Daniel: [00:00:00] Welcome to supply chain dialogue, season two, episode 12. I'm Daniel Helmig. Group CEO of CIPS. CEO of Crown Commercial Services, CPO Nestle, just some of the positions my guest held over his career. Malcolm Harrison is one of the most distinctive procurement and supply chain leaders in Europe. He's probably one of the most well known and well connected people I know in our field. Having been in charge of the chartered Institute of procurement and supply chain, which is CIPS gives him a much wider view about many different industries than the average CXO in supply chain. He has a passion for driving competence and knowledge into the supply chain profession. As well as helping companies to manage sustainability challenges beside cost quality and supply chain resilience, bringing his FMCG background to the table to solve the issues. We do not agree on all [00:01:00] topics, but this is one of the many reasons why I am so happy to have him. With us today because there is usually not just one, but different ways to solve a challenge. I know, stop with the introduction and let the man speak for himself.

Hi, Malcolm. Thank you very much for joining us today.

Malcolm: Hi, Daniel. Good morning. Very nice to be with you.

Daniel: Excellent. Now, we have some pretty good questions lined up, to understand what you think about different topics which are important for the procurement profession or supply chain. So let's directly dive in. Now, when we had the first talk just recently, , you mentioned something that was quite interesting for me.

It's your special relationship to high altitude mountaineering. Can you tell me a little bit about it?

Malcolm: Oh, Daniel, this goes back a long way in my past, but you're right. I have always had a love of being out in the open air, being out in the outdoors. And, and you know me, I like challenges as [00:02:00] well. So I guess in my late teens and early twenties, I spent most of my spare time in the mountains.

I Spent, yeah, a lot of time in Switzerland, a lot of time in France, and, and I was lucky enough to spend six weeks climbing in the Himalayas as well,

Daniel: Wow.

Malcolm: and it was an incredible experience. The challenges were huge, the mountains were huge, the biggest challenge, though, was that where we were climbing had never really been mapped, the mountains were unclimbed, so we had no maps, and it's quite interesting when you're trying to find your way.

up a mountain that nobody's been up before and you don't have any maps either.

Daniel: It's direction then, , it's just up.

Malcolm: but it's just up, but you live amongst some beautiful mountains in Switzerland. And you yourself know, I mean, there's, there's the wrong way up and the right way up. And if you try and go up the wrong way, you're not going to get there. But I guess, you know, some of those, experiences have probably translated into my career as well, in terms of, [00:03:00] wanting to sort of progress, wanting to move forward, wanting to move organizations forward.

And realizing that sometimes you might not get the right way. You've gotta have another go and find the right way until you achieve that objective.

Daniel: There are a lot of studies being done now that you mention it in terms of, When you achieve a challenging sport goal , what it actually translates to later on in your career, that if you have accomplished that, then it's much easier to as well think that you can accomplish other things.

So therefore I'm not astonished that your experience led to much more, fascinating as well in the business world and therefore, thank you very much for sharing that. Let's start with another question . From your perspective, how has the profession of supply chain management evolved since you first started? And what are some of the notable changes you have observed?

Malcolm: That's a really good question, Daniel, and in some ways we could spend the next hour just talking about that because I believe the changes of the profession have been profound. And that's not to [00:04:00] say that the profession has ever moved away from what I believed was the core focus, which is on ensuring supply, and delivering value.

But look what else has been thrown at the profession in terms of risk management, in terms of the broader business role, which I think the profession now has to perform. And particularly more recently, The challenges around ESG sustainability, and those challenges are not just important to organizations, not just important to the profession, they're really important for our planet.

And I think the profession has a huge role in helping address the challenges of sustainability.

Daniel: Couldn't agree more. That's one of the reasons why I'm still going on this topic and it's interesting, those that actually listen to this, and if you look at your targets, and your targets as well for 2024 are mainly in the area of cost reduction and supplier [00:05:00] optimization, you know that you're doing something wrong.

What Malcolm is just saying is so important that we as well look at the other, objectives that range similar, like what we have observed 20, 30 years ago, when it was just cost, cost, cost, because we were going to countries like China and India and what have you.

