How to Supercharge Procurement Performance
By John Hall | My Purchasing Center
William Bagley will one day look back on the decades he spent sourcing, negotiating and buying goods in consumer electronics and medical device markets less for the way he subtracted costs than the way he added value to the procurement organizations he guided and transformed.
Two years ago, he took a sharp turn when he was asked to head up procurement for Unum, the Chattanooga, Tenn.-based global financial services giant whose roots pre-date the Civil War. Unum was looking for someone with expertise in driving down costs. It also wanted to supercharge procurement’s performance.
It’s all about process, and not so much product. Whether it’s sourcing circuits for personal computers or biometric devices, or IT services for internal divisions managing billions in portfolios, Bagley barely noticed how his career path had changed. When asked if he agrees indirect procurement is getting more attention these days, he replies, “Yes, but honestly, I pay little or no attention to it. As I was growing up in this business, people didn’t focus as much on the indirect side, at least on business unit level. There was a lot of spend none of us paid a great deal of attention to.”
As Vice President of Global Procurement at Unum today, Bagley, who is also a member of the My Purchasing Center Editorial Advisory Board, defines himself “more as a business person who knows quite of bit about procurement.” Indeed, he embodies the modern well-rounded procurement executive whose expertise is as broad as the roles he’s assumed.
At key opportune times during his career, Bagley was called upon to lead transformational activity.
“Whether we were going from transactional on the direct side to more strategic sourcing to broaden our supply chain and have more of a global, multi-regional network, or redefining our planning organization, I’ve had the opportunity to do some transformation work,” he says. “While I consider myself a procurement practitioner, that’s what attracted me to my role at Unum more than anything else. When I look at where I spend most of my time today, it’s how we can drive change in our approach to procurement that drives the value and outcomes we’re looking for in our business.”
While he considers himself a true change agent in procurement, one thing he hasn’t had to change much after 11 roles at six different companies is his business card. He only interviewed for two jobs: His first one out of grad school at HP and his most recent one at Unum. “I only needed to change the logo on my card,” Bagley muses.
For a period of 12 years (1999-2011), Bagley took on increasingly complex and important roles with two companies that bridged HP’s spinoff entrance into and exit from the medical devices industry – Agilent and Phillips Medical Systems.
Armed with an electrical engineering degree and a MBA in operations research, Bagley took his first role at HP in 1988 working on wafer fabrication in the company’s semiconductor operations in Oregon. Not long after that, he learned of an emerging, strategic procurement opportunity with HP in the Boston area and grabbed it. He never looked back.
For the next 11 years, Bagley assumed a number of important roles with increasing responsibility at HP, beginning as a new product planner for shipment plans and design releases. He went on to serve as a commodity manager for PCAs, bare boards and printed material. From there he served in procurement management positions from strategic up to corporate levels.
One of the highlights of his career at HP came when he chose an opportunity to create a demand-supply matching organization. At the time, he was managing groups of engineers and buyers and endeavored to enhance their responsibilities in planning and logistics.
“What we needed to do was something really simple: Understand the demand, which was more on the planning side, understand what our customers wanted in terms of products, and then everything else is supply related,” he explains.
He faced two key challenges: Matching those objectives to drive efficiencies such as inventory reductions, increased savings and on-time product deliveries, and do it without increasing the size of his staff.
“Quite honestly, when you look at these elements, they all could be in violent disagreement with each other depending on where you are from a performance perspective,” Bagley recalls. He was given two years to achieve some very specific goals. He achieved them in 18 months, improving on-time delivery rates from 30% to over 80% while decreasing inventory and reducing costs.
In 1999, HP spun off all product lines unrelated to its core computing, storage and imaging business into a new company called Agilent, which took over HP’s long-held medical products and testing/measurements businesses. At the time, Agilent’s initial public offering (IPO) was reportedly the largest of its kind in Silicon Valley history. Bagley was tapped to be Agilent’s manager of demand supply management, and led the new company’s re-engineering of product planning and procurement.
