Resilience and the role of relationships
“Define what ‘critical’ means to your business to truly understand who your critical suppliers are”
Paul Wallace, Procurement Director EMEA, Air Products
What about the skills required from your regional leads to build the bridge between your internal customers and suppliers? The biggest investment I’ve made is in soft-skills training because if you are bringing good people into procurement, they’d better have great influencing skills. It’s also about building trust and proving that we listen. Finally, if someone wanted to follow your example and deliver a more resilient supply chain, what three pieces of advice would you offer? The biggest is to understand who your critical suppliers are, to work with your supply chain and to truly understand what ‘critical’ means. Next, build agile teams who have a mindset that they can flex – individuals who don’t see a problem but an opportunity. I hate the cliché, but it’s true. Thirdly, go back to skills. Above a certain level of role, people require high levels of emotional intelligence. Finally, I recommend continually improving your processes and considering your tools. The integrated systems used in procurement are not good enough, using a collection of specialised, best- of-breed tools is much more effective. Image reproduced with permission of Air Products
about understanding your ongoing relationship with suppliers and their ability to deliver your current and future demand. Resilience goes further than this, it is about being ready for the future and the unexpected, and our ability to continue to supply customers when we enter a different type of crisis. What type of crisis comes to mind? The energy crisis, for example. Resilience relies heavily on building excellent relationships between our suppliers and internal stakeholders, and that’s part of the procurement functions’ job, to ensure you get ahead of the curve by having those supplier relationships. That’s what we did in Covid. We reached out to our critical suppliers and asked them if they needed our help. Doing that was totally fulfilling. We found some suppliers were being asked to shut down but we were able to help prevent that from happening. I believe that effort earned us a lot of recognition internally and certainly promoted procurement to being right at the front of the business.
about creating the recognition, the “...wow, we didn’t realise procurement did that, we didn’t realise you did that in the supply chain”. And I think it needs internal communication and ways of working to deliver the resilience we’re talking about. How did you bring suppliers along on your ‘working together, winning together’ approach? The point of the exercise is to find out what help our suppliers need from us. Sometimes it can be as simple as paying invoices more quickly, right, but what are the other ways? Our recent Voice of the Supplier exercise revealed that there’s an opportunity for us to listen more when our suppliers suggest value engineering proposals. Here, procurement can act as a bridge between our technical team and the supplier to find ways of delivering those. If they change one of the design parameters, for instance, the supplier might be able to produce it in half the time with a reduction in cost. That’s how I want us to work with suppliers – openly and transparently. It’s interesting that a Voice of the Supplier exercise should put the spotlight on that. It’s fascinating. To get the full benefit from it, you have to follow-up and get underneath what they say to fully understand it. One supplier was reluctant to question our technical expertise. Procurement was able to remove that reluctance.
State of Flux speaks to Paul Wallace, Procurement Director EMEA, Air Products, about the function’s part in boosting supply chain resilience
So Covid provided you with the opportunity to showcase what forward-thinking procurement can do?
What does resilience mean for you at Air Products? Is it just another way of talking about risk management or does it mean something different? That’s an interesting one. Obviously, critical suppliers bring the need for risk management, which means you really need to know who they are. We went into the Covid crisis thinking that 60 out of 10,000 suppliers were critical; but when we took a deeper look, that 60 became 400 and all for different reasons. You must broaden how you consider risk and manage the risks inherent to our suppliers. It is also
Describing himself as a financial analyst at heart, Paul Wallace has doubled the ROI delivered by the EMEA procurement function at S&P 500 US multinational Air Products, which sells gases and chemicals for industrial use. He achieved this through a massive transformation that saw him put in place a team with stronger ties to regional businesses across the Europe, Middle East and Africa region. He’s also tackled supply chain transformations and has almost 37 years’ experience at the company. State of Flux caught up with Paul to discuss resilience, the role of suppliers in that, and to take a look at what the future might hold.
I think you’re right. It’s about working together and winning together. That means finding out who you have on the team who understands the supply chain; understanding who your internal contacts are, and their issues, and then strengthening those relationships. It’s
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