For Procurement Heads‘ latest CPO Spotlight, he spoke with Dan Goodson about how he got into procurement & what he’s doing to improve diversity.
How did you get into procurement?
I’m not one of those people who, as a child, had their long-term career vision in place.
It has been much more of an evolution over my career.
I have done various roles throughout that time in project management, commercial, finance, strategy, and then latterly in procurement.
The opportunity of the Group Commercial & Procurement Director came up because Network Rail was looking for someone to do a full transformation on the procurement function and change it from a transactional organisation into a much more strategic business partnering function.
I was known as a transformational business leader and I had a reputation as someone to drive change, for example in overhauling business planning for 40,000 people at the company and then, as strategy director, refocusing the organising in a small number of ‘must-wins’.
Procurement needed someone who understood the business and who could set a bold vision unencumbered from the old ways of doing things. After a rigorous recruitment process, I got the role.
One of the things that attracted me to procurement was the opportunity to be at the heart of the core decisions in an organisation.
The breadth of the role dealing with all categories across a £8 billion-a-year spend is exciting and there are very few roles in a company that have so much reach and influence – for example, it allows me to challenge and support Network Rail in becoming more commercial, more sustainable, and more diverse.
I have brought a lot of fresh thinking into this role, and I have also learnt a lot. Public procurement wasn’t something I had experience of prior to this role and the learning curve was steep but fortunately I have some great people around me and I have always been able to learn quickly.
Public procurement regulations can be restrictive at times but the principles around openness, transparency and equal treatment are the right ones.
If you know the regulations well and you can think strategically, you can still be agile, innovative and drive value for money.
Tell us about the transformation journey you mentioned
When I took over the Commercial & Procurement team, it was too transactional and fragmented.
It didn’t value business partnering and the organisation would only engage at the last step of the procurement process. The function was seen as more of a blocker than an enabler.
There were no category strategies in place, sourcing was often about re-tendering the same specifications again just to try and squeeze further cost out, and there was a culture of disputes in post contract management. We were not very innovative or creative in our commercial deals.
We have introduced category strategies, removed the duplication in governance and added progressive assurance, utilised new technology including Robotic Process Automation of tenders, and radically improved our business partnering so we are involved, and in some cases lead, in setting the business strategy.
I also brought in some new people into my national team and changed the culture to be more agile and service-orientated. This took time and required a company-wide change.
All of that would have been a lot under the best of circumstances, but on top of that we have had to deal with Brexit, Covid, multiple supply chain disruptions, industrial action, and increasing inflation!
I thoroughly enjoy leading Commercial & Procurement at Network Rail. We have made lots of progress and this has been recognised in our efficiency and effectiveness benchmarking, as well as much improved feedback from the business.
That said, my bar continues to rise and there is much more to do!
Traditionally I would think people see the railway as an old-fashioned industry, what have you done to try and change that mentality? How have you introduced innovation into the organisation?
You are right that, in the past, the railway has been seen as an old-fashioned industry. However, that is changing and the opportunities that exist with data, technology, and innovation are exciting.
There is a lot of innovation in the rail supply chain and wider industry, but we haven’t always been good at procuring or deploying that innovation.
Over the last few years, we have begun to change that, recognising that not all innovation will be successful, and that Network Rail doesn’t always know best.
Previously, procurement was seen as a blocker but now we look at how things can be done differently through, for example, the use of alternate bids, outcome-based specifications, small business research initiatives, and design contests.
We have a pitch platform where any supplier can send us a five-minute video showcasing their ideas and how they can improve the railway.
We facilitate conversations between the suppliers and the business to see if what’s proposed can be trialled and perhaps rolled out more widely.
Some of it has been successful, and some hasn’t gone as far as I would like, but these things are making a difference.
Around 75% of our suppliers are small and medium-sized enterprises (SMEs) – a business community which is renowned for its innovation and flexibility.
In 2019 we launched our SME Action Plan with 31 key actions to make it easier for our SMEs to work with us. This included giving access to our standards – the rules for the operation of the rail network – free of charge, as well as making our pre-qualification questionnaire easier to navigate.
This has helped us increase the proportion of our annual expenditure spent with SMEs from 27% to 35%, exceeding the government target of 33%.
We have lots more to do and our journey will continue but we have made positive progress.
What are you doing to improve diversity in the future?
This is a subject that is close to my heart and I champion it on a daily basis.
In my team, we purposely focus on inclusion, and both demographic diversity and diversity of thought. I want people who have varied lived experiences, think differently, and feel included.
We try and design jobs to be more attractive to people who traditionally would not want to work on the railway or who may think it was boring or inflexible.
We use anonymous CVs and diverse interview panels. I have a number of people in my team who work flexible hours or who work part-time, to suit their personal circumstances.
I have a balanced gender split and ethnically diverse team but there is more to do in the most senior roles. There are also many other demographic characteristics to consider.
