Procurement transformation at Rolls-Royce


Rolls-Royce prioritises mind-set and behaviour in drive for procurement transformation – winning hearts and minds

By Future Purchasing |

Rolls-Royce plc is a multinational engineering firm, a giant in the design, manufacture and distribution of power systems for aviation, marine, power and nuclear, and other industries.

With 55,000 people spread across 50 countries, any business process change is a strategically tough undertaking. Nevertheless, three years ago the organisation embarked on a business spend management transformation journey as part of an IPEX (indirect procurement excellence) project, converting the way 9000 users across the business buy indirect goods and services, upskilling the teams and simplifying the processes. Its successful completion has triggered the start of a similar transformation for direct materials.

In any business, inconsistent sourcing and buying processes across regions and functions will mean a diverse mix of category strategies, both in terms of breadth and quality, and therefore varying levels of compliance. So a desired outcome from this transformation programme was standardisation across all processes.

Gordon Tytler, Director of Procurement for Rolls-Royce, understood that implementing best-of-breed technology, while important, would not achieve process efficiency on its own, it must be accompanied by a level of trust in order to encourage uptake and foster stakeholder engagement.

As the [ Future Purchasing category management report ] consistently reveals, stakeholder buy-in and engagement is a vital combination for any spend management implementation strategy, and is one of our four key measures of category management performance success. Gordon’s team sought to win the hearts and minds that would initiate this positive culture change.

Engaging the business – one bite at a time

To secure stakeholder buy-in, Gordon favoured a phased approach. “The team started with indirect and non-product-related direct categories,” he said. “We didn’t try to ‘eat the whole elephant,’ but approached it bite by bite.” This gave stakeholders time to digest and appreciate the results.

“We built a compelling case for change driven by business need: to deliver critical products and services on time, and demonstrably save more money,” he explained. But “just as important was the need to give the business fuller data visibility, to see what they were spending and with which suppliers, to influence demand, identify opportunities, and to help drive operating cost targets to which the business was committed.

As part of the spend management technology implementation, we achieved massive insight into spend patterns, and access to data which allowed us to interrogate ‘what-if’ scenarios in real time. Alongside the fact that the IPEX project delivered on time, under budget and with an outcome better than the business case supporting it, this ability to look at reliable data, formulate questions and get immediate answers, was enough to persuade the CFO that the next step of the initiative was worthy of stakeholder support and investment.”

But from Gordon’s perspective, while the technology capabilities were important, the biggest area of investment and focus would be in gaining the trust of the buying community and the operating user teams. “We took this seriously and created a major change programme to ensure people understood what they needed to do differently and the benefits that would bring,” he said.

“For our stakeholders the ability to have immediate access to reliable and transparent data on spend profiles and supply markets has gained us their trust in terms of the value that procurement can deliver. For our buying community, having reliable data and processes frees up time and space to do more strategic category management and to build their role for the future – getting the best results for the business is the part that ‘never stops.’”

Increasing the capability of the team, through leadership

As the [ Future Purchasing survey results ] show, it is more important than ever for leaders of functions in transition to invest time and effort in instilling the right mind-sets and behaviour. So even with stakeholder and user trust in the strategy established, it is just as crucial to enhance the capabilities of the teams who will work within it. Developing talent and skills can be done through formal mechanisms, but Gordon found that a mix of styles worked best in upskilling the buying population.

“There is a place for classic training, and intellectually people get it – however, just like the trust we commanded from stakeholders, so the buying community needs trust from us. What is really needed is our faith in them, to let people go away and do the work, and to give them coaching to be the best they can be. We don’t need homework checkers, we need people to do the job.”

Gordon and his team worked on expectation setting, recognising that capability will evolve. “If you help people to understand what good looks like, and what outcomes are expected,” he said, “then outcomes and rigour will increase year on year. The exciting thing about this is that people develop and grow as the business benefits increase.”

This is the kind of leadership skill that has the most impact, he believes. “While the line managers were right in asking for the best tool on the market to fulfil business outcomes, they also needed to coach their teams to get the best out of it,” he said. “In order to do that, their job is first to understand the direction of the business and translate this into clearly defined team goals, then be coach, facilitator and trainer, and finally to trust their team to do their job. In the past we have become stuck on process steps and governance reviews rather than clarity of objectives, outcomes and energising the team to deliver them.”

Moving forward

Gordon and his team have learnt a lot from stage 1 of the transformation, and moving onto stage 2 they are better equipped. “We are excited that by using some of the best tools in the business we can build in quality controls, making us better at compliance and risk management without slowing us down, and give people more useable data insights,” he said.

“Our challenge now, is going to be in defining the role of the category manager in the future, and helping them use the insights into markets and opportunities to bridge the gap between what the supplier market offers with what the business needs. In turn this will give our stakeholders more trust in the savings we deliver and the teams that work with them. For us, procurement transformation is not about processes and controls, which play a part of course, but more about insight, trust and business results.”

Testimony to this came with Rolls-Royce’s achievement at the CIPS Supply Management Awards 2019, where the procurement team scooped the ‘Overall’ winner award for creating collaborative supply chains.

Gordon Tytler
Director of Procurement Rolls-Royce Group.

Procurement transformation – further reading

Blog post: Procurement transformation and quick win savings

Blog post: Procurement transformation at a European media company

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