Malcolm: So Daniel, I think you raise a really interesting point because you say 20, 30 years ago, the focus was on cost, cost, cost. Go back 40 years, it wasn't, you go back

Daniel: right.

Malcolm: you go back 40 years, and it was all about ensuring supply, why? Well because Economies generally were growing, they were coming out of the 60s and 70s, which hadn't been so great.

There was more demand than there was supply, and therefore there was this imbalance, and prices were going up, but we did have inflation. And the focus wasn't about saving money primarily, [00:06:00] it was about ensuring that you had the goods and services to keep your organization operating and to satisfy the needs of your, of your customers.

And yes, you always had to do it whilst achieving the greatest value, but it wasn't about cost, cost, cost.

Daniel: It's true, before 1990s I did not have cost targets.

Malcolm: And nor did I.

Daniel: I was at, that point in time at Ford Motor Company and it's interesting, isn't it? Because, I mean, when you link it to what you mentioned as well with regard to sustainability.

In the 1990s, CO2 emission increased significantly because we had such an incredible amount of growth. Things were happening at that point in time. It was fantastic. And I think you were at that point in time, similar like me, we were at the top of a pyramid of people that realized , there is growth coming.

And there was nothing yet there. It needed to still be built up. And that's what we were saying there. Yeah.

Interesting.

Malcolm: It wasn't the supply base, and we spent a lot of our time creating that supply base. Now, you're right, [00:07:00] things like low cost country sourcing, the growth of supply coming out of China was all part of the solution, but there were a lot more, initiatives that I can remember being involved in which were all about creating supply.

Daniel: True to that. Now, in your opinion, what are the biggest challenges that supply chain face today regarding sustainability? We talked already about it and reducing greenhouse gas emissions.

Malcolm: Yeah, look, I think This is really, really challenging, for not just the profession, but for organizations as well. But if you were to say to me, well, the biggest single challenge is, I think it's this lack of common approach and lack of common metrics. And I think that is, that's really critical and really difficult.

Why is it really critical? It's critical because Supply chains are heavily interrelated, and what is one person's particular supply chain is different for another organization. [00:08:00] And yet, when you're addressing issues around sustainability, and we'll talk I'm sure later about scope 3 emissions, and the importance of addressing scope 3 emissions, you've got to have A common approach and common metric, common metrics across multiple supply chains, and I think that's, that's incredibly difficult to do.

And the other, I believe, big challenge is we have to try and ensure that the reporting is really well balanced. , and it's, yes, emissions are important. Yes, greenhouse gases need to be reduced, but there are some other issues out there as well. And I'm not sure that we've yet got the balance that we need in terms of reporting.

I think it's as well interesting to see that currently the standards are being set by supra-national organizations, by governments. And if I remember back in the days where We actually accomplished significant and massive change in supply chains, as you said, normally with one standard, which was normally an [00:09:00] ISO standard.

Malcolm: You're right, they are linked to governments and, you know, we haven't even talked about the geopolitical challenges that we face at the moment. So at a time when there is a need from a supply chain point of view and from addressing, sustainability issues to have really joined up governments thinking in a common way.

If you look at some of the geopolitical issues at the moment, you look at the war in Ukraine, you look at the challenges between the U. S. and China and the trade issues that there are there, and the letter loan that renders issues that we've got in Israel Palestine at the moment. Again, you put all of that together and you'd say actually governments are probably less joined up.

They have been in in recent years at a time when we need them to be even more joined.

Daniel: Yeah, absolutely true. Before you were looking at, maybe two main forces and now we are suddenly have a multipolar scenario and environment [00:10:00] in which it's very difficult

Malcolm: Yeah,

Daniel: get all the nodes linked.

Malcolm: multipolar and probably greater self interest as well.

Daniel: Yeah, sure. Absolutely. Let's, let's switch for a moment, to some of the other challenges that you have, met over your time together with your team. So in your role as a CEO of, of Crown Commercial Service, and for those that Do not really know about this.

