Procurement ‘has the power to transform your business’

12th Sep

Engaging external procurement support is often perceived as a negative step. But what if that external support could become an indispensable part of your business, one that would actually save you time and money by securing you the most competitive goods and services?
Joe Oughtred and Daniel Usifoh of Hessle-based Gateway Procurement want to demystify procurement, saying it has the power to transform businesses of all types and sizes. Effective procurement promotes collaboration and close supplier relationships, which in turn reduces costs and supply chain risks. It also increases profit and drives innovation and growth.
Businesses spend between 50-70% of their turnover on external resources, and it is increasingly recognised that optimising this cost base is key to being one step ahead of the competition. This is where Daniel and Joe come in – they can analyse every aspect of a business spend to see whether it is getting the best possible value for money. At the highest corporate level (they’ve worked at large firms including Asda, Reckitt Benckiser, NHS Supply Chain, FCC environment and William Jackson Food Group), tendering is part and parcel of procurement operations, and Daniel and Joe have extensive experience as practitioners in various industries, having tendered lots of categories.
For smaller companies, meanwhile, it’s often the case that there aren’t enough hours in the day or resources to focus on getting the best deals on goods and services. Daniel and Joe can objectively review spend data, processes, procedures and contracts, and pinpoint where savings and efficiencies can be made. In other words, they can help time-pressed business owners see the wood for the trees, and save them money.
But why procurement as a career? Nigerian-born Daniel, 41, started out in sales, but soon decided he wanted to do something different. “I was torn between being going into accounting or something else, but after talking to a friend of mine who was working in procurement, I chose procurement because I like to meet new people. I like to engage with people, and I like to build friendships and relationships. I’m not knocking accounting, but if I’d done that, then I’d have been unlikely to do those things. So, being given the opportunity to meet new people, new suppliers, new cultures, and to get to know different things, that’s the reason I went down the route of procurement. Most importantly, it’s about helping businesses grow.”
Like Daniel, Joe, 34, had started out in marketing, but soon realised it wasn’t really for him. “I switched over to procurement because it suited my personality. I think in sales and marketing you have to be quite extroverted, and while there’s a bit of that in procurement, it’s not all the time. Business-wise, I’m part of the family business, William Jacksons food group, of which I’m one of the sixth generation so I’ve always grown up with that passion for business – and particularly Hull.”
Indeed, Jacksons was where Daniel and Joe met; Daniel was heading up the group indirect procurement team there, which Joe later joined. (In procurement, by the way, you have what are called ‘directs’ and ‘indirects’ – the former relate to acquiring materials and goods that go into the business’s core products, such as ingredients, raw materials, chemicals, etc., while the latter are the so-called GNFR costs – goods not for resale – such as energy, IT, travel and waste management. These are required to support day-to-day business operations.)
After a couple of years of working together at William Jacksons in Hull, Daniel and Joe decided to join forces to start their own procurement support business. “We thought we could help family businesses and SMEs drive value from their supply chain; having worked in this space, we know there is so much value to be unlocked so we thought other businesses of similar ilk could benefit from effective procurement,” says Daniel.
“Most businesses don’t recognise the power of procurement,” adds Joe. “There’s so much innovation that comes from the supply base, but people just don’t talk to suppliers. So as a function, I think it’s underutilised, and people don’t really recognise what it can bring to the company.”
Like a lot of start-ups, for Joe and Daniel it was a case of tapping up contacts from their extensive list built up over the years; they targeted family businesses in particular, and among those they’ve worked for are Lincoln & York, and Hull’s own Hider Foods. “They take the long-term view,” says Joe.
“I understand how family businesses work, which helps, and we’ve been going to a lot of family business conferences. Our values are aligned with them, and when you can talk to the decision-makers, the business owners, things often happen a lot quicker than going to the larger organisations. We do work with large companies, and we’re geared up to do it, but a lot of them have their own procurement teams, and while some of them see us as an extension of their team, others are quite anti-external support.”
But do they also encounter resistance from the SMEs who may be reluctant to engage external support?
“With some of our clients, it can be a long road to convince them that it’s worth engaging with us, and I think people perceive that we’re just going to slash costs and run off,” concedes Joe, “but we’re not going to do that. It’s going to be a sustainable price that suppliers can manage and is right for everyone, because everyone needs to make money at the end of the day.”
“Some businesses don’t quite understand procurement – they don’t get it,” Daniel adds. “But it’s about changing the narrative from being reactive to proactive in terms of your cost management.
There are only two ways businesses can increase profits – they can sell more, or they can reduce their cost base. The latter doesn’t cost you anything, but to sell more you have to advertise and you have to drive more sales – what we’re saying is, why get into financial difficulties before looking at your cost base? That’s the idea, is to educate people about the benefits of procurement.”
At the heart of their work is the building of relationships. Procurement isn’t like some faceless energy-switching service – although Daniel makes the point that if your home energy bills were rising, you’d look at moving suppliers, so why wouldn’t you take the same approach to your business? But there’s no one-size-fits-all procedure, and Daniel and Joe tackle each situation with tact and sensitivity.
Joe says: “We find a lot of our clients have had suppliers for maybe 10 to 15 years; they’re doing a fantastic job for them, they really like them, but they’ve never benchmarked the supplier to see if they’re still competitive, and obviously we can come in and do that without damaging any operational relationships.”
It’s not all about costs, though – a client may have been with a supplier that long because they value its service and relationships, all of which Daniel and Joe take into account. “If we run a tender, we have a scoring system,” says Joe, “which we agree with the client. So, you might say 40% of the scoring is on price, or if it’s compliance and quality that are really important, we’d score more on those – it depends on the nature of what you’re buying. So the price is not always the key factor, and there’s a proper process in place.
“Because we’ve come from procurement roles within industry, we know that if you appoint a particular supplier or put a contract in place, that then needs to work within the business. You’ve got to get stakeholders on board, you’ve got to get your operations team on board and everyone to accept that new agreement. If you go for the cheapest, it could be a real pain to you because the quality is going to be wrong.”
Daniel sums it up. “For us, it’s not about delivering cost, it’s about delivering value.”The pair, who have saved more than £20 million for companies in their careers, are clearly passionate about procurement. In March, Daniel addressed a large audience of local business leaders at the Bank of England – Bondholder and IoD event at Hull’s DoubleTree by Hilton.
They are also keen to promote procurement as a career choice, too. They run training courses for people hoping to follow them into the industry, with classroom-based courses (either at Gateway’s offices or within the workplace of your choice), plus bespoke mentoring and coaching on both an individual and team basis, led by practitioners certified by the Member of the Chartered Institute of Procurement and Supply.
They also have ambitions to develop the company further. “We have a three-pronged strategy and a five-year plan,” says Daniel. “Firstly, we want to be known locally as the go-to resource for procurement support. In the next two to three years we will move on to our regional strategy, and in four or five years’ time we want to take it nationally.” When I ask if this involves a chain of offices around the country, or even moving out of the area entirely, Daniel quickly responds, “Oh, no. We want to stay close to our roots, because we’re passionate about Hull and want to operate from here.”
Daniel and Joe have achieved an enormous amount in barely 18 months; why not get in touch with them to see what they could do for your business?

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