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ACHIEVING PROCUREMENT EXCELLENCE DIGITAL REPORT 2021
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ACHIEVING PROCUREMENT EXCELLENCE 2
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Andrew Newnham
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POST-PANDEMIC, BRITISH RETAILER MARKS & SPENCER PURSUES NEW PROCUREMENT STRATEGIES AND SUPPLIER PARTNERSHIPS TO EMERGE STRONGER THAN EVER
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ne year after the UK first locked as an exciting time: “We made a real down, COVID-19 has accelerated difference to the business.” procurement transformation. A year later, M&S emerged from the Non-essential retail has pandemic stronger than ever. Certain re-opened—but according to British procurement practices, however, have multinational Marks & Spencer (M&S), the shifted—especially those revolving around most important shift has been in mindset. risk management. “It doesn’t mean you can’t “[Before the pandemic], we had tried to have risks,'' Newnham said. “You should have change the hearts and minds of the team”, risks. But companies also need knowledge, said Andrew Newnham, Director of Group transparency, and understanding.” Procurement at Marks & Spencer. “[But it was When Newnham joined M&S, risk difficult] to make our people think differently mitigation was one of the pillars he about the role of procurement.” implemented in his new procurement If nothing else, the pandemic forced even strategy. When the pandemic hit, risk successful retailers to think outside the box. suddenly took centre stage. “Marks & At one point in 2020, M&S’s clothing and Spencer talked about decision-making”, he home sales dropped to 15% of what they said. “Suddenly, we were at the forefront of had been prior to the pandemic. “At one asking: ‘What’s the risk in our supply chain?’” point just before the first lockdown point, Immediately, the company took steps to our CEO, Steve Rowe, came through the understand its supplier base, work with office and said, ‘Go home now’,” Newnham individual suppliers, and keep its operations said. “The pandemic was moving. “How do we a kickstart to an entirely start making risk-based “ONE OF THE MAJOR new way of working.” decisions on a data-led ACHIEVEMENTS Throughout 2020, basis rather than what Marks & Spencer we think we know?” OF 2020 WAS WITH gathered information — Newnham asked. HEARTS AND MINDS about the strength of its “Do we understand GETTING PEOPLE TO data and processes, its which suppliers have agility, and its supplier no cash problems, BELIEVE WE NEEDED knowledge. “We were which suppliers are TO CHANGE” empowered to make too reliant on M&S, decisions”, Newnham and which suppliers ANDREW NEWNHAM said. He recalled telling have untenable DIRECTOR OF GROUP his team that they’d look financial and legal PROCUREMENT AT MARKS & SPENCER back on the moment risks going forward?” marksandspencer.com
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When Marks & To mitigate future “WE’RE A BRAND WITH Spencer initially shut operational risks, M&S A LOT OF HERITAGE down, the company had Procurement spent tried to review contracts significant time putting AND A LOT OF and, in line with many a new risk framework in LEGACY. CULTURE— retailers, mitigate place. Yet, the company AND HOW WE LOOK supplier costs. But decided not to spend Newnham and his team AFTER OUR PEOPLE— large sums of money to members discovered buy pre-made solutions. IS IMPORTANT” that they didn’t have “If you do that, the clear immediate data to team doesn’t own the ANDREW NEWNHAM know which contracts problem”, Newnham DIRECTOR OF GROUP could end easily and told us. “We made a PROCUREMENT AT which couldn’t. This led conscious decision to MARKS & SPENCER to more revelations. use tools that [our team “Before COVID, we’d talked about supply members] could use… that had accessible chain risks, but not necessarily operational information and data. They needed to risk”, Newnham said. “Certain suppliers have a stake in the solution.” could shut down a store. So what plan One of the biggest motivators for did we have in place to ensure that didn’t Procurement at Marks & Spencer, after happen?” all, is the direct link between what they 6
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ANDREW NEWNHAM TITLE: DIRECTOR OF GROUP PROCUREMENT COMPANY: MARKS & SPENCER INDUSTRY: RETAIL PROCUREMENT
1884
The year Marks & Spencer was founded in Leeds by Michael Marks and Thomas Spencer
£9.0bn Group revenue in 2021
EXECUTIVE BIO
accomplish and the success of the company. “M&S is a great place to work if you want to work somewhere where you can deliver, make changes, and be empowered”, Newnham said. “This team understood what we were trying to do. One of the major achievements [of 2020] was with hearts and minds—getting the team to believe we needed to change.”
Andrew Newnham is Head of Group Procurement at British retailer Marks & Spencer, where he has delivered £500mn worth of business savings in three years, implemented a new thirdparty supplier risk framework, and led company-wide efficiency programmes. Prior to his role with M&S, Newnham negotiated and implemented several large-scale outsourcing contracts at Vodafone, UBS, and ITV. After he graduated from the University of Sussex with a First Class Honors economics degree, he worked at BT and British Airways before taking a role as Vodafone’s Senior Commercial Manager.