This is the procurement organization of the UK government. And later CEO of the Charter Institute for Procurement and Supply Chain, CIPS. What were some of the biggest challenges you and your team faced during this time?

Malcolm: So look, I think the big the biggest one in both instances was ensuring that we were truly relevant to all of our customers. All of our users. So, uh, if you looked at the crown commercial service, we were operating across the entirety of the UK public sector. It's a complex landscape. And for us to make sure that we were relevant to, you know, a [00:11:00] school in the Midlands, as well as a hospital in the centre of London, or the Ministry of Defence, or the Ministry of Justice.

Very different customers. And yet they were all using common goods and services and our role was to ensure that those common goods and services, were procured in the most effective way, delivering most value to those, , organizations within government, but quite disparate organizations. So how did you ensure you were relevant to all of your customers?

And in some ways, I would say there was an almost identical challenge with CIPS, which is about ensuring relevance and then ensuring relevance to the profession. And during relevance to the profession across the world when recognizing that the profession is developed to different degrees in different parts of the world.

So you go and talk to a supply chamber, go professional in a really well developed [00:12:00] organization in Switzerland. And it's not going to be quite the same issues that they're facing as somebody in Burkina Faso or one of the more developing parts of the world and CIPS was serving both. So how did you ensure that you were relevant to everybody working in the profession?

So I think relevance is the number one challenge. The second one was probably technology. And if you look at the way technology has been advancing, and we all these days want everything to be on an app, we want everything to be instantly available, wanted to be instantly available for the lowest cost possible.

Ideally free. And you have to make sure that you are embracing that technology or seeing that technology as a way of making your services or your goods and services more accessible to your customer base. , but implementing that technology is not straightforward. And those were challenges that we had both in the ground of commercial service and in CIPS as well.[00:13:00]

Those were, those were the big two. And then, perhaps not so much a challenge, but where I thought was the place to put most focus in both those instances. It was all about getting the team right, and it's all about getting the right people, getting the right people in place, and the right people in the right roles.

And yes, that's important in a Chief Procurement Officer role. I think it's even more important in a CEO role. Because you have to have the right breadth within your team and you need to have the right expertise, the right different functional expertise, but you also need to make sure you're welding a team together as well to make sure that that organization is moving forward in one coherent way.

So there you go. Those would be three for me. Relevance, technology, and getting the right leadership team in place.

Listening to you, I thought, well, I would probably say the same three things in an industry environment, In terms of relevance, they're dealing with different divisions.

Daniel: Everyone has their way and they all believe that they can do it [00:14:00] better than you from a central kind of perspective. The technology is as well, very much similar, you know, orchestrating all the different kinds of topics that you have. And first and foremost, it's always people.

So fully agree. It's, it's interesting that. The challenges, even though you had to deal with a completely different set of organizations is still very similar. Makes sense. Makes a lot of sense. You were talking about technology, Malcolm. Is AI and perhaps technology more widely a threat, or an opportunity for those working procurement and supply functions?

Malcolm: Well, it's not a threat, it's an opportunity, and I think if I look at technology, as you say, more widely, not just AI,

I would see technology as bringing two areas of benefits to an organization. One is about efficiency, and the second one is about effectiveness. And much of the early work, I think, was on efficiency. So, how did you undertake very laborious, [00:15:00] repetitive processes, which didn't really need, human intellect involved in them?

How did you undertake those, processes in a much more efficient way? Purchase orders. So how do you make sure that your purchase orders are always right? That you, how many errors, Daniel, have you and I seen in our careers in data should probably be down to double keying.

Daniel: Absolutely.

Malcolm: so eliminate double keying by using technology and joining your activities up, joining your processes up. So the first focus I think was all around efficiency. The increasingly though, what I'm seeing is people talking about how can we be more effective? How can we use technology to look at new ways of working?

How can we look at, using technology, using AI, to really understand what's going on in the supply base? And [00:16:00] therefore to start making better procurement decisions, or faster procurement decisions, because you have information coming to you, which is either more accurate, more timely, or both.

