Procurement as a Competitive Advantage at Best Buy

Speaker A: Ever since I started my career, it was very obvious to me that my success was always directly proportional to the partnership with the business. So I have to have a relationship and it has to be a relationship that enables me to be educated on the business and understand what it is that they're trying to accomplish. That is the secret sauce. It's the business.

Speaker B: Welcome to supply chain Shocks. I'm Per Hong, a partner at Carney in our strategic operations practice. And for more than 20 years I've worked with clients across a range of industries to navigate disruption in their global supply chains and to build long term strategic advantage. Today, we're going to delve into the world of procurement. Procurement occupies a unique position within any supply chain that drives value and enables the business to prosper through supplier relationships. And in a post pandemic world that is continuing to experience seismic shifts driven by endemic inflation, labor and resource shortages, logistics bottlenecks and energy price surges fueled by climate change and geopolitical crises, the need for procurement to step up to the plate and to meet these challenges head on has never been great. Today I'm welcoming Anna Barre. Anna is a vice president of procurement at Best Buy where she's led a transformation of the procurement function. And before Best Buy, Anna led strategic sourcing teams at McDonald's, at Ah, Kraft Foods and Proctor and Gamble. And today she joins us from Chicago. Hi Anna, thanks for joining me.

Speaker A: Hi, thank you for having me.

Speaker B: I know you're mid swing in a procurement transformation at Best Buy, but how is procurement changing at Best Buy and what is your vision like? What are you hoping to achieve through a transformation?

Speaker A: All right, so, so in terms of why the vision for procurement at uh, Best Buy and why do we need to transform? When I was recruited into Best Buy, I was recruited really with that purpose in mind. They, meaning the leadership of the company, realized that this was an opportunity that was really untapped within the company. And they looked for somebody who would really come in, be really future thinking individual who understood that procurement is meant to do more than just transact and save money. So the transformation at Best Buy is all about providing strategic enablement to the business, allowing the business to be successful, allowing the business to be more nimble. We actually have a rallying cry for procurement and that is to drive competitive advantage for Best Buy by helping our business partners succeed. So that vision has nothing to do with pure cost savings and optimization of spend. Of course it's in there. It's part of that vision, it's part of being successful, but it's so much more than that.

Speaker B: Can you expand on that a little bit for us? What are the key changes that you're hoping to drive through this? And what does procurement look different tomorrow than it does today?

Speaker A: Every single leader of a procurement organization wants to be strategic, wants to be involved early on, be part of planning, be part of budgeting, decision making. No one will tell you that's not my job and I don't want to have anything to do with it because we all realize how critical that is to the success not just of this function, but really to provide and unlock opportunities to optimize the bottom line and really actually enable top line growth. So I don't think that's anything new or anything secret. Everybody wants to do it. And Best Buy also needed to transform in the way that enables that. So where we're coming from is being more of that traditional procurement organization where we had a remit for spend and contracts and negotiations and basic approval process of purchasing decisions. But the team never was incentivized, maybe is a good word, or expected to lean in with that strategic thought leadership. And that wasn't being because they couldn't, didn't know how. It just wasn't a standard expectation. Nobody asked for it the same way because they didn't know they could. So when I joined, I immediately noticed that gap when I evaluated prior work, when I asked individuals on the team what they were most proud of, what came back to me was great stuff, but it was very much reactive versus proactive. So I will tell you that the basis of this transfer transformation that has three components of people, obviously process and technology. The most important one that I personally believe one needs to lean in for the others to be successful is the people. Because if you don't have the people understanding your vision aligned ah to the vision sitting in the right seats with the right remit. It doesn't matter what process you put in place or what amazing technology you invest in, you will always be limited in terms of what you can get out of that investment.

Speaker B: I think that's such an important message for, for so many of our listeners to be able to hear. And anyone who's led a transformation knows it's not an easy road. What are some of the biggest challenges you've experienced and how have you overcome them?

Speaker A: I will tell you I will have to start with my journey, maybe before Best Buy, just so that I can explain how I think I was lucky enough in my career to work for amazing global companies where I learned a lot and each one taught me something different. And I will tell you that what I did learn in my past is as I was changing jobs, changing employers, I learned to become very humble when it comes to understanding why things are done the way they're being done. It's super easy to come in new and say, well, this doesn't work well. This doesn't make sense. Well, let me show you the better way. It's so easy to do that. But unless you understand the why, you're not going to be taken seriously. You're going to have issues, you're going to trip over yourself, and it's going to be a bigger struggle. So coming into Best Buy, I use that experience to truly understand the why, the why things needed to be done the way they were being done at that point in time. And like any company, there's a history of pest performance, financial performance that drove certain decisions, policies and practices that were still in place when I was hired. Right. So I needed to understand that, to really, with respect for that, be able to say, is this the right time to maybe tweak certain things? So having that humility around my own lack of knowledge, I think made it easier for me to actually slow down, learn and listen. Listen. In terms of challenges, it will always, I feel, be people. Because you're dealing with individuals who have files, perceptions, experiences, fears, passions, right? It's the hardest thing, right, to get your message across and ensure that you're being heard and ensure that there is belief that this is the right approach. And then based on that, you know, really build a camaraderie of people who are willing to help you and partner with you. You have to have that kind of. And be sensitive to that. Because the worst thing that I could have done is shut them down in the moment where I needed them the most.

