he explains.

Flexibility in contract terms and conditions is also required to contract successfully with smaller, younger firms. They may not be willing or may be genuinely unable to sign up to what would be standard terms for larger suppliers in areas such as liabilities, insurance and so on. “We will start with our standard requirements, but we need to be flexible when that’s appropriate”.

Similarly, the normal due diligence and checking of company financials and so on has to be approached with flexibility; many of the most exciting firms just won’t have three years’ worth of accounts to check or an established D&B rating.

As well as these different approaches, there are some positive factors to negotiating with such firms. “What is important to them may not be simply the revenue they get from us. We’ve found our willingness to give references and support their marketing and PR efforts by allowing them to say they’re working with us can have big benefits for them”. Interestingly, we wrote about that very issue recently – see the article here, in which we argue that buyers could use this route more often to negotiate better deals with suppliers.

Finally, I suggested to Nugent that he might take a look at our friends at Koble, whose platform is designed to link up buyers and (particularly) smaller suppliers who sometimes struggle to get their firms and products in front of big buyers. The recognition we see at Discovery that smaller and more innovative firms should be a key part of their supply base is something we would like to see replicated much more often among big firms and senior procurement folk generally.

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