Now, I think there's both opportunities. So I don't see a threat from technology at all. And I would always say to anybody working in procurement, you should embrace those opportunities. People say, oh, that means we're not going to have a thing to do. There is so much to do at the moment. Think of all of the work that needs to be done around supply chains and sustainability, think of everything that needs to be done in terms of collaborating with organizations to address those challenges around sustainability.

Embrace technology, allow that technology to free up some time, free up some resource to get on with what I think of as far more important and actually far more challenging issues that the profession has to address.

Daniel: Specifically, the point in terms of all the stuff that you haven't [00:17:00] done so far, right? A lot of, work is humdrum work that you just need to get through because clearly no IT system so far was able to do that. If you have suddenly the time available. What are all the things that you could actually do?

I can just recommend that any CPO puts a couple of people in a room and just say, what would we do if we would have the time? And you would be amazed the brilliant topics that would come out of that, to add value to the company . So I couldn't agree more.

Malcolm: And you're right, it's if you had the time. Because You never get round to those topics because you're dealing with the issues of today, which is about ensuring that I'm keeping my organization supplied with all the goods and services it needs so that it can provide the customer base of what it is that they're looking for.

And, and you can't compromise on that.

Daniel: Hmm. Yeah. Now let's go back to What we both feel very passionate about, which [00:18:00] is again, sustainability the focus of the government's according to the Paris Accord on scope one and two is something that right now is the major driver.

Scope three is, yeah, it's there, but it doesn't seem to really register too far. You and I are more scope three folks. Are we on the right track here globally? Can governments drive companies to net zero by 2050 on scope one and two? And should scope three be a much more important driver going forward?

Malcolm: So, Daniel, my view on this would be, you're not going to address the issues of. greenhouse gas emissions and supply chains without addressing Scope 3. buT Scope 3 is much more difficult. Scope 1, Scope 2, you can kind of see it. You can feel it. It's inside your organization. It's much easier to measure.

And you can address more of it on your own. And Scope 3, you [00:19:00] can't. Scope 3, it's outside your organization. , it's in those supply chains, and I don't believe you can truly address Scope 3 unless you address it in a collaborative way. And you have to work with those other actors, those other organizations that are involved in those supply chains.

And that sometimes means working with your competitors as well. And that can be, I think, a challenge for some organizations to get their, minds around in terms of saying, yeah, we know we've actually got to go talk to and work with our collaborate, with our competitors in order to collaborate and address issues in supply chains.

I think it's much more difficult. So yeah, yes, you and I might well think that while the answer scope three. I think it's scope one, two and three, and you need to find ways of helping organizations, , to collaborate and to, address those scope three emissions.[00:20:00]

Daniel: When you mentioned that you have to work together with your competitors. If you look back, for example, on the quality side, there was an alliance with the airlines they actually created an alignment with regard to quality assessments of the suppliers.

Similar like, the automotive industry did. And, okay, there it was ISO at the end. But, the airlines they realized it doesn't make sense that quality, , manager one is going in there and then quality manager two and quality manager three and they all have different kind of standards.

It doesn't really make that much sense.

Malcolm: And you're, you're right, the airlines did it, the automotive industry did it, the telecoms industry did it. And I was involved, oh, probably 15 years ago now, in creating something for the consumer, fast moving consumer goods industry as well. Where we created something called AIM Progress, which was all about how did we get the biggest branded organizations in the world who were absolutely competitors against each other on the supermarket shelf.

How [00:21:00] did we work together to make sure that we weren't spending all of our time, inspecting, auditing suppliers, in very slightly different ways, which didn't really achieve any significant value. But what it did mean is that the suppliers had no time to focus on how did they improve their operations.

If you're going to address scope through emissions, you need suppliers to be thinking about how they're going to change the way they operate. And you don't want them to be spending all of their time, dealing with one audit after another, after another, after another. So I think the concept is relevant in many different industries.

Perhaps the bigger challenge is when you get to scope three emissions, we do, we need to be talking about pan industries because, because these supply chains are, they're not unique to, they're not unique to automotive or they're not unique to the airlines or they're not unique to telecoms or consumer goods.[00:22:00]

These supply chains run across all. So if you're going to truly address scope 3 emissions, and that's why I think scope 3 emissions is so challenging. If you're going to truly address scope 3 emissions, you need initiatives which are genuinely pan industry.