Speaker B: So talk more about the impact that you've created. What's changed since you've arrived? What impact have you had?

Speaker A: So imagine a team that was negotiating, contracting and sourcing. On top of that, they're now writing category strategies. They're sitting in business meetings, leading governance sessions, deploying new technology, growing supplier diversity, software spend. We're looking at, uh, in the midst of building strategy around srm, which we will be looking to deploy within the next nine to 12 months. All of that is absolutely net new to the company and we've already seen tremendous value being generated just within the last year and a half since we started the transformation.

Speaker B: Tremendous. When we started this conversation, you were talking about allowing the business to be successful and to be more nimble around your goal to really create partnership with the business. What, in your view makes a successful partnership between procurement and the business? And how have you seen that interface start to change or evolve, you know, through the course of this transformation that you've been leading?

Speaker A: So I love this question so much that I'm going to try to not jump out of my seat with excitement.

Speaker B: Honestly, you could jump out of your seat if you want, and I'm all for that.

Speaker A: So ever since I started my career, it was very obvious to me that my success in terms of delivery of value and professional growth was always directly proportional to the partnership with the business. And I will tell you that when one picks up a clean slate and wants to set up a procurement organization, of course I'm speaking only from my perspective and my opinion on this. You know, there's different models that I've seen people deploy, right? Get the data right, and based on the data, uh, assess the value that you can generate, and based on that value, you have an ROI. Then you can invest in technology and process, etc. For me, it's almost the opposite of that. I can't be chasing data without explaining why I'm chasing the data, without having trust from the business, without having a relationship, without understanding their pain points, understanding their vision, their strategies, their plans. I can't do any of that because it won't be sticky. So I have to have a relationship and it has to be a relationship that enables me to be educated on the business and understand, understand what it is that they're trying to accomplish. And I really have to know this isn't just reading a white paper type of knowledge. It has to be very deep knowledge. And once I have that, and when I say I am really speaking about everybody in procurement and on my team, then I can react to it and I'm reacting to it in a way that enables them to actually deliver on what it is that they've presented to me. So for me, that is at the core, that is the secret sauce. It's the business. So again, the hard part is the how, how do you do that? Right? How do you ensure that they're being received, that you're not just taking their time from having a conversation with you because they feel they have to, because it's the polite thing to do. So for me personally, I am going to go back to the answer I gave you before on, um, my leadership team. So identify individuals within your organization, like I have, that are super curious and insert them into those partnerships, have them come in and show something, say something. I give them an idea, give them a solution, and then that opens up the door for a deeper relationship to start kind of brewing out of that. Now, those leaders then bring others along with them for those conversations. So you do have to assume it's going to take a little bit of time to build that trust, but you need to have a strategy for how to do it. And it has to be through, I think, the top leaders on the team, people with that experience that will bring others in and then teach them. Now, also, I will tell you that what I encourage my team to do, I don't just encourage it, I expect it. And you know, we actually have been rebranded recently to be Procurement Plus. That's our brand, the actual procurement, and a plus sign, so that we as a team see the difference from what it was to what it is now. And as part of that plus, expectations were expected to be thought partners and innovators. So it is the expectation of everybody on the team to bring in new ideas, new solutions, challenge, obviously, you know, diplomatically and, and respectfully, but always lean in and, uh, almost to a point of being uncomfortable. And so as Procurement plus, it is on us to develop very robust strategies that unlock new information that we bring to the business, information that they never had before. And I can tell you, within that last year, I have so many examples of really strengthening, empowering, enabling different functions to make decisions, to have information that they've never had before. Something as simple as us knowing of industry partnerships, associations or networks that we introduce our businesses to that are new to them. I'm so passionate about this and so proud of what we've accomplished so far.

Speaker B: Are you prepared to give maybe an example how this transformation has made a difference?

Speaker A: I will tell you that each month we as a team get together for. It's either a town hall or what we call a procurement huddle. And each month we provide examples of living Procurement Plus. So we t on the team. Some of the examples, without going into too much detail, are challenging past relationships that the business had with certain suppliers where there's a comfort level, for instance, right? It's, we trust them. Um, it's comfortable. They've always done a great job. And in one instance, you know, that the team said, okay, we get it. You know, you make the decisions. It's, you know, your budget, you make the decisions. But we're going to bring in some ideas, we're going to bring in some new and innovative solutions to you. So you're doing business with this huge gorilla of A supplier. But there's some really unique capability technologies very few people know about. It's brand new. Let's try it. I'll give them an opportunity. And that was not necessarily a very intuitive and natural reaction from this team in the past. It was challenging. Let's just get him a great deal with the incumbent in this case. No, no, no, we're going to bring somebody. Let's just learn from them. You don't have to contract with them. And the outcome was, was that they actually did, and now they're really experimenting in capability technology that's really novel to our industry and potentially adding that competitive advantage just because they entertained having the conversation. The team is feeling so empowered, and it's such a rewarding experience to know that by leaning in and having the courage to do something different resulted with Best Buy being a stronger company. So that's just one example. Another example I'll just quickly touch on. It is also, you know, challenging some incumbent ways of contracting and working and engaging with another company that were not very innovative. Right. And, you know, asking for permission to play around with that and have a little bit of a different approach has unlocked tremendous financial value.

Speaker B: So what's next for procurement at Best Buy? Where do you take it from here?

Speaker A: Well, obviously, the technology needs to be put in place. Right. And deployed. And like I said, it's going to take us a little bit of time to do that. We have a list of many things that we still want to do, and I will tell you that at the foundation of those things is really enabling relationships to get stronger, not just with our stakeholders, but also with our suppliers. I, uh, truly feel there's an opportunity for Best Buy to partner differently, to partner, in some instances much more strategically, to rely on our suppliers to feed innovation organically. So we're going to be focusing on that as well. So definitely leverage our suppliers more strategically, but also figure out how to be more effective with the data we'll be collecting. So with technology, we will be more prepared to make faster decisions real time with the data as it flows through. And I want to ensure that this access to this information, to this data serves everybody equally, not just the procurement organization. So when I talk about working in partnership with our business functions and our business partners within the company, we need to ensure those ways of working have that foundation of data. And I have an ability to help them transform how they absorb that data. So that's next. Right. So, you know, we have the trust, we have the strategies, we are invited in, we're driving Value. But now, how do you ensure that it's all sustainable through the foundation of technology, how it's absorbed and how decisions are made and when they're made based on that new lever that we're putting in place right now.

Speaker B: Excellent. That makes total sense.

Speaker A: Sense.

Speaker B: What advice do you have for other procurement leaders who are embarking on similar transformations, particularly in the current volatile environment that we're challenged with?

Speaker A: Yeah. So never underestimate people and the reaction to change. Everybody has a different reaction to change, so don't ever underestimate that. Spend a lot of time with people, talk to them individually a lot, not once months. Always prioritize people topics in meetings and leadership meetings because they're the most critical component of anything. Right. Transformation and beyond. In addition to that, my advice is ensure that you have the right leaders in place first. They will help drive change. They will help with communicating. And those leaders not only need to be strong leaders in the function in terms of content and knowledge, but they have to be people leaders. They have that same passion, compassion, intuition for their teams, uh, just as strong as they do for the business.

Speaker B: I think that's great advice, and that's one of my big takeaways from this conversation too, is just the criticality of people and the importance of partnering with the business. What do you wish people who aren't in procurement, who don't live procurement maybe in the way that you do, or what do you wish that they would understand about the importance of this role in helping navigate the uncertainty and the challenges that businesses are facing?

Speaker A: This is actually, I think, easy for me. I would want them to understand and realize that there's so much that they can benefit from and get out of procurement only if they allow it. Now, having said that, I think the onus is un procurement to show them how to get there. I still run into that even at Best Buy, where sometimes I've come across a stakeholder who is reaching out for something that's very basic, not knowing what questions to ask, not knowing that there's so much more to what I can give or my function can give than what they traditionally are used to. And I actually do think that explaining to the business that procurement does have a very unique place in an organization. We kind of sit at the nucleus of the company where if we do our jobs correctly, then we see everything that's happening internally. We see all the business plans, all the strategies, objectives, goals, pain points. We also, if we do our jobs correctly, understand the market and see what's happening happening externally from an economic perspective, geopolitical perspective, supplier perspective. Right. We should know who's acquiring who, what our supplier strategies and plans are. So being in a position to connect dots for people internally and with external partners and actually externally between our partners is a very, very powerful place to be in. So if we have all that knowledge and insights, it's on us to ensure that everybody knows it and then they can tap into that. So, so I want individuals outside of this function to understand this immense power that sits within a, uh, procurement organization. And then my job and job of my peers, I think, is really to ensure that they know that it exists and then prove to them that we can deliver on it.

Speaker B: Those are important words, I think, to leave on. Well, Anna, this has been a tremendous conversation. I appreciate the energy and the passion that you clearly bring for transformation. The, uh, words of advice that you provided around partnership, around people, and frankly around persistence and being able to see the journey through this has been fantastic. Thanks so much for joining us today.

Speaker A: Thank you so much for having me. It's been a pleasure.

Speaker B: Supply Chain Shocks is produced by the supply chain resilience experts at Carney, a, uh, global management consulting firm. As the original operations consulting firm, we help our clients confidently set a course to navigate disruptions and transform their operations. To learn more, go to carney.com and if you enjoy this show, check out the other shows in the Carney podcast network, including on Inside the Mind. Carney's consumer institute uncovers how and why people shop today and what our behaviors mean for the future of consumer goods and retail companies. You can find all these shows wherever you listen to your favorite podcasts.