For Procurement Heads‘ latest Big Interview, he spoke with David Hazeldine to share more about his procurement career.
I am Chief Procurement Officer at AstraZeneca (AZ), a multinational biopharmaceutical company, which I am proud to say has played an important role in the fight against Covid-19 over the last two years.
The procurement function is made up of around 430 people and we spend in the region of $14 billion annually.
I have been in the role for three and a half years and during that period we have been through a transformation of the function, raising its profile and credibility, as well as recently launching a new value proposition defining the full range of value we bring to the company.
Our focus has not just been internal, our new brand has been shared across the globe with 2,000 of our most important suppliers.
As well as maintaining focus on the broader therapeutic areas and the patients we serve, we’ve been an integral part of the biopharmaceutical industry’s response to the pandemic.
Together with our partners, we’ve released for supply over 2.5 billion doses of our Covid-19 vaccine to more than 170 countries across every continent. Approximately two-thirds of doses have gone to low-and lower-middle-income countries, including more than 260 million doses delivered to 130 countries through the COVAX Facility.
How did you get into procurement?
I was a graduate trainee with the Yorkshire Electricity Board, I did a rotation through what was called purchasing then, and I was hooked, so every time I could find an opportunity to get back into the purchasing group that’s what I did.
It sounds strange I know, but back then I found it incredibly exciting to open the brown tender envelopes and see what the suppliers had submitted in response to our bid process.
What are the roles and responsibilities that the function has within AstraZeneca?
I have always tried to outline the roles of procurement as simply as possible; I don’t think it is rocket science, we respond to business requirements and seek to bring the best external solution to meet those requirements.
The downside of keeping it simple though is that groups across the organisation correlate the function’s activities with their experiences of “shopping” in their private lives and believe there to be less of a professional structure and complexity to what we do.
If you look at the workflow across the function you have the front end of category management (strategic phase) which then overlaps with sourcing and contracting (execution phase) which subsequently overlaps with the transactional, back end phase, which supports the more operational aspects of the workflow. These overlap points are critical to the success of the function as to operate strategy, execution and operational activities independently drives more complexity and misalignment.
It is a life cycle and we try and keep it as straightforward as possible, not just for the people within the function but, importantly, for our internal and external partners.
At AZ we are targeted very much not just at cost reduction but the broader value that procurement can bring so we do monitor budget efficiency contribution, reinvestment opportunities if you like but also as we move into a period of headwinds we do need to keep an eye on mitigation inflationary cost pressures across the business.
We have spent a lot of time working on a financial value framework with finance to define what procurement brings to the table from a total perspective.
This work brings an enhanced level of transparency and credibility to the numbers being reported by the function, especially important when you consider that some business units have different approaches to the value delivered, some like to take to the bottom line, others may seek to invest in other initiatives to drive more value across the unit.
Like many CPOs, I have spent a lot of time in my career talking to CFOs about the merits of the various elements within the total breadth of value.
What are your key focus areas for procurement at the moment and what are the challenges?
Within our new value proposition, we have a focus on four key elements and these are underpinned by initiatives to make AZ and procurement a ‘great place to work’.
Our core element revolves around generating financial value for the organisation, that is the full breadth of value as stated already with some hitting the top and bottom line, things that help manage budgets, things that are reinvested.
As we move towards inflationary headwinds and some of the risk profiles within our supplier network post-Covid we are targeting more mitigation of these forces than we have over the past 10 years where inflation hasn’t really been that prevalent.
There is a strong interconnection between the elements we have identified and this illustrates well through our next element of supplier collaboration with a need to harness our supplier relationships to combat some of the challenges that we see coming towards us.
Also, the sustainability agenda is massive for us right now we are delighted to have just signed ourselves up to Energize, which is the pharmaceutical-wide industry drive around renewable energy to support our supplier networks.
Sustainability is not a “competitive advantage” where we seek differentiation from our competition, it is much more in need of collaboration, but it will be a competitive disadvantage if we don’t step up to our responsibilities on the sustainability agenda.
As an organisation, we have set ourselves ambitious targets.
In January 2020, we unveiled an ambitious programme for zero carbon emissions from our global operations by 2025 and to ensure our entire value chain is carbon negative by 2030, bringing forward decarbonisation plans by more than a decade.
This has presented us with a clear call to action.
We haven’t got time to sit and wait for 2030 to arrive, we are working incredibly hard across the business to come up with a sustainability strategy and the associated initiatives to execute against this strategy.
