Winter, June 2013

Is Perth the new black?

Procurement excellence heads west

Procurement excellence heads westUnlike Melbourne’s weather pattern, it seems procurement-smarts are heading in a westerly direction.  

At The Faculty we’ve noticed a significant increase in best practice procurement coming out of Western Australia.  “You only have to look at the migration of serious procurement talent, both from the east coast and overseas, to know that Perth procurement is on the up and up,” says Andrew Hooke, Commercial Director at The Faculty.

No doubt spurred by the resources boom – and probably only hastened by the need to drive sustainability beyond the boom - the size, structure and sophistication of Perth based procurement teams, both public and private sector, have changed markedly over the past five, even two years.

“And it doesn’t end there,” says Andrew, “Some of the procurement initiatives coming out of Perth are truly first-class and lay to rest any misguided, old-school views that the East Coast leads the way in terms of procurement maturity and ‘star power’. Today, it’s neck and neck.”

Certainly there are plentiful examples of Perth based procurement teams outsourcing their transactional work to off-shore centres.  While this is at least partly related high labour costs, it also speaks to a focus on more strategic issues.  Likewise, The Faculty has been engaged to deliver several leading edge commercial capability programs to WA based procurement teams, firmly focused on increasing their value proposition.

Speaking with Cindy Dunham, General Manager - Operations West Procurement, Rio Tinto, she agrees: “Just four or five years ago, Perth based procurement teams were executing transactional tasks– processing orders, that sort of thing. Today, we are seeing a lot more thought leadership, and engineering of the future state coming directly out of Perth.” 

On the cause of this transformation, Cindy believes: “It obviously has a lot to do with the resources boom – to deliver real value, procurement needs to be fully integrated with the business and geographic co-location has helped with that.  Proximity has helped us to drive earlier engagement which in turn improves the quality of our service offering and our ability to deliver more value, beyond transactional tasks.” 

Despite the geographic distance, Cindy doesn’t feel isolated from her eastern peers in the challenges faced: “Procurement is procurement is procurement.  Cost is king everywhere, not just in Perth”.

Certainly a global slow-down in commodity prices has necessitated a strong shift in focus to cost reduction and containment nation-wide.  “Whereas it used to be about supply and keeping the mines running, there is now a seismic shift to reducing costs,” says Cindy. “Our response to this has been to change the nature of the conversation from price to value.  Our stakeholders have a right to expect that we will have the right process for buying the right products, delivered at the right time and to the right place. That is merely procurement’s licence to operate.”

“Our conversations are shifting from cost to value and operationally, people are starting to see the impact procurement can have on bottom-line value, which may be more about increasing productivity, rather than cutting unit costs.” 

Although the high cost of labour in the Perth market has forced some businesses to be more creative in the ways they attract and retain talent – often sponsoring international procurement professionals, Cindy reports extremely low turnover in her team. “Our team is nearly all ‘home grown’ talent. There wouldn’t be a person who doesn’t have at least five years with the business,” says Cindy. 

On how Rio has seemingly bucked the talent trend, Cindy reasons: “People are really excited about the procurement journey at Rio and want to be part of the unfolding story.”  So passionate is Cindy about the opportunity with Rio, and within the profession more broadly, it’s hardly surprising that university graduates coming into the business often navigate their way to procurement: “Procurement is the ideal place to see and touch different parts of the business.  I really think it’s the most dynamic, exciting place to be working right now.” 

“The growth in WA procurement excellence reinforces the importance of networking within the Australian procurement community for increasing the profile and capability of the profession as a whole,” says Andrew.  “I am continuously impressed by the willingness of our Roundtable members to share best practice learnings with each other and to act as ambassadors for the profession.” 

Cindy Dunham is appearing as a guest speaker at The Faculty’s foundation level public training program, Pathways to Procurement, to be held in Perth on 19 & 20 June.  To register a member of your team for Perth Pathways to Procurement, click here 

For more information on coming Faculty events in Perth, please contact Commercial Director, Andrew Hooke on +61 3 9654 4900, or via email.