It’s always encouraging to hear about CPOs playing a clear and tangible role in helping to drive enterprise projects with deep strategic relevance.
Late last year, as an example, Jacob Nielsen, CPO of Nestlé, shared during a Procurement Leaders CPO Connect calls how his €2bn savings programme was directly funding the company’s return to growth strategy.
And we’ve heard many other great examples of procurement being a crucial part of the picture rather than playing the supporting role it might have done in the past. Last week provided another great example, this time from Simon Harnett, CPO of National Grid (pictured above).
National Grid is a UK-headquartered electricity and gas utility company that operates networks in the UK and the northeast of the US. With revenues of more than £17.5bn, the business is one of the largest public utilities in the world.
Naturally, such a business model requires periodic infrastructure investment – and the levels can be mind boggling. In March, the company announced that it would be increasing its capital-expenditure programme by “at least” £10bn to reach a jaw-dropping £70bn over a five-year period to 2031.
As CPO, Simon is a key piece of the jigsaw to ensure the successful delivery of the programme. According to the company’s recent annual report, “strengthening procurement strategies, supplier relationships, and commercial disciplines to mitigate supply chain risk” is a key focus.
And so it was that Simon took the CPO community through the work he’s done to ensure the supply chain is ready, that risks have been mitigated and his team is also ready for the challenge ahead.
What’s making things even more challenging is a shift to a seller’s market, as industry peers also look to upgrade their networks. Such competition results in longer lead times, inflationary pressures and shortages of key goods, services and labour.
To address this scale and complexity, Simon has doubled down on some key areas, including a shift toward Project 13 principles and alliance-based contracting to foster deeper supplier partnerships, supply-chain mapping to understand exposure, a focus on team capabilities and working cross-functionally to drive simplification and bring the full scale of the business to market.
So far, so good, it would seem. The supply chain and delivery mechanisms for around three-quarters of the £70bn capex programme have already been put in place.
To receive weekly insights from the Procurement Leaders community, sign up to the CPO Crunch newsletter using the link at the top of this page.
