A Profession Comes Of Age - Raise your game, Raise your voice (Australia)

Raise your game, Raise your voice

Good Morning, Distinguished Ladies and Gentlemen,

It is a great pleasure to be here in Melbourne, the second-largest city in Australia with a population of 4 million people. There is so much to see in this Victoria’s coastal capital, from the busy cultural Federation Square along Yarra River; to the impressive Werribee Mansion with over 5,000 varieties of roses; to the Melbourne Star Observation Wheel with its extraordinary bird's-eye views; to the Eureka Skydeck 88, amongst several other tourist attractions.  

To all those who came from outside Melbourne, your visit would be incomplete without seeing some of these places.

I am also reminded that Australia will soon be competing at the 2015 Rugby World Cup in Twickenham and being one of the few nations who have won the Rugby World Cup twice, hopes are high for glory to be brought back.

Back to this conference, I will like to express appreciation to the organizing team for the excellent preparation and for such a great event. The quality of the event is impressive and I would like to thank you for your hard work.

My name is Babs Omotowa, and I speak today in my capacity as President of CIPS.

I imagine that when I was announced President of the Chartered Institute of Procurement and Supplies in November 2014, some may have wondered who I was. This is especially as I had not previously been on the CIPS Board and was not a principal officer of CIPS. My journey to the CIPS presidency was unexpected. The board waived tradition to invite me to lead this great organization following the excellent tenure of Australia’s very own Craig Lardner who is here with us today. I remain humbled and deeply grateful for the honor.

And for this reason, I always endeavor to introduce myself a bit every time I meet with colleagues who I previously may have had the opportunity and honor to introduce myself.

I qualified as MCIPS in 1996 whilst working for Shell in Nigeria and subsequently participated in the Nigeria branch activities. I subsequently served as a CIPS examiner from 2002 and by 2006 I was honoured to be made a fellow.

Some of you may also know me from my current job as CEO of Nigeria LNG Limited, a $10-billion per annum revenue company, one which supplies 8% of the global liquefied natural gas market. Just to give an example of our impact globally; at some point, 40% of the entire electricity in Portugal was provided by gas supplied from our NLNG plant.

However, I began my career in procurement, working in the warehouse. Mine you can say is a classic story of rising from the storeroom to the boardroom. And I can tell you, without a doubt, that the tools and techniques I learned from CIPS enabled and propelled me to reach the heights of CEO of this global company. 

Many of you are MCIPS qualified and am sure can testify to the high quality of the training and the attendant rigor that many professions have not been able to provide their members. Our institute educates and celebrates its members and it is also a mark of confidence that we can groom world-class talent.  That is a huge plus.

But then, I am not the only one who came to the boardroom via the procurement route – Tim Cook of Apple, and Sam Walsh of Rio Tinto are among the CEOs of multi-billion dollar companies with procurement backgrounds.  All these should, hopefully, motivate you to reach for the sky as CIPS prepares you for the very top.

Procurement has indeed come a long way since 1932 when the Purchasing Association was formed. It has moved from being a back office transactional role to a core function and one that provides many organizations with a competitive advantage. We are now indeed more of a strategic management function.

Without a doubt, the profession has indeed come of age but the world is also rapidly changing, and CIPS is in a unique position to shape its future for the century ahead.

I have had the privilege since November 2014 to visit and meet members across the world, to listen to their ideas on how to make procurement the best profession in the world, and to also share my vision and presidential theme, which is that: “Procurement has come a long way but it is time to raise your game and to raise your voice”.

You may find yourself asking, so what exactly does that mean?

Let me start with the aspect of “raising your game”.

It simply means developing your potential, honing your skills, and moving to the next level.

One way to think about this is to reflect on the leader of any country that you know. You will immediately realize that winning an election is one thing, but knowing how to work with parliament and opposition to achieve the manifesto is another. Obviously, additional skills are required to run a country than are needed to win an election. Ask President Barack Obama, Ask Australian Prime Minister Tony Abbott, or any other democratically elected leader.  

The essence of Procurement and Supply is about bringing value for every dollar spent - for your team, your employer’s business, for stakeholders, and for society at large. For several years, we had used inadequate metrics and drivers to gauge our progress such as price and discounts negotiated with suppliers. The traditional focus on price and ‘winning’, as opposed to ‘succeeding’ (win-win and value creation) limits our profession and as such we must reorient members, go beyond the traditional cost savings, and move to the level of adding value.