Daniel: And for those listening in the supply chain, take a good look as well in terms of defining what scope 3 is, because there is scope 3. 1 up to scope 3. 15. And you need to figure out what your scope is that you actually are responsible, which by the way, Spoiler alert is scope 3.

1, not 15, which is franchise. So there are as well other challenges that our planet faces besides greenhouse gas emissions.

From our discussions, I believe you have a very particularly strong view about water availability and usage. What is it? And what do you think could be done to address it?

Malcolm: no, I do. I do. And that's, I guess, because of my background, and for those of you who don't know me well, the [00:23:00] majority of my career has been in consumer goods. And being more specific, it's been food and drink. And food and drink, you cannot, provide the food and drink that the planet requires now and for the future without a adequate source of, uh, potable water.

And I am quite worried. I'm quite worried about the lack of focus on water, and the lack of focus on water usage, water consumption, how do we become much more careful about, water wastage, And all of this is going to have to be, in my view, addressed in, in order to ensure that there's sufficient water to grow sufficient crops to be able to feed and, assuage the thirst of a growing population.

Now why, Daniel, I think it's even more challenging is, as you see this move from a rural to an [00:24:00] urban environment, and we've got that on top of a growing global population. The amount of land that you require in order to feed the population. is growing faster than the population is growing. Because if people live in an urban environment, they tend to consume food which, requires more land and therefore more water.

Meat, meat versus cereals. Meat, you require cereals to feed the animals to produce the meat, and you find that more meat is consumed in an urban environment than in a rural environment. Just one example for you.

Daniel: Thank you, Malcolm. While you mentioned that, it rang a bell to, to a book that I'd recently read on, from Peter Frankopan. He just in one felt swoop , basically took 5 billion years of earth development in terms of, okay, what are the variations in terms of climate, and so on and so on, and try to figure out.

Is what we're seeing right now normal, or is there an aberration ? And [00:25:00] one of the things that he points out, and which links to your organization topic as well, if you look at the Roman Empire, it developed during a time of a warming period, which meant that they were centralizing, there was a lot of food actually being created that then could feed as well all the masses of the empire at that point in time.

As soon as the warm phase ended and it was difficult to basically get the crop there, yeah, so water and what have you, the empire crumbled. Now there are different kind of arguments and other people would say that's all. Yes, it is something else, but I found it quite fascinating. So it's the same with urbanization, isn't it?

If you do not get this food due to, for example, changes which are intertwined, so greenhouse gas emission, the, cooling or the heating up of the earth, it will lead to the fact that masses of food cannot travel any longer to the urban, urban centers that will have negative impact overall for the people living there.

Malcolm: Yeah, absolutely. Absolutely. I mean,

Daniel: [00:26:00] supply chain again.

Malcolm: it is supply chains, I mean, you can say every supply chain is critical, but I think, I think these are the most critical supply chains.

Daniel: It's life and death.

Malcolm: it's like net, if people do not have food and water. You get, you get civil, disturbance, and you think that some of the challenges we've got at the moment, I would suggest they could get, they could get significantly worse.

You and I probably remember that incident, oh, it must have been 15, 20 years ago, when there was a shortage of maize in Mexico, which then meant that the country got really, really quite worried about civil disturbance caused by a shortage of food.

tHat's in the, mature and well supplied world that we live in today. Now, what if Demand grows far faster than supply. You will get shortages.

Daniel: Absolutely. I mean, we did as humankind, we did such a brilliant job, right? 120 years, 140 years ago, 80 percent [00:27:00] of everyone working was working in the farming industry. And at that point in time, we were 1. 2 billion people. Now we're eight. And we do it only with 3 percent of population basically do this all due to all the advances that we did.

But there is Seemingly, there is an end to this, and we have to get smarter in terms of working with this. I fully agree. The just as well again for the listeners. Take a look at the UN Global Goals. Just go into Google, type in UN Global Goals and just look at all the different things that many governments in 2015 have done.

Aligned upon and here water was one of the most important ones together with as well. Greenhouse gas and gender equality and what have you. It's worth to link that and as well educate the population inside of your own company because you will be amazed how many people, even in sustainability, do not know necessarily about the UN.

global goals that are there. [00:28:00] Malcolm, last question for you, if you don't mind. Now looking ahead, what are your plans after having left CIPS as a CEO? Where do you plan to add value going forward? Any ideas already?

Malcolm: Look, so I've got lots of ideas. And the, the great thing is that this is a fantastic profession, Daniel, and you and I are both very lucky to have spent the majority of our careers in it. And it's a profession that has still got some challenges. And I guess what I would like to be able to do is to use the, I guess the expertise or the knowledge that I've learned over.

40 plus years in the profession. I'd love to be able to use that to help support the profession to be able to perform better. And there are a couple of areas that I'm looking at the moment. I'd love to be able to work with some, you know, really good, professional focused, advisory consulting organizations where I can, you know, Bring my [00:29:00] expertise to bear to help improve efficiencies, to help improve supply chains, to help address some of the issues that you and I've been talking about.

And then probably no surprise. I'd love to find a way of helping people. And supporting people and supporting those leaders and that's future leaders in the profession, to have the skills to be able to perform better and deliver better for their organizations and then for them to have more fulfilling careers.

I mean, if I look back, I would say I've been incredibly lucky to have worked for some brilliant line managers, who coached, who mentored me. They weren't just bosses, Daniel. They provided inspiration, they provided challenge, they, but they did it in a way which allowed you as an individual to grow.

Not everybody, In every organization has that luxury. And I think the increasingly with the more complex agenda that the leaders in our profession face, I think there is a need for more [00:30:00] mentoring, for more coaching, for more support, for more tailored and targeted, executive development for today's and tomorrow's leaders in the profession.

If I can be part of, in some small way, part of making that happen, I'd find that very fulfilling.

Daniel: And it's a learnable trait, isn't it? Mentoring or actually getting better in terms of leading people. You can learn that it's not a character trait.

Malcolm: You can learn it. You can learn it. Absolutely. Maybe it's easier to do when you're not under the pressure of a line role. Maybe you're able to sort of step back a bit and not worry about today's objectives , because when you are focusing on developing people, this is long term, this isn't something you're going to achieve in the next 1 2 weeks, this could be the next 1 2 years. And I think the ability to step back, due to a little bit more humility, which we may sometimes have found difficult when we were in those hard, [00:31:00] pressurized line leadership roles, Daniel. I think the ability to do that helps when it comes to developing and mentoring and coaching people.

Daniel: Wonderful last words from you on our podcast. Thank you very much, Malcolm. It was a pleasure having you all the best as well. Happy holidays for you and your family. And I'm looking forward to hopefully see you next year as well.

Malcolm: Thank you, Daniel. It's been great to talk to you. You have a great break, too, and you're going to be able to do what I can't do this holiday season, which is just walk out of your apartment and walk up some beautiful 2, 000 meter mountain. I'm afraid we don't have any of those here

on Little Island. You have a

Daniel: Don't be too envious. I'm not going to walk up the 2, 000 meters mountains. I can promise you that. But there will be some medium sized hills that I'm going to climb. That's for sure. Thank you, Malcolm.

Malcolm: you next year.

Daniel: I hope you enjoyed this episode of supply [00:32:00] chain dialogues. If you did, please subscribe on apple, Spotify, Google or any other major podcast platform. And if you are already a subscriber, tell a friend or colleague or any decision maker in your company. To listen in alternatively, as well as share episodes with local regional or country governmental context, you might have. Especially when we talk about greenhouse gas, emission reduction. If you like to reach out to Markham and do not have his contact details, sent an email to dialogues@helmigadvisory.com. And we forward what your request to him? With that. Be safe, be bold and since it this time. Again, let's together. wish and work for a better, less war infested year ahead. I think we have enough challenges already as mankind. Haven't we. Goodbye and see you in two weeks.