What does sustainability truly mean to a procurement function? A number of procurement professionals and organizations are increasingly shifting their focus toward sustainability and how procurement can play a key role in achieving key sustainability goals and driving real change, but how do we actually quantify what it means to procurement?
For an organization like Hexion, a leading manufacturer serving the global adhesive, coatings, composites and industrial markets through a broad range of thermoset technologies designed to “address the most pressing issues of our time,” sustainability is the very beating heart of the company and this is reflected in each and every facet of its business strategy through its “Responsible Chemistry” ethos. Hexion is dedicated to the safe manufacturing and supply of its products and so the company has successfully positioned its procurement function as one of the key driving forces behind this commitment.
“We are a critical element of our value creation strategy,” explains Nathan Fisher, Executive Vice President, Chief Procurement Officer at Hexion. “Our business partners understand that we have to do our job right in order for us to compete in any market. Period. If we’re not doing our job right then the business can’t do what they need to do in the markets and with the customers they want to serve.”
“We have plants all over the world and many types of materials, so we have to keep the plants running. It all starts with that commitment to the environment and to safety. So, I don’t just go get cheap products from suppliers who run cheap sites. Materials we buy must be competitively priced, but you must also adhere to high levels of safety standards and environmental standards to be a supplier of ours.”
Fisher is a rarity in the procurement space in that he has been Executive Vice President of Global Procurement at Hexion for 15 years. Where most find themselves moving from company to company completing procurement projects within a specific timeframe, Fisher has remained with Hexion and from this unique position he has seen firsthand the evolving perception and indeed the evolving role that procurement can have in an organization. For him, one of the biggest changes first and foremost is one of accountability. “If you go back to when I first came into the leadership role, procurement was more of a function and it was kind of an Island. People went into procurement and they stayed in procurement. You didn’t get a lot of visibility from within the company,” he says. “We have our raw materials, which represents over 70% of the cost of goods sold. If you put in our indirects in logistics, it’s even more. For some companies that same metric is under 50% or under 30% in some cases, which breeds this notion that procurement is just a function.”
Fisher points to senior leaders at the time recognizing that procurement was a major function and this paved the way for greater visibility and accountability, something of a double edged sword for Fisher. This move represented a big change for Hexion and a clear sign that procurement would become a true accountable and impactful organization that needed to perform at a high level. Another big shift for Fisher has been the collaborative efforts of business leaders and sales leaders with regards to raw materials and how the teams understand and align with one another. Compare this to 15 years ago and, by his own admission, the island approach was very much the law of the land. “It was a case of having one guy over here doing one thing and they hand over information, and the business team then does their own independent review of the information,” says Fisher. “Now there is a lot of transparency, visibility, and collaboration. There are real value driven conversations between sales leaders and business leaders, not just with the procurement leaders and commodity managers. We are talking collaboratively with the people on the frontline about what’s happening in the markets.”
With accountability and visibility comes clarity and efficiency, but there is also an increased pressure. More voices in the mix means more eyes on the performance, something that Fisher is happy with, but admits that this is something that people need to get on board with as a regular part of the strategic planning approach to global procurement. “Once again, if you want visibility, you’re going to be comfortable with the fact that you’re going to be transparent and have a lot of conversations and be open in sharing,” he says. “It’s about sharing your commercial strategies, what you’re trying to do and how you want to be as a partner. If you really want to be a value adding component of the company, you should want that.”
Fisher admits that this was a big change in procurement and process for Hexion, but is keen to highlight that over time the company’s procurement staffing has changed in that where once upon a time it was very much engineer and technically driven, it’s now made up of different mindsets and varied experiences. This speaks to a key part of what makes procurement at Hexion different. Fisher highlighted the traditional ‘island’ approach to procurement and soon after he joined the business this was “completely thrown out” as the company looked to install a more collaborative culture. “We broke that island mold very early. We just threw it out and said that is not going to be the way it is. You have to be very comfortable with collaborating with everyone further,” says Fisher.
“When we are talking to people in other companies, it’s becoming more common to find former procurement leaders in leading roles. We do the same thing too. As an example, the leader of our formaldehyde business, which is one our three major business groups used to be in procurement. When we, the chemical industry, get to a position where that crossover is more commonplace, the collaboration between partners is going to increase exponentially because everybody’s starting to work together.”
As previously mentioned, Fisher has been with Hexion for 15 years and when asked what it is that has kept him there for such a long time, he muses and admits that it’s a good question. What has kept him so motivated and engaged for so long? “I love to develop people,” he says. “I like to coach them and I enjoy watching others develop, move up and move on, and achieve success. If people become other CPOs and business leaders and other high-level leaders in companies then I think that’s fantastic. I have a passion for what I do and I have a passion for that development.”
An admirable and honest approach, but why Hexion? Many CPOs the world over talk of training and developing their people, so what makes Hexion an environment worth sticking around for? “I spoke of accountability and valuing procurement, but where others simply say that, Hexion is absolutely there as a company,” beams Fisher. “Hexion recognizes the value of the position. If I were to look at this as just a building block to get to my next salary, most people wouldn’t stick around. Hexion knows this and truly values their leaders and they want them to succeed and they want them to stay.”
Hexion focuses on the development of commercial skills through its own training programs, which vary from day long training sessions to multiple day long workshops. The company actively supports rotating people into and out of procurement to drive a diverse mindset and experience. Fisher personally leads some of these programs. “It is important to the people; we’re going to spend our time investing in you, not just to sit through this. We’re going to have lots of conversations about what you experienced out there in the world,” he says. “We’re going to do this on all the core skills that you’re here to learn and to do better. And people get invested in them. We have to put the time and energy into that and it’s not just me. All the leaders and teams do it.. We don’t bring external people to do that. We’re invested in this and our people see that.”
