Our Group Procurement Director Mark McHugh has featured in the latest Procurement Heads blog.
Mark McHugh is Group Procurement Director at global agri-food business AB Agri, which produces and supplies animal feed, nutrition, technology-based products, data and value-added services for the agri-food industry.
Mark currently heads a £1bn spend portfolio, with a remit to drive cost performance, process automation, shape sustainability pathways and accelerate innovation.
He is passionate about procurement improvement and its positive impact on business performance and recently spoke with Rupert Gaster about his career.
I started in procurement as an 18-year-old, I left school after A-Levels and went to be a shipping clerk with Magnet Kitchens. I was promoted to Junior Buyer, I did an HNC and my MCIPs followed by a Diploma in Management Studies and worked my way up.
I originally worked in the furniture industry then I worked for the Burton Group, which became Arcadia and Debenhams, so I was very sad to see what happened to them recently.
The big one is commodities, things like wheat and soya account for two-thirds of our spend and they are volatile commodities, so we work closely with our customers to help them lock in a known margin and manage risk. Co-products are also a key element of our offering, where we develop products from brewing, distilling, food processing and bio-ethanol, to co-market into animal feed.
Then we have raw materials, such as vitamins and minerals, amino acids and enzymes. We have also got significant energy and logistics spend, plus maintenance and repairs and other indirects, those are the six high-level categories.
Covid and Brexit have been centre stage for the last year. In the commodities and co-product space managing events; supply, demand, climate and geopolitics and then how the markets react to those events, requires constant attention.
Global demand for grains and oilseeds is currently a major area of focus, at present the market sees global demand growing faster than supply and the price of wheat and soya is currently trading at ten-year highs.
At AB Agri, we are passionate about producing affordable, high quality and responsible food – this is hard-wired into our DNA.
Our business was formed in 1984, taking leftover pulp from the sugar making process and using it to feed cattle. Our co-products business has grown since then and we now supply the dairy, beef and pig sectors with a significant quantity of feed originating from brewing, distilling, bio-ethanol and food production.
We want to leave a legacy for generations to come, and I am proud to play a central role in achieving our vision. Our aim is to make the biggest positive difference to the agri-food industry, by inspiring excellence in the way our industry produces food for people and animals.
We’ll achieve this by:
Another priority focus for our procurement team is AB Agri’s international growth strategy. We are currently supporting several investment projects, in addition to facilitating innovation from strategic partnerships. Obviously, our core activity is cost management but digitalisation and automation are also on the agenda. The objective being to drive process efficiencies, freeing up additional resources to focus on strategic added value activity.
I certainly see that any business has to be cost-competitive. Procurement will never get away from the importance of cost management, which will always be a core element. But I think facilitating growth, speed to market and innovation are areas where procurement can add a lot of value to a business if you have the right skillset and approach.
Negotiation has been revolutionised through e-sourcing. I think things like contract structure, performance management and material scheduling will all be automated, and a focus is on driving that. To then free more resource to help a business grow and drive value from its supply chain.
An organisation’s best asset is its people but I think another big asset is its supply base and getting maximum value for your business from your supply base is a big focus.
I think there are two levels, for any candidate, we look for core attributes: you want someone who is passionate, enthusiastic, energetic and wants to do a good job. Someone who has a strong work ethic and wants to learn and improve.
Then obviously there are role-specific skills as well. For us at AB Agri, I think that the ability to look beyond cost and be able to understand the business strategy and to build relationships is critical. Then to take that knowledge and insight into the supply base and use it to drive value for our business. A great example of this would be in our alternative energy business, Amur. Where we use our procurement skills to source waste products and generate value through converting these products into natural gas, via our anaerobic digestion plant.
Some criteria are skills and competency-based, another element is how you are wired as a person. Some people build relationships better than others. You need people who are data-savvy and understand processes, but I think it is also really important to hire procurement people who can combine this with building relationships and flexing their approach when needed.
Working with people is really important to me. To build talent, drive performance and support people to grow and develop in my team. I enjoy that.
Diagnosing and solving problems or identifying opportunities, and making our business perform better and give improved service to our customers. In doing that, acting responsibly and doing good things.
I also like building a plan collaboratively with stakeholders, then following it through and delivering value over several years, I find that very satisfying.
Definitely vision and foresight.
Resilience and the ability to communicate, to think laterally, be persuasive, sometimes being patient and pragmatic. At times you need to be assertive, and balance that with kindness, support and care. It’s crucial to have an instinctive sense for which of those levers to deploy, to what extent and when.
Do it! Come and work in procurement because wherever you are in your career journey you will get a great balance of skills that will support your future career development.
Secondments can be very valuable, say for example procurement are looking to accelerate their traction with marketing.
If you are able to take a marketeer and give them a secondment into procurement you get the value of their insight but they also get new skills and techniques that will help them, and both functions should be able to see new benefits from working together.
Secondly, I’d say, “always think of maximum value rather than lowest cost”.
To do this, you also have to think about your business and the context it operates in. You need to also know what your stakeholders consider value to be.
I think you will see a broadening or merging of core procurement skill-sets with other roles. For example digitalisation, data and insight will require a combination of technical IT skills to build systems, combined with financial, commercial and strategic insight to ensure that the business can extract the right information and insight. So new “data scientist” roles may emerge, merging elements of IS data extraction and finance business partner with procurement or commercial data analyst.
Transparency will grow in importance on several levels. If you think about what we have all lived through for the past year in terms of Covid and Brexit, the more you understand about your suppliers and supply chain the better you can respond to disruption or emerging trends or threats.
I think more and more organisations will see transparency and the ability to influence back up the supply chain as an important source of value or risk mitigation. Enabling you to accelerate innovation by ensuring more of your supply chain understands your strategy and can align and prioritise activity accordingly.
Due to the role that procurement plays in our business; we have been operating two-to-three months ahead of the curve. For example, we source around 80 different raw materials from 25 provinces in China; in late December 2019, it became apparent that there was a virus outbreak. We started to pick up on the virus spreading from an epi-centre in the city of Wuhan. But we also started to see an impact in terms of getting products out of China, which was our first focus.
Then, in March 2020, as the UK went into lockdown, there was a whole raft of work in terms of making our organisation safe; bear in mind our people are key workers, as we play a crucial role in the food supply chain.
We had a headline objective to keep our people safe and our customers supplied. We had to work hand in glove with our health and safety and operations colleagues to make sure we had everything we need to keep our operations safe and continue production – becoming experts in cleaning regimes and bio-security protocols at the same time.
Then we had several hundred office-based staff who needed furniture and IT equipment to work from home.
In April and May, road haulage from Europe became a massive issue as countries closed borders with other countries. Then as we got to June/July and things were stabilising here in the UK; it really hit the US where we have critical testing laboratories and key contract manufacturing suppliers.
We also had to manage the impact of containers not moving, initially east to west and then the subsequent shortage of containers to take product back, west to east. It has just been a series of moving challenges, in the UK somewhere from October time, it blended into Brexit as well.
We consciously decided to sit down with our customers and price forward through Q1 2021, so we could implement a managed stock build during November and December, to tide us over what we anticipated to be a period of disruption during January and February. We are now managing the impact of new customs procedures and associated hold-ups and delays.
In addition, we are also managing new movement restrictions in China, to control the risk of infection spreading as people return home for Chinese New Year and to contain certain regionalised outbreak spikes. Regarding the supply of key materials, we’ve got the situation under control, but it requires constant attention.
Not really, the thing we are doing differently is to encourage and focus on individual and team wellbeing. I personally feel a massive debt of thanks to our front-line operatives who have kept our operations going every day. Travelling into their place of work and delivering to our customers. I feel very fortunate by comparison that my challenge is adapting to working from home.
But from an office base point of view, we are not getting the spontaneous social interaction we would normally enjoy. Also, people are wrestling with homeschooling and dependent caring, as well as other family challenges. We need to encourage people to do whatever we can to help each other with our wellbeing.
I like to be outside. Family is also really important to me. I live on the Moors in West Yorkshire, I like to be outside, walking on the Moors, doing things in the garden or anything like that.
Trust your instinct more and don’t sweat the small stuff.
I once shared a service lift at Ascot races with Jeremy Kyle.
Several years ago on a visit to Bamburgh Castle I saw a tomb and written on it was:
‘Whatever thy hand findeth to do, do it with all thy might’ and it really stuck in my mind.
It goes on to say ‘…for there is no device, nor knowledge, nor wisdom in the grave, wither thou goest.’
To me, it says “Find your passion and give it everything you’ve got because life is short”.