Mercury is a leading European Contractor that builds and manages complex engineering projects that reimagine how people work and live in the built environment. Their determination and focus enable the delivery of leading-edge construction solutions across a range of key sectors including Enterprise Data Centres, Advanced Technology & Life Sciences, Hyperscale Data Centres, Fire Protection, Technical Support Services (TSS), Data Centre Facility Management, Healthcare & Building Services. Mercury employs over 2,600 people across over 10 locations in Europe and had an overall turnover of €1bn in 2020. Mercury employs the best people, invests heavily in training and education, and ensures that the highest standards of health, safety and governance are applied throughout the organisation.
Johnny McFadden joined Mercury as Group Head of Procurement in 2018. A life-long career within the construction sector has seen Johnny cut his teeth from regular residential building sites to Oil & Gas mega projects across Europe, Middle East, Africa, and North America. Mercury’s continued rise created a need for a redefining of structure. Johnny and his procurement team have made significant steps over the past three years and he kindly offers an insight into the ongoing evolution of the function as well as providing his own outlook on procurement in general.
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Johnny, what does your role as Group Head of Procurement cover?
Primarily, I was recruited to put a supply chain structure in place that is robust, flexible, and smart. We are a support function that endeavours to keep Mercury projects running smoothly, which can be very demanding as construction projects are