I’m very proud that colleagues in my team say that it is a team where they can be themselves at work and speak up if they feel something isn’t right.
How would you say your leadership style would attract people to your team?
My style is very much one of empowerment – it is around setting out that vision for people and empowering and coaching them to make a difference.
When you start in management, you have teams of a few people and you can get your arms around the team.
As you get more senior and you have more people working in your team, it is about setting that vision and working with people and empowering them because you can’t make every decision, you can’t be over everything.
I have about 200 people in my team in the national function and then professional head leadership for hundreds more across the business.
You have to set your standards, but it is up to the individuals throughout the teams to deliver. I want my team to take risks.
I don’t mind them failing if their intentions are good. I will praise them when they succeed and support them when there are challenges.
We have developed an ethos in the function that we ask a lot of our people, but we are very supportive around making sure they look after themselves from a health and wellbeing perspective.
We were compassionate during covid and made sure people had the support they needed and that hasn’t stopped.
Health, well being and family are very important to me personally and as a leader. Care is very much the heart of what I think about from a leadership perspective, and I think generally people value that.
I am demanding, I have high expectations, and I want people to innovate and do things differently but also want them to be healthy and to feel like they are part of a team that supports them.
What is your vision?
My vision as a business leader is to be a difference-maker. In procurement, it is to make the function a strategic partner to the organisation and one that drives innovation in the organisation.
It is about using technology and automating the tasks that can be done by machines, offering self-service, using advanced analytics, and freeing up space for my team to have the intellectual capacity to go and drive value and support the organisational goals.
Procurement shouldn’t be about lowest cost. It needs to consider whole life value and innovation, and it is critical in driving positive societal outcomes.
What measures are you taking within Network Rail to address your impact on the environment?
We are doing many things so I will just mention a few of them here.
Firstly, in 2020, Network Rail became the first rail infrastructure body in the world to commit to the Science Based Targets initiative, which independently verifies the plans of businesses worldwide to cut carbon emissions.
As 97% of our emissions come from third parties, including our supply chain, it was vital that we delivered our aim for 75% of our suppliers to commit to SBTs by 2025. Happily, we did this two-years ahead of schedule.
This underlines how seriously we’re taking the threat of climate change as a business. The impact of climate change on the railway was clear to see last summer when our infrastructure came under huge pressure from extreme heat.
The second thing we are doing is targeting specific categories to see how we can drive out carbon and improve the environment in those areas.
An example would be in steel where we spend more than £100 million a year. It is a particularly carbon-emitting industry, so we are working with our supply chain to drive the use of Green Steel which would reduce carbon by about 85%.
Thirdly, we are one of the largest users of electricity in the country using about 4.5 tera-watts, or 1% of total consumption, annually.
We completed our first corporate power purchase agreement for 64 giga-watts of solar power last year and we are about to go out to market to secure around 1.5 tera-watts of renewable energy this year which will be one of the largest deals ever done in this space.
These are exciting commercial arrangements, and it will make a real difference in reducing emissions in the country.
Finally, travelling by train is one of the greenest forms of transport and we need to encourage people to use trains as opposed to cars or other modes of transport.
My team has a big role to play to reduce the cost of the railway and improve the service to our customers and passengers. If we can do that, it will mean more people use the railway and reduce overall carbon emissions for the UK.
How do you think the current economy and rate of inflation are affecting Network Rail’s ability to operate from a procurement perspective?
Network Rail gets a five-year funding settlement from the Government for which I led the negotiation a few years ago. We get a set amount of money, so we must live within our means over the five years.
When inflation of 10% plus occurs, we have to make some difficult decisions. If you understand your categories, you can make decisions on where to prioritise your money, which levers you can pull to keep costs down and understand what the real price increases are in the supply chain to negotiate with suppliers.
It is important to be consistent and joined up across an organisation the size of Network Rail.
What do you look for in the people that you hire?
It’s simpler to say what I don’t look for, and that’s people who are the same. I want diversity of thought and experience in my team so I look for different things in different people, depending on the make-up of my team and the particular role/s.
Having said that, I think the world has changed over recent years with things like Brexit, Covid, climate change, and various other shocks to system.
Therefore, to be successful in an organisation like Network Rail, you need to be agile and flexible. If you are someone who doesn’t like change, it will be more difficult for you.
The days of static jobs that don’t change are gone.
From a personal perspective, what do you feel are your biggest achievements?
The first is leading the Network Rail control period 6 business plan (covering 2019 – 2024), and negotiation with government, which resulted in the award of over £40 billion for the railway.
This was a 24% increase on our previous control period (2014 – 2019) at a time when we weren’t expecting to get any more money.
We did that by systematically convincing the regulator and government of the need to invest in the railway.
The second is the transformation of procurement in Network Rail which I talked about earlier. Finally, it is building a group of individuals into a highly engaged, high-performing team, and a team that support each other.
I have done this a few times in my career and it makes me proud of the difference that I have made.
