Our story with CPO on the Rise in 2011, Eric Beylier, the Head of Global Supply Chain & Procurement (Chief Procurement Officer) at TETRA Technologies, Inc. continues today with a look at what has happened since Eric made the case that Procurement & Supply Chain should report directly to the CEO (Part one is here). Eric believed that he needed a seat at the proverbial table (with the CEO and the different business heads) if his organization was going to be taken seriously and make the impact he believed it could.
With Power, Comes Responsibility
While the CEO embraced the vision of an engaged supply chain & procurement team driving value across the five businesses and a Chief Procurement Officer as his direct report, he also wanted to see a few proof points in the first year.
(1) Organizational Change Management – Since the company was already undergoing fairly significant changes, the CEO wanted to make sure that Eric was the right person to lead the organization and that Eric’s values were aligned with center-led and matrix-based philosophies of the company.
(2) Savings / Cost Reductions – The CEO believed that the supply chain & procurement team could and would execute well and become a key area to help the company maintain its overall competitiveness in the market; however, he was also sensitive to cycle times (efficiencies), market risks, and supplier relationships and wanted to ensure that a proper balance was kept by the team.
(3) Sustainable Progress – Finally, the CEO wanted to make sure that good, longer-term decisions were being made for TETRA’s supply chain and that the ideas and successes of the first year were building towards a larger and sustainable vision.
To date, Eric has been successfully implementing such vision at TETRA and feels very optimistic for the future, which is good, because the future is now (See below: 2011 goals) for the procurement department at TETRA.
2011 CPO Performance Goal: Earnings per Share
In the present, Eric’s contribution goal from the CEO in 2011 as the Chief Procurement Officer is to deliver between $0.15-0.20 per share [Sidebar: How cool/daunting is that!]. Eric believes that the plan they have developed to deliver this number is both achievable and straightforward – they plan to draw these numbers from operating expenses and from capital projects, one spend category and strategic sourcing project at a time.
This high-profile EPS target lends credence to Eric’s view that “supply chain & procurement can make a company extremely competitive, and allow it to survive during recession.” But as business cycles ebb and flow, Eric is mindful that “while companies survive or compete on cost, they thrive on revenue growth. We must be careful to avoid tripping on a dollar while trying to pick-up a dime – We cannot cut costs at any cost.”
Partnering with the CFO
Successfully making the case that “supply chain & procurement is an operational function and that it therefore should report into operations” was a key to the transformation at TETRA. Yet, despite this view, Eric understands the value that tight collaboration with the CFO and the Finance department can yield, noting that “division Controllers are involved in two steps of our seven-step sourcing process and Finance signs off on the go-ahead of every sourcing project.” Finance is also involved in the savings calculation process and signs off on the final numbers. Eric believes that, “changing the reporting relationship from the CFO to the CEO has actually energized the relationship between myself and the CFO and our two groups.”
Today, finance sees the supply chain & procurement group as a valuable function and respects it as a true partner. Eric has excellent relationship with the CFO and believes that having a strong finance background has been very helpful in developing this relationship. As one of many proof points of the benefits of collaboration at TETRA, the CFO has been extremely helpful in validating, and then helping to roll-out and enforce, a series of new procurement policies and processes to the entire company. The new policies focus on four key areas: ethics, procure-to-pay, strategic sourcing and supplier performance management.
This story, like the procurement transformation at TETRA, is not done. Next time, our rousing finale with Eric Beylier, a CPO on the Rise in 2011.
CPO on the Rise in 2011
Name: Eric Beylier
Title: VP – Head of Global Supply Chain & Procurement
Company: TETRA Technologies, Inc.
Education: MBA, UCLA, Anderson School of Management; MS and BS, Physics & Chemistry, Ecole Supérieure de Chimie Organique et Minérale; Post-MS research at M.I.T.’s Material Science Department.
Years in Procurement: 20
Most valuable experience for current job: Operational engineering experience + high pressure management consulting projects on strategic sourcing with many companies across many industries
Most important skill used in current job: Leadership, communication, people skills and financial skills
The key to achieving success in procurement: Leadership, team building, relationship management, common sense, communication, communication, communication and solid quantitative analysis skills