To do this we must understand the language of the business and how value is defined.

It sounds obvious, I know – but it is surprising how few people take the trouble to understand the differences.

Value naturally extends to the organization’s customers, which is where revenue comes from, it extends beyond customers, enterprise, and suppliers, it flows into society and we must always think of how procurement activities can impact positively the society we live in.

Australia like any other region has been impacted by the global recession. The economy is pressed at the moment with a knock-on effect across organizations. Unemployment has hit and confidence in public spending is low.  The fluctuating exchange rates and the weak Australian dollar have also had an impact on both imports and exports. 

As a result of these, several organizations are restructuring, even up to board levels, and procurement is not immune. It is a reality of economics that businesses wind back when times are hard, but, unfortunately, procurement has been a casualty of the restructuring, rather than it being a time for investment in procurement skills.  This is also a time for procurement to demonstrate what value we can deliver beyond savings including enterprise-wide risk management and growth enabling.  These times often see businesses squeeze suppliers whereas the right approach ensures suppliers can innovate and bring value to the enterprise and by so doing create a better and more sustainable future.

Procurement professionals have played a significant role in economic turnaround across the world and should have the same meaningful impact in Australia.  CIPS membership in the region stands at 3,600; although it is estimated that this represents only about 10% of the procurement community.  There is therefore a lot of work that we must all do to encourage more employers to insist on professionally qualified procurement teams.

A great opportunity for Procurement in Australia is the recently launched Indigenous Procurement Policy which has been in place since July 2015 and which expects that at least 3 percent of contracts will be awarded to indigenous businesses by 2020. As part of this new policy, some contracts will be mandatorily set aside for the community, and minimum indigenous participation targets will be set for certain deals. This is a good opportunity for Procurement to create local capacity and employment and to positively impact society.  

There are many examples across the world where procurement has so impacted society – let me share 2 of such;

The first example is SABMiller; the world’s second-largest brewer, whose procurement team brought creativity into their sourcing activities and by so doing, is dramatically changing the society where they operated.

Hop and barley are, traditionally, inputs for brewing, but by thinking differently about sourcing raw materials from localities that they operate, they made a difference in Africa by working with their production and R&D colleagues, to utilize a popular crop called Cassava as input.

Cassava deteriorates rapidly after harvesting and so couldn’t be collected from the widely dispersed small farms to enable commercial brewing.  The team acquired an innovative mobile processing unit that travels to the cassava-growing regions and processed the root in situ.

As a result, SABMiller was able to launch two cassava beers – Impala in Mozambique and Eagle in Ghana, which have now created a new revenue source for SABMiller. This has also made the previously poor farmers’, more economically empowered. The farmers have also now become a strong support group for the company. This gives a new meaning to smart procurement.

The second example is from my own company Nigeria LNG.

We recently signed a $1.4 billion contract with Samsung and Hyundai in South Korea to build six new LNG ships. This followed a transparent tender which led to a very competitive price compared with benchmarks. Normally this is where the story would have ended.

However, not for us, as that was where our story started as the procurement team seized the opportunity to provide value to several socio-economic challenges in Nigeria including skills acquisition, employment, capacity development, etc.

We included in the contract that 600 Nigerians will be trained in shipbuilding including in South Korea and the skills they gained will enable us to transfer shipbuilding skills and knowledge that was hitherto not available in Nigeria.

But then we did not stop at that.

We identified materials to be used for the construction of the ships that could be made in Nigeria, including cables, paints, furniture, anodes, etc. We then included in the contract that these must be bought in Nigeria and we then worked with the local manufacturers to improve and get international certification. Today for the first time in Nigeria, local manufacturing companies have exported tens of millions of dollars in goods to South Korea.

But that was not all.

We also got the Korean companies to send shipping simulators worth $5 million each to Nigeria. This will enable us to train many more Nigerians in ship operation and navigation locally rather than only the few that could afford to go overseas. It would also enable regulators to have more access to affordable training facilities.

But we didn’t stop there.

We also included in the contract that a dry-dock facility would be built in Nigeria rather than having to do this overseas. Samsung and Hyundai committed $16 million to this and also technical partnership with local investors for the project.

These are just examples of how procurement can add value and make a difference.

The second part of my message is “Raise your voice”.  