Another key area that Fisher is proud of is its leadership opportunities. The procurement leaders regularly get together and collaborate and share the processes, the initiatives they are running and the skills required to be in those positions. When people have an interest in learning leadership skills, Hexion creates a situation that allows these people to lead teams in order to learn, so they’re comfortable in those environments. “That’s what our whole purpose is,” explains Fisher. “Whatever this procurement professional is, how can we develop and give them the experiences so they are comfortable in whatever they have to face, whether it’s in their current role or more of a leadership role within procurement or other commercial teams, that’s how we’re investing.”
Focusing specifically on that procurement lens, Hexion leverages a procurement compliance review board. This global team partners with legal experts to focus on compliance areas that procurement will face across the world. This group works to develop and provide the right education to procurement members as to how they should conduct business anywhere in the world. “It’s about asking whether we are given the right education, the training, the processes in order to succeed?” he says. “We put on a number of sessions every year that look at the problems facing a commercial/procurement person in the world and we talk through it, we do scenarios, we play them out and then we say, ‘How would you handle this or how would we do this?’ As leaders we’re invested in that.”
For Fisher, this is all focused on enabling an environment that shows the procurement teams of Hexion that their leadership supports them. This becomes a network in which they can immediately ask for advice and check in and use it as a sounding board, and one that is actively developing them through new training and development work. For a global company like Hexion, the value of this is priceless. “The key is to do the right thing,” says Fisher. “We’re trying to develop them so they understand what to do when they get to those scenarios.”
Investing in people is a very clear vision for Hexion, but Fisher will be the first to admit that this has to generate results in one form or another. At its very core, procurement is results driven and so Fisher and procurement have to be able to reward that great faith placed upon them by the company with successes, cost savings and tangible results in line with the company’s strategic goals. One category that he, and many in the business proudly discuss, is environmental results. Fisher points to the number one line of questioning from him and his team: “If I’ve got my logistics carriers, am I having too many incidents? What’s happening? Am I seeing a lot of injuries? What is happening in that area? Are we seeing this across more carriers?” he says. “There is a major focus in our company on those things and we need to perform to that and track those incidents.”
Naturally, supplier relationships are the key to procurement and by investing in its procurement people, Hexion has people that are switched on and engaged. This is particularly key to another success for Fisher; supplier assurance. “Are we getting materials to our plants, quality materials at the right time?” he says. “Again, we track to that very well. You have to have that focus to do that.”
Cost is another focus, for it is the traditional mission statement of procurement. Fisher again points to the ways in which his teams use key metrics for this but more importantly for him there is a spotlight on how well his teams are buying the materials and this speaks to that investment in people. “You have to be transparent and you have to show these metrics and how we are driving these results,” he says. “You work with your commodity manager, your leaders and your businesses to show how we need to get better or to show how we are performing well. Hopefully, all of this and having a better equipped team of people who are engaged with procurement is translating into better sales and better customer relationships. We go to that next level to show, have that deeper conversation of finding out how well we’re buying material in the markets against our competition, or how we’re performing on the sustainability and safety perspective. Ultimately In the end, we have enabled an environment that allows us to have the conversation with people that says we are performing really well in this area but also, here’s an area that we’re currently focused on to make better.”
The supplier relationships are incredibly important from the outset for Fisher. He and his team ensure that these are relationships built on honesty and integrity. Fisher goes as far as saying that no amount of money in the world would make him and his team violate either of those things. “Suppliers see that and they know that we are ethically-driven,” he says. “In the chemical industry, it’s more about building strategic relationships. We are still hard negotiators. We bring expectations when there is something changing but there’s a respect for our suppliers.”
Through its Responsible Chemistry ethos, Hexion takes its sustainability responsibility incredibly seriously. The sustainability conversation has changed incredibly so in recent years, and so the company has ensured that it is both structured and positioned itself in markets that allow it to look at its sustainable approach to its operations and make active changes.
“As a procurement organization, we are actively supporting Hexion’s initiatives. However, sustainability flows along with community enhancement and involvement. We’re connected with the external world. 80% of our job is external with suppliers and carriers and we leverage partners in the world on sustainability,” says Fisher.
“For Hexion, before we talk sustainability, we always talk about safety. It’s very important to care for your associates, their families and caring for all our stakeholders and our plants and our environment, that has always been a part of our culture.”
After what has been 15 incredibly successful years, building and enabling a procurement function that truly drives Hexion forward, the future still represents one of opportunity for Fisher and his team. With a digital architecture program on the near horizon, one that will reshape and digitally enable the user experience in procurement through data analytics and contract management, Fisher is excited to see this next chapter of procurement unfold.”
“We’re just looking to improve the way the professional procurement person does their role, and make them better at what they’re doing,” he says. “It’s very exciting for us, for the users and for the suppliers.”
Fisher is a man that very much believes in the power of leadership and using that power to develop others and empower them. It’s what he’s done his whole career and what he will no doubt strive to do until the day he retires. For him there is no secret to success, no silver bullet or lightning in a bottle. It’s always about learning. “The most important thing a leader can do is put the right team in place and understand how you can support them,” he says. “Put in something that says people feel good to come work in your organization because you’re going to support their development and their future.
“In doing that we get very good people that come to procurement. They go off and do very good things, whether it’s in another organization or another company, they do good things. I think that’s the key; having an environment where people feel that they are supported in everything they do.”