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Marks and Spencer’s Procurement Transformation
“ALL PROCUREMENT TEAMS, I BELIEVE, NEED TO GET CLOSER AND CLOSER TO THE BUSINESS. EVERYTHING YOU DO, AS A PROCUREMENT TEAM, SHOULD BE ABOUT INFLUENCING AND MAKING YOUR PART OF THE BUSINESS MORE SUCCESSFUL” ANDREW NEWNHAM DIRECTOR OF GROUP PROCUREMENT AT MARKS & SPENCER
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HQ
The corporate headquaters are located in London, UK
CEO
Steve Rowe was appointed CEO in April 2016
78,000+ Number of employees
1,519
Number of retail stores globally
62
International markets
50.5%
Percentage of UK Clothing & Home sales online
13.5m
Online traffic (visits per week)
45
M&S have factories in 45 territories globally
1,379 Number of factories globally
953,129 Number of factory workers globally
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“ ONCE WE’VE GOT THE DATA, HOW DO WE MAKE DIFFERENT DECISIONS? HOW DO WE LOOK AT OUR SUPPLIER RESILIENCE AND EITHER HELP THEM TO CHANGE THE WAY THEY OPERATE OR SWITCH TO ALTERNATIVE SUPPLY SOURCES?” ANDREW NEWNHAM DIRECTOR OF GROUP PROCUREMENT AT MARKS & SPENCER
Throughout its decades of supply chain and procurement operations, Marks & Spencer has focused on building an inclusive, tightly-knit culture. As a result, when the UK lockdown started, many thirdparty suppliers stepped up to help M&S through its most difficult months. Said Newnham: “They were part of the solution.” From here on out, the company intends to find not just tier-one partners but the right partners. “Sometimes the tier-two vendors are more flexible”, Newnham said. “It’s important that our suppliers share our values and are prepared to buy into our values.” How important is this cultural fit at Marks & Spencer? “Almost a defining thing”, Newnham said. “We’re a brand with a lot of heritage and a lot of legacy. Culture—and how we look after our people—is important.” But successful partnerships take two to tango—and Marks & Spencer is determined to hold up its end of the bargain. Moving forward, the company aims to strengthen its supplier relationships by lending its expertise. “This isn’t just the right thing to do”, Newnham said. “We’re going to try to change things.” He pointed out that now, ESG supply chain measures affect how consumers buy and shop. “Our customers are diverse”, he said. “Our customers want 10
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“ NOW WE’RE ABOUT AGILITY. WE’RE ABOUT MAKING DECISIONS. WE’RE ABOUT BEING EMPOWERED. WE’RE ABOUT EFFECTING CHANGE” ANDREW NEWNHAM DIRECTOR OF GROUP PROCUREMENT AT MARKS & SPENCER
sustainability. As a procurement team, it’s up to us to understand those concerns and help our third-party providers understand and deliver our values.” While Marks & Spencer has historically focused on RFPs (requests for proposals) to close good deals, Newnham argued that the company should also be commercial advisors. “We’ll start with what we’re trying to achieve”, Newnham said. “Then we’ll work back from that. [We can decide] whether an RFP is the right route to 12
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take, or whether we take a more direct approach with a key partner.” First, the company covers the basics. “You’ve got to understand the business objectives; you’ve got to handle the sourcing process”, Newnham said. “If you don’t negotiate a good deal, run a good competitive process, and reduce risk by getting the right contract in place with a good indemnity clause, you’re not really in procurement.” Certainly, Marks & Spencer is excellent at focusing on key business outcomes. While the company has a distinguished history, it doesn’t shy away from keeping up with the times. “If you’re not involved
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in the commercial discussions all the way through the lifetime of the contract”, Newnham said, “how can you be expected to understand the service and do a great deal going forward?” Still, to Newnham, procurement excellence is all about strategy. “Once we’ve got the data, how do we make different decisions?” he asked. “How do we look at our supplier resilience and either help them to change the way they operate or switch to alternative supply sources?” Compared to other retailers, this mindset sets Marks & Spencer apart. “You need to build a strong foundation and become
business partners”, Newnham said. “You need to be known as a good negotiator. You need to be known as understanding the market.” All in all, Newnham believes the pandemic has made Marks & Spencer stronger. “Our procurement organisation is an unstoppable force”, he said. “You can’t let perfect be the enemy of the good. During COVID, the team had to drive operations forward. “Better to achieve our targets on time rather than reach an absolutely perfect bar”, he said. “We reach 80% perfect, and then we can ask: ‘How can we do things better?’” As for the evolving role of procurement, Newnham is thrilled that his team’s recent work is helping Marks & Spencer adapt: “Nothing’s too small. You’d be surprised— deliver a lot of 1% changes and you make a real difference, it’s the British Cycling Marginal Gains rule.” Going forward, the foundations of the company’s procurement strategy will be much more solid. After a transformative year, the company has stress-tested its systems, evaluated which ones work, and targeted those that it needs to improve. Newnham explained: “We learned what we were good at.” In some sense of the word, COVID19 helped Marks & Spencer change its perspective on what it meant to be in procurement. Currently, the company is re-envisioning its role in the global supply chain as well as its core strategies. “Now we’re about agility”, Newnham concluded. “We’re about making decisions. We’re about being empowered. We’re about effecting change.”
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