Procurement professionals sometimes have great ideas for improving the business – not just by reducing costs but also by transforming processes and opening up new revenue streams, but they seem to be shy to raise their voices and be heard in their organizations and beyond. 

In my many years of working across several countries and companies, I have found that procurement people are shy; I don’t know why, but who knows, maybe you have the answers.

Maybe it is because the profession started as a back office and as such being upfront in approach is not second nature.

Maybe it is the conservative nature of our training. I am glad that marketing is becoming increasingly intertwined with our profession and training. I hope that will help our professionals in speaking up to be heard.   

Or maybe it is because the majority of CPOs do not report directly to CEOs.

Booz and Co reports that only 5% of Fortune 500 companies have CPO in C-suite whilst Ardent Partners highlighted that only 20% of CPOs globally report to CEOs.

Whatever it is, whether procurement has a direct line of communication to the top or not, the procurement professional needs to find a way to be heard. I know it is not easy, but take my word for it – a smart CEO will always listen to great and creative ideas. I am a CEO and I know that.

I always encourage Procurement professionals to share the success stories they have achieved in their organizations and careers so others can learn and possibly replicate. We have included this call in the supply management magazine and on the CIPS website, but till today we have only seen a few professionals come up to share their stories. I hope you will prove me wrong after today and begin to share your success story.

One good aspect however is the CIPS Awards, where we have over the years seen several organisations enter for the award to showcase the good work that they are doing. However those stories are used in the awards and apart from the winners, very little is known about all those who did not win, whereas their stories and several others who did not even enter for the awards, can also inspire others. We should print and celebrate more procurement success stories.

I would like to lay a challenge in your path, which is on the forthcoming Commonwealth Games in 2018……this is another opportunity to let the world hear the story of another procurement success in delivering a fantastic showpiece. The world will be watching the 2018 Common Wealth Games and Procurement should deliver an excellent game - on time, on budget, and with creativity.  Seize the moment to make this a lasting legacy for procurement and follow in the footsteps of the London 2012 Olympics as well as the South Africa 2010 FIFA World Cup.  Both of these had their challenges, but they left a lasting legacy and engendered a sense of pride among procurement officers. The London 2012 Olympics for example resulted in major changes in how public sector contracts are made available to SMEs through the Compete4 website.  These have resulted in a significant step-change for public sector procurement and I hope there will be a future CIPS President standing here in a few years talking about the impact and value made, not only in Australia but also beyond these shores.

So my message to you is to “Raise Your Game and Raise Your Voice”

You may be asking yourself, where and how do you begin?

Big outcomes usually have little beginnings and I urge you all to focus on the following five areas:

1.         Look beyond price reduction. Learn the language of the business and understand where you can add value.

2.        Drive value in the entire value chain and enable your suppliers to innovate. It will benefit both you and them.

3.        Push the boundaries of value and be a solution for big societal issues. This is good for society and business.

4.        Secure the present and the future by investing in finding and developing the best people to excel.

5.        Work to have procurement reports to CEOs. It is happening in my company and I can tell you that it works.

Speaking of things that work, please do share your good stories with your procurement and business colleagues – and tell them about occasions when you raised your game and your voice. You can do this by posting a comment on the CIPS website, which will allow others to learn from best practices.

As professionals who once were rigidly defined in static boundaries, we must now see prodigious change and boundary expansion. We must influence at senior levels, take ownership and accountability and we must now redefine and communicate the value add of this profession.

The sky is the limit and the time is now for procurement professionals to seize the moment and make a difference.  Indeed, I look forward to a time when our profession is recognized as a strong force for tackling major global issues – and where procurement is a lead item on the agendas of bodies such as the United Nations, G7, World Economic Forum, etc. 

Finally, I say that the future of our profession is indeed bright — but it is not guaranteed. Capitalizing on opportunities will not just happen by itself. It requires strategic planning, political will, and courage to adapt to a changing world.

And members will have to be willing to make significant changes in how they go about their business. If we raise our game and raise our voices, I can say with certainty that our work will validate that we are a force for good.

I look forward to a time when more than 80% of CPOs in organizations will be reporting to CEOs, when 20% of CEOs globally are from procurement, and when Ministers arise from the profession.

This is my dream and one that I hold on to and I have no doubt it will happen in our lifetime.

Let us all go out there and make a difference.