CPO interview: Rachael Legg, Johnson Matthey

Johnson Matthey (JM) is a British multinational chemical and sustainable technologies company. Its four core businesses are the development of hydrogen technology, catalyst technology, clean air solutions, and platinum group metals recycling and refining.

The company's CPO and property officer, Rachael Legg, joined in March 2018. Since then, she’s led the transformation of the function, and like many CPOs, dealt with a near-constant stream of black swan events. These are the challenges she’s faced, and how she’s navigating them.

What are the main challenges your function faces?

Our vision is for a cleaner, healthier world which drives our strategy and mirror’s society’s need to create a more sustainable future. JM will catalyze the net zero transition for our customers in automotive, chemicals, and energy. In achieving this, procurement and our supply partners play a pivotal role to ensure we are fit for today and for the future – that is, where supplier expenditure typically accounts for over 40% of the groups revenue, we must ensure our ecosystem aligns with the company’s play-to-win strategy around reputation, growth, and profit.

Black swan events are highly disruptive, and whilst before now seen as rare events they should serve as a wakeup call for business to double-down on building and sustaining risk-reduction capability, moving from reactive to preventative thinking and importantly, action.

If we had not already been working on supply risk management, we would not have been able to respond and pivot so readily, and this continues to be a focus for us.

This may seem obvious, but it is surprising how frequently this preventative work is deprioritized in companies as soon as the immediate crisis passes.

These business issues require business solutions – procurement working in partnership with commercial, operations, supply chain and technology teams, creating transparency from our core customer’s products, back through the value chain, we have the opportunity to reassess and realign our global/local supply footprint where needed. We aim for the right balance between cost, security of supply, innovation, supplier diversity, and sustainability. And of course, none of this is possible without building trusting and collaborative supplier relationships, enabling us to perform and transform at the same time.

These challenges will come as no surprise. Geopolitically, as a responsible business JM complies with all its sanction obligations and have stopped all new commercial activities in Russia and Belarus as a result of the war in Ukraine. Achieving this has required open and honest dialogue with some of our suppliers about how and where to source alternative materials and base operations. A challenge, but most of our suppliers were also keen to diversify out of the same jurisdictions.

Inflation – which we expect will be here for a while – is both a challenge and opportunity for us. It means really understanding our suppliers and working in partnership with them. No part of the value chain can solve this on its own so again, it means having an open dialogue, and having the right conversations with partners, identifying opportunities where we can mutually address rising costs. Procurement’s vantage point is well-positioned to help the business holistically see and co-ordinate across potential organizational silos, and as custodians of supply markets provide broad external far sight and insights to aid commercial teams so this is also what we aim to do.

Data and digitalization is another major challenge and opportunity. Events over the past few years have taught us that, as a function, procurement needs to invest in and utilise data to enable transparency of value chains, rapidly changing scenario planning – especially given forward visibility of inflation patterns have become hard to predict – digitalization to proactively manage where supply decisions flow, and being able to pivot across the organization at pace. The data from external partners needs to be built into this kind of analytics capability and therefore, finding the right solution partners to work with is crucial.

What’s been the effect on talent?

Talent – specifically retaining talent – is a huge focus for us. We’ve committed to upskilling our people but we’ve also dedicated a lot of time to building a compelling case for why they should stay. This is about communicating our purpose and greater mission – something that is particularly important for people who are beginning their careers. Ways of working are also huge factors in this and finding the sweet spot in hybrid working is critical for talent attraction – most of the candidates we speak to ask us about this. We’ve also found an opportunity here. Whilst some category roles require closeness to the supply market, many aren’t country or location dependent, and don’t require significant face-to-face time with stakeholders.

It means we’ve been able to access a wider pool of talent and therefore have greater access to the best people. This has also enabled us to increase our diversity, with a particularly positive effect on gender diversity and people with carer responsibilities.

Staff wellbeing is another facet of this. Since 2018 we’ve been navigating geopolitical trade tariffs, planning for the impact of Brexit, Suez Canal supply disruption, the pandemic–inducing labor shortages and constrained supply, Russia’s war on Ukraine, the energy crisis, and now double-digit inflation, with the potential fallout of a macroeconomic downturn on the horizon. For our supply chain, procurement people, and our partners it’s been one black swan event after another, and especially since the pandemic we’re also facing one accelerating grey rhino event, namely the climate crisis.

Demands on our people is significant and sustained. Our main concern is therefore preventing burnout and making sure they are enabled to drive forward the function at the same time as dealing with the barrage of operational challenges. Here, working flexibly can offer some degree of work/life balance, and whilst we see some organizations starting to reverse hybrid working decisions, in JM procurement we want to enable this wherever possible for those who want it.

We are also focussing on simplifying the business and our ways of working, to enable teams and individuals to use their time more effectively.

For this to work, it is important to continue to build trust with our people and be open to feedback on what is and importantly, is not working for them, then act on it.

As a global procurement leadership team we continue to review if we have the resources, skills, and capabilities where we need them, and looking forward, investing in our people to grow into these areas so the business can better manage disruption, perform and transform at the same time.

An exodus from China has been a consistent theme of the deglobalization conversation. How are you approaching supply and procurement in the country?

China is an important growth area for us – we have facilities there and a newly appointed executive. What’s more, we have long-standing strategic supply relationships, as well as new opportunities, that can help enable the net zero transition for our customers, so it’s very much a core part of our agenda.

We are, however, exploring the extent to which we diversify some of our China sourced goods and materials – from a sustainability lens it’s a good opportunity to consider more local supply sources closer to where manufacturing is based.

Supply failure risk management has always been part of our board agenda and geopolitical factors are one consideration. To address supply risks and drive towards net zero strengthening key supplier relationships continues to be a focus for us, bridging relationships across cultures and countries. Here, it is not easy to run a procurement function out of Europe and build relationships with suppliers in China for example – you need boots on the ground. Ensuring we have the right people, with the right capability, in the right places is therefore critically important to our business.