The digital and technology element is also critical for us as a function with the business impacted by a number of the processes that we are responsible for and we need to make sure we leverage the technologies that are out there to make us more efficient and effective whilst recognising a need to clarify a return on that investment being essential as other digital initiatives compete for finite funding.
The same is true for those processes that directly relate to our procurement workflow be it RFxs, category management, sourcing and contracting or driving data analytics and subsequent insights that will drive our decision making.
There is much talk of technology aiding the “self-serve” debate where some of the function’s tasks are digitally enabled to put these tasks within the control of the user.
This will require a mindset shift in the business and a need for procurement to articulate the rationale to avoid a view this is merely about passing workload off to the business.
What role have you and the function played at AstraZeneca to drive yourselves to be so influential during the pandemic?
It has been an inflexion point for procurement within AstraZeneca, but it would be wrong for me to claim the function has been any different to other parts of the business, the collaboration and effort across AZ has been amazing to experience.
People in this organisation truly put the patient first. I think what stands us aside from many is we partnered to develop and supply a vaccine that met an immediate global pandemic need that was accessible to all.
The result was a strong partnership with Oxford University and the provision of an “at cost” vaccine that was developed and supplied within eight months as opposed to years.
Procurement was a strong function in AZ before Covid but we spent the early days making sure that quality compliant PPE was supplied not only to our internal organisation but externally we donated upwards of 12 million masks to many countries’ care agencies taking advantage of the strong supply chains and supplier network we had established historically.
We engaged in setting up laboratories for testing and the requisite consumables which were much in demand across multiple industries, rapid mobilisation of a critical supplier network to support manufacturing and the clinical trials for the initial studies as well as partnering with HR and legal for the provision of homeschooling support to parents juggling work and child care.
So across the breadth of activities, you can see we were a key cog in the AZ machine.
When you look at some of the numbers associated with the company’s Covid response, they are phenomenal, it makes you incredibly proud to be part of it and it reinforces one of the AZ key values of “do the right thing”, by any measure we have done the right thing.
Is there anything you would do differently?
You can always look back in time and ask that question but I truly believe the procurement response to the challenge was outstanding.
Strongly collaborating with internal and external partners under a common goal helped no doubt but I was hugely impressed with how procurement stepped up at a critical time whilst maintaining our high standards in support of the broader, non-Covid related activities.
Obviously, pace was essential in this scenario; but you can’t just do things without the required due diligence to ensure all risks are identified and mitigated.
Many external to AZ struggled to get some of the most basic things to respond to the pandemic, I’m proud to say we had no issues in sourcing the right quality of PPE to protect our staff as they went about their roles in the pandemic response but also maintaining the supply of medicines to patients not related directly to Covid.
Bearing in mind the speed at which the pandemic hit, our response demonstrated agility, collaboration and a high level of procurement acumen in securing supply, ensuring the goods and services were of the requisite quality and being creative to seek solutions to solve some challenges associated with sourcing activity.
We also had the traditional need of ensuring the commercials associated with any of the arrangements were strong.
So, I think with all things considered, there are few things that we do differently.
Do you think the past couple of years has pulled procurement into the organisation more than it was before?
It has brought the function out of the shadows in a positive sense but this has required a lot of hard work to ensure we have supported the business efforts around Covid but also in maintaining strong performance in sustaining our normal.
The importance of the response to the pandemic was so huge and standards and expectations were just so high, it was very important that procurement didn’t behave in a bureaucratic manner and say well it is going to take six months to develop a category strategy and then we are going to need another three months to sort out the sourcing, we just didn’t have that time luxury.
The bar has been raised for procurement to make sure they learn lessons over the last two years and deploy that into our business-as-usual moving forward.
We have had a lot of recognition and credit in the organisation which is brilliant and my team have done an amazing job, a true team effort for which we are incredibly proud.
Do you think the pandemic has changed procurement as a department?
I think it remains to be seen if I am honest.
We have shown ourselves to be agile and reactive.
I think reactive is a key strength of an organisation because things are always going to come out of the left field and require you to be adaptive and responsive.
You can’t be proactive in everything.
I think getting the balance right is going to be important for us moving forward. I am hoping we won’t have these events every year that test us, put extra strain on the organisation and our people but I think we have shown ourselves to be worthy of our integrated place in an organisation rather than being seen as a bit of a black box or a function that is all about the prices we pay for things.
We have moved closer to our business stakeholders throughout the period and the visibility of our contribution has increased at the Senior Exec table.