Two years later, Philips Medical Systems acquired Agilent Technologies’s health care and medical products business.
For the next 10 years, Bagley took on various key roles with Philips Medical Systems, beginning as director of global purchasing. In 2003, he assumed the role of senior director, electrical commodity cluster, managing development of multi-year sourcing strategies for such spend categories as contract manufacturing, software, displays, computing devices, power sources and user interfaces.
He later served as vice president, outsourcing and supply management for Philips Healthcare, where he developed and implemented commodity strategies aligning long-term technology roadmaps with strategic suppliers, managing supply assurance and strategic relationships and ensuring new product readiness.
A pivotal impactful role came in 2009, when he and his boss devised a new job with the company that had a catchy title: Vice president of cost innovation for Philip Healthcare’s supply transformation program. The role required Bagley to drive initiatives to reduce cost of goods sold and lead a new global cost innovation team across the enterprise, including all product divisions.
“What we were trying to convey to the organization was this: Cost reduction isn’t about winners and losers. If you do it right, it’s really about how to make your supply partner successful while at the same time meeting your business objectives,” Bagley recalls. “The innovation part came when we needed to be creative in terms of how we look at costs. Part of that entailed identifying and taking out waste in the system.”
This is where Bagley’s engineering background came in handy. In fact, he engaged teams of engineers inside Philips Healthcare – “the subject matter experts involved who knew the specifications of the products” – and asked them how they could look at things differently to drive out costs. “The other piece we was this: How do we actually negotiate differently, so that we can expand the pie versus always constraining the pie,” he says. “It was as simple as that. What I did was spend time building a capability that was within the organization so we were able to continue driving out costs while meeting the business objectives.”
An ‘Upstream’ Mindset
When Bagley came to Unum, he discovered a procurement organization that while highly efficient, was transactional-focused. “The actual buying and understanding the market depends on how engaged stakeholders who need to use the goods and services are. We had a little missing element there. What I’ve been doing for the past two years is figuring out how to put in the capability that allows procurement to match the internal needs and demands to what’s available in the supply market, and how to ensure that we’re bringing the capability to the stakeholder prior to them making decisions.”
To Bagley, procurement needed to become more visible – not necessarily at the point of transaction but several steps before. “The upstream process is where the value is added,” he says. “That’s what I’ve been working on here – trying to move the team more upstream. That’s where the cost is defined and the negotiation really is taking place.”
Bagley has discovered one key difference from the years he spent in direct procurement.
“Unlike direct, where you’d design a product and then basically the demand was driven by volume, here it’s trying to understand how the demand depends on what the stakeholder or budget owner is trying to do within their business, and that could vary from a recurring expense from the year before, or a totally new one-time expense. So really, I’m trying to apply some of what I consider are some of the more mature techniques from a direct materials procurement perspective to kind of an indirect environment. That’s where I’m seeing some opportunities here.”
Advice for Procurement Pros
When Bagley looks back on his career, he’s been most happy when he’s been challenged to make a difference.
“When I consider the reasons why I stayed in the medical device organization as long as I did, I was able to add value not only to the organization, but people’s lives,” he says. “It’s no different today with my job here at Unum.”
When asked what advice he’d give young procurement professionals, Bagley quickly responds, “First and foremost, follow your passion and invest in it. A lot of times, we are afraid of our weaknesses and opportunities because we’re in a fast-paced business. There’s a constant pressure on us to perform. So you gravitate to those areas where you’re the strongest and what ends up happening is you never develop those other areas that make you a much broader, more valuable resource for a company as you get further in your career.”
Bagley advises younger professionals to seek companies that encourage and value personal growth. “There will always be those disruptive factors in business that will one day make obsolete what you are good at today,” he says. “One of the skills I had the opportunity to constantly work at was how to transform or drive change. And you can do that whether it’s in procurement, or any other function. Regardless of what you do for the company, spend time trying to understand what you do as a company. What is your product? What are you delivering to the marketplace? Particularly in a procurement function, you cannot serve the needs of the business if you don’t fully understand the business you’re in.”