2024 GLOBAL SRM RESEARCH REPORT
CASE STUDY: WESTPAC - RAISING PERFORMANCE TOGETHER
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“Often we’ve looked at our overall response to an issue, such as climate change or human rights, and recognise we need our suppliers’ help.”
As the company continues to adapt and change, so too does procurement. CPO Brian Hagen joined the business two years ago and says the function has been very much in “head-down- driving-change-mode” as it undergoes a digital and operational transformation. Supplier management is embedded in point two of procurement’s four-point vision for the function with the aim to ‘connect preferred and diverse suppliers with the right opportunities and buyers’. While work continues on establishing an overall SRM structure and strategy, procurement is already using its management of suppliers to support Westpac with two of its strategic imperatives: sustainability and risk management. Centre-led approach Westpac’s procurement function follows a centre-led strategy where it sets the policy and framework for the business to safely procure goods and services of around $4.6bn annually, leveraging its economies of scale. The supporting operating model is a front, middle and back-office structure of 124 resources. The front office is the primary engagement point for the business’ category management and sourcing needs; the middle office supports the source-to-pay process; and the back office covers systems, analytics and reporting. “We are continually assessing and applying strategies to further digitise and apply efficiencies to drive more value for the business,” says Hagen. “Under a centre-led model, procurement partners heavily with the business and other stakeholders such as legal, risk and finance to ensure we are collectively vested in the problems we are trying to solve for our customers.” The procurement function doesn’t manage supplier relationships, which instead sit within the business. Procurement provides expertise and a framework to help the company
Founded more than two centuries ago as the Bank of New South Wales, Westpac Banking Corporation is one of Australia’s oldest companies. It was initially established in 1817 to support and strengthen the nation’s emerging economy and then expanded rapidly during the gold rush of the 1850s. At that time, staff and gold-buying agents would travel by horseback to reach remote locations. Some even lived among the miners and offered their services from ‘tent branches’.
Brian Hagen , Chief Procurement Officer, Westpac Group
Building strong and trusting supplier relationships is enabling Westpac to reduce risk and boost sustainability and supplier diversity
manage its own relationships. “We provide the foundation for relationship management and try to make it simple to partner with us,” says Hagen. “Our north star,” he says, “is that group procurement will be the first choice for our people and suppliers because we make it easy to partner with; to do business safely; and to succeed.” Building resilience Like many financial institutions, Westpac works in a highly regulated environment, which means much of its focus on suppliers covers risk and resilience. “We work with suppliers and teams directly on anything that requires action, be it modern slavery, environmental impact, inclusion,” says Hagen. “Our minimum standards go far beyond current legislation: We don’t only assess the risk, we take action on it.” Procurement’s work links directly to a strategic pillar of the bank, sustainability, and to Westpac Group’s overall purpose: to “create better futures together”. And now additional incoming rules are requiring Hagen’s team, as well as the wider business, to give risk management even greater attention. Any company regulated by the Australian Prudential Regulation Authority (APRA), which is responsible for ensuring that the country’s financial system is stable,
competitive and efficient, must soon adhere to a new standard for operational risk management. The Prudential Standard CPS 230, 1 which comes into force in July 2025, aims to ensure that businesses are resilient to operational risks and disruptions. “It’s a massive shift hitting Australia in terms of the obligations for banks around business resilience and the role service providers play,” says Hagen. “While we have always governed our supplier relationships to regulatory standards, we are going to go deeper into the end-to-end supply chain. That means beyond our direct supplier relationships to those relationships our suppliers have (we call this 4 th party) in order to provide critical services, which if interrupted could impact the bank’s critical operations.” Key requirements of the standard are for companies to: • identify, assess and manage operational risks, with effective internal controls, monitoring and remediation • be able to continue to deliver critical operations within tolerance levels through severe disruptions, with a credible business continuity plan • effectively manage the risks associated with service providers, with a comprehensive service provider management policy, formal agreements and robust monitoring.
Raising performance, together Today more than 36,000 employees serve around 13 million personal, business and corporate customers across Australia, New Zealand and the Pacific Islands, with services including accounts, loans, investments, insurance, credit cards and more.
1 https://www.apra.gov.au/sites/default/files/2023-07/Prudential%20Standard%20CPS%20230%20Operational%20Risk%20Management%20-%20clean.pdf
Photo supplied by Westpac New Zealand
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