It could have gone the other way, we could have failed to support the organisation and let it down which would have been a disaster but there was so much at stake, we came together as a much stronger, collaborative ONEProcurement function.
What differentiated the last two years around the pandemic was the presence of a common goal that existed across both our external and internal partners with a recognition that a sense of urgency was paramount to find a solution that met all the requirements of the pandemic.
Our credibility has been enhanced but we must now build on that momentum, learn from some of the things over the last two years and factor it into our business as usual mentality.
I also sense the level of pride has increased within the function as a result of the efforts and hard work to support all the corporate challenges over the last couple of years.
What is your biggest achievement in your career?
Maybe surviving nearly 40 years in the function!
I have worked for some superb organisations across multiple industries, the job of procurement is never done and is always with a challenge, which is brilliant.
I loved the setting up of the R&D organisation at SmithKline Beecham, effectively building on the sourcing of glass test tubes, moving into the depths of the business through clinical trial sourcing and clinical testing partnerships and then taking that blueprint into the post-merger GSK organisation in 2001.
Within GSK running R&D Procurement at scale was amazing and that is really where I got the bug for life sciences and pharmaceuticals and the impact the industry has on patient medical needs.
Additionally, the achievement of being CPO at Diageo, unifying the function where previously it was fragmented was a superb experience.
I have been blessed to work with some really fantastic procurement professionals, it’s been an awesome ride.
Who has been the biggest influence in your career?
So many!
I think I have been privileged to work with some incredible leaders; Pam Cheng is EVP of Global Operations & IT here at AZ, my current boss and is an incredible leader for a very complex organisation.
I also think back in the day Willie Deese and Joe Meier at SmithKline Beecham/GSK were powerhouses in Procurement.
It is hard to pick from all the people I have been privileged to work with as there are so many.
Bob Ostryniec at Heinz, a great guy who ran a fantastic supply chain.
As I said previously, I have also worked with some superb teams over the years across all the companies I have worked for and when you see some of them moving on to bigger and better things that gives you a really nice feeling.
What advice would you give to someone starting a career in procurement?
Understand your business, first and foremost.
In parallel, become proficient in the tools in your procurement toolkit but remember it’s not about applying them without relating the application to the business need.
Ask yourself the question “So What?”, “Why is this tool relevant to satisfying the business need?”
Be curious, ask questions of people and be proud of the function you are in.
Be prepared to grow a thick skin but be proud and confident of the function because it brings so much to any organisation.
What advice would you give to your younger self?
I would advise the younger John that the function is more than just opening brown envelopes.
I would just say be true to yourself, I don’t know whether that’s because of my straightforward Yorkshire roots, I think people like the fact they know where they stand with me.
I would encourage my younger self to make sure that you connect with people at all levels of the function and treat people with respect, how you would like to be treated yourself.
That is what my father taught me and I think it is good practice to follow.
What are the procurement trends moving forward?
I think advancements in digital and technology platforms will become ever more important. It is likely in three-five years there will be more self-serve where users manage some aspects of the current procurement-originated activities via advanced technology platforms.
This will require deep insight into the shifting environment for these technologies within the business but also an inherent knowledge of the technology itself.
Data will become ever more important and the function’s ability to absorb larger data points at pace will further add to the insights we can offer the companies we operate in.
This needs some acceleration as we have yet to further the predictive analytics capabilities of the function to the required level to make a meaningful difference.
Within our procurement value proposition at AZ we clearly state that our vision is to optimize the ecosystem of partners, both internal and external in pursuit of delivering our value agenda.
The world will continue to be complex with heightened geopolitical influence, new technology platforms, sustainability goals across many forms and the shifting needs of the end patient in the case of the pharma industry.
We need to manage all these elements across the breadth and depth of the complex ecosystem as cohesively as possible, a challenge to test the function into the not too distant future.
Finally, bridging the gap between ourselves and the business will require us to manage and adapt all the aspects mentioned for us to build on the momentum gained throughout Covid and to establish ourselves as a truly integrated business partner who speaks the same language as them and understands them probably closer than we do today.
The increase in cross-fertilization of talent will be key and we need to welcome people from the business into the function and expect our procurement folks to spend time embedded in the business and then to return to the procurement fold.
Tell us an interesting fact about you…
I have been working on writing a book for about 10 years!
It is nothing to do with procurement or business, I am often given a bit of a hard time at home for reading the same sort of books about NY dysfunctional cops and as I have read so many the thought is I must be able to write one myself.
Still very embryonic but that is something I would love to push forward on later in life.
