AECOM — Head of Procurement talks ESG targets and suppliers

Angus Craig, Head of Procurement, AECOM

To kick off a brand new yr of conversations with CPOs and heads of procurement and provide who’re joyful to share their on a regular basis roles, challenges and visions with friends (and procurement resolution and service suppliers), we talked to a global procurement lead who has some necessary asks of the provision base.

Angus Craig is Head of International Procurement at international infrastructure consulting agency AECOM. Sitting at quantity 189 on the Fortune 500 record as one of America’s largest firms, AECOM amassed $13.3 billion of skilled companies income throughout fiscal yr 2021. It delivers skilled companies all through the undertaking lifecycle – from planning, design and engineering to program and development administration. Through tasks spanning transportation, buildings, water, new power and the setting, it’s a chief in serving to to unravel some of the world’s most complicated challenges.

Craig’s position, which covers all areas exterior of the Americas, shouldn’t be solely to ship extra worth via the provision chain and oversee probably the most environment friendly method to execute all the source-to-pay course of for the group, however to interact with the provision base to collectively assist obtain the group’s goal of science-based internet zero by 2030. While all GHG emissions are in scope, the complexity of Scope 3 means it has obtained probably the most consideration from the cross-functional group.

“AECOM is an ESG chief in its sector” he defined, “outlined by its Sustainable Legacies technique. We have a number of internet zero packages that intersect with this technique, for instance, shifting to electrical autos (Scope 1) and working with landlords to maneuver to renewable power tariffs (Scope 2). When it involves Scope 3, that class entails the entire provide chain, which features a various vary of principally companies that we devour ourselves and which we interact to assist the supply of tasks for our purchasers. AECOM has developed an additional class, ScopeX™, a course of developed to cut back carbon via design companies to purchasers. It considers embodied and operational carbon throughout the complete undertaking life cycle. Aside from these initiatives, AECOM is offsetting residual carbon by creating our personal nature-based resolution tasks.”

As head of procurement his position within the ESG agenda entails differentiating suppliers primarily based on their capability to assist the Sustainable Legacies technique. He goals to make that info out there to the enterprise to allow them to take extra knowledgeable choices with their purchasers, one thing that may be a giant differentiator for the group.

Suppliers should acknowledge the significance of patrons’ ESG targets

“For me,” he mentioned, “the necessary factor is how we take our ESG ambitions and apply them in the true world. That means working with like-minded suppliers. We’ve issued an RFI to a pattern of our suppliers to know what their internet zero plans are, and we’ve seen an enormous variation in response. Some suppliers fully perceive the query, have plans in place and are eager to share them, as a result of additionally they see that as a differentiator. Some suppliers both haven’t any plans or see the request as a risk.

“But that is one thing that may be a very excessive precedence for us, for the group and actually from a procurement perspective, as a result of it’s an necessary value-add that basically permits us to increase our worth proposition to the enterprise, going past arduous greenback financial savings. So it’s crucial that our suppliers adjust to and share our imaginative and prescient to embed sustainability and ESG into the whole lot we do.”

This is far more of a problem for the companies sector than for the manufacturing trade. A consultancy has no manufacturing line and the quantity and sort of suppliers shouldn’t be finite.

“In this we’re additionally complying with our purchasers’ ESG needs, which is why we count on our suppliers to adjust to ours. But when the sort and quantity of suppliers you’re employed with is so nice, it turns into a way more sophisticated problem and a really totally different proposition.”

Two most important ESG challenges for the companies sector

Craig is battling a pair of challenges: one he feels is endemic to the ESG agenda, the opposite is restricted to his trade.

“Something I consider is usually lacking from the entire internet zero dialog,” he mentioned, “is the entire ‘echo chamber’ impact, the place these people who find themselves really dedicated to it assume everybody else is simply too. But in my expertise there are giant sectors of the economic system which might be nonetheless struggling to know what precisely it’s they should do.

“Another problem pertinent to the development trade, is that tasks are giant and due to this fact command a big quantity of useful resource. The quantity of suppliers for sure specialist jobs will be restricted. This reinforces procurement’s position of gaining a greater understanding of the organizations we work with, whether or not round business features or well being and security or sustainable practices, in order that we will make higher choices about who we interact with and affect. And that may be fairly a time-consuming exercise.”

Craig sees procurement as facilitators throughout tasks who should determine the place commonality exists and current an entire image to the provision base, however he sees expertise as an enabler to that. “Clearly we want entry to strong and clear procurement expertise for our P2P course of, for our danger evaluation of suppliers, for market intelligence and for knowledge analytics. It’s important to maintain on high of the suitable expertise to turbo cost what we’re doing and assist us ship for the enterprise.”

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Technology and individuals are the reply

Alongside harnessing expertise, he sees constructing group functionality and enterprise interplay as the important thing to reaching procurement’s and due to this fact the enterprise’ targets.

“I need individuals who can’t solely present class experience, however who’ve the fervour and drive to permit us to interact absolutely with the enterprise and the provision chain.

“It’s necessary to develop an ordinary strategy as a lot as doable, and I don’t imply procurement-by-numbers. I imply customary and legally-compliant RFP templates with the suitable phrases and circumstances that embed our ESG necessities. We make investments quite a bit of time utilizing our expertise to acquire a greater understanding of our spend knowledge. But the problem is placing all these components in place in order that once we do interact with stakeholders and suppliers, we’re capable of construct a momentum that permits us to reply rapidly to queries and requests, and have the suitable processes already in place.

“Another space that is essential proper now’s our program ‘sourcing for fulfillment (S4S).’ This is about bettering governance round sourcing. We developed the sourcing technique with our sponsor and then met with the VPs of operations to get it endorsed and agree the useful resource necessities. It’s actually necessary to get all the suitable folks in settlement earlier than we embark on a undertaking. It wants common critiques to verify any points get raised and are tackled head on.

“Equally necessary is celebrating our success on the finish of a undertaking. We attempt to publicize it as broadly as doable once we make a great deal; it offers us a method of exhibiting what attractiveness like. It’s necessary to enhance folks’s notion of what we’re doing and get recognition for it exterior of our personal 4 partitions. An enormous half of that’s figuring out the sponsor from the enterprise proper from the beginning, in order that once we do get an ideal end result the sponsor is aware of how we acquired there and shares within the success. AECOM is a consultancy, and due to this fact a people-based enterprise, so it’s necessary that these individuals are acknowledged for his or her successes. From my perspective it’s about constructive reinforcement, as a result of it’s a lot simpler to inspire folks when you’ll be able to present them what they’re aiming for.

“When you showcase your achievements, success is self-perpetuating and extra folks need to keep in procurement or certainly be part of it. So I used to be delighted to listen to how one group member put it: ‘There are scratches on the door exterior to return in, not on the within to get out!’”

A superb chief wants good knowledge

During his a few years as a advisor, Craig learnt that constructing rapport and utilizing knowledge to take away some of the emotion round procurement choices are very important.

“It’s typically fairly troublesome to advertise the procurement agenda,” he mentioned. “It may be that we need to consolidate our suppliers, or get higher pricing in place, or make sure that we’ve the suitable T&Cs, and this won’t be the enterprise precedence; their precedence is to get the job delivered to plain, under-budget and on time. We should determine the place there’s overlap between us and the enterprise agenda and show that good procurement follow can also be good enterprise follow. And the most important driver of good procurement is knowledge, together with ESG and carbon emissions knowledge — that goes for any enterprise.

“First you want a very clear thought of what you need to obtain, then it’s about harnessing expertise to collect the info that means that you can make a lot better choices and drive compliance to your insurance policies.

“Procurement historically has targeted on negotiations and T&Cs, however I consider the long run now lies in the way you make the most of expertise to interact with suppliers in a deeper method. AECOM is a good instance of this; we try to know suppliers and their ESG initiatives, and calibrate and quantify their solutions so we will add that to the award combine, as a result of it’s a high precedence for us.”

Many because of Angus Craig and to AECOM for sharing their experience, insights and learnings, and look out for extra practitioner-related commentary on a various set of points as we function a CPO every month on Spend Matters.   

If you might be on the lookout for procurement companies suppliers that can assist you along with your 2022 choices, strive our Procurement Services Market Directory .

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