Our “CPOs on the Rise in 2011” series continues today with part two of our profile of Price Marr, a procurement executive with Ameren Corporation (Ticker – NYSE: AEE), one of the nation’s largest investor-owned electric or gas utilities. Part one of the profile is here.
As noted last time, Price leads the Strategic Sourcing Department at Ameren, which supports all contracts above $5 million at the company. When you consider the critical nature that the success (or failure) of large capital projects has on a utility company’s business, you start to understand how important procurement has become at Ameren. I’ve known Price for a few years and it appears that his group has really gathered momentum in the last two years. For example, procurement now has membership on the committee that evaluates and recommends all cap-ex projects above $25 million. With this voice in the main business and activities of the company, Price says “we have the standing to ask the challenging questions – it is an expectation that we bring our expertise to bear on key matters.” Price also notes that “this was the first year, that the finance and regulatory teams brought procurement to the table – to help finance with budget forecasting and to provide key inputs to regulatory to help it make a rate case.”
Other big initiatives that Price and his team are driving and supporting include a large working capital initiative tied to streamlining inventory, chemical hedging strategies, and sustainability which, as you might imagine is very important to one of the largest coal-burning utilities in the US. Of course, there are all of the more typical sourcing and procurement activities that the Ameren procurement team also focuses on, including identifying savings on category spend, driving standardization initiatives, and improving internal processes.
Price says that, “While 2010 was a slow year in the industry, large projects are looming on the horizon with activity really picking up in 2012.” While it will take some time to get back to the peak spending levels of 2007, Price and his team continue to dig deeper in an effort to drive more value. For example, Price says that “as more operations and daily activities are being considered for contracting [to third parties], my team has become more involved in the contracting decision process.” They also provide insight into the price forecasting of 10 to 12 of the company’s largest categories and continue to develop and drive demand management programs.
An interesting challenge for Price is the amount of time that his staff must invest on a project. For example, a large scrubber project that can cost in excess of a half billion dollars may take five years to build and it may take more than one full year for the project impact from procurement to develop. To ensure that his team is working on the right projects and delivering value, Price evaluates resource allocation by measuring the individual ROI of each team member.
From a performance measurement standpoint, savings is the main metric and it is measured quarterly in collaboration with the individual controllers from each of the businesses. The calculation of savings is pretty typical and money does not have to be taken out of the budget to get credit for savings.
As Price reflects, “In my six year career, procurement has moved from being a recipient of orders to helping drive the direction of the company.” Price hopes to see procurement ascend to the Executive Leadership Committee some day. With the trail that he has blazed at Ameren, I believe that is a certainty.
Thank you Price, the first of our CPOs on the Rise in 2011.
CPO on the Rise in 2011Name: Price Marr Title: Strategic Sourcing Manager (leads Strategic Sourcing Department) Company: Ameren Corporation Education: MBA, Pepperdine University; BS, Civil Engineering, United States Military Academy (West Point, NY) Years in Procurement: 10 Most valuable experience for current job: Management consulting and organizational leadership Most important skill used in current job: Flexibility and drive for results The key to achieving success in procurement: Stay focused on the outcome and use the strategy that best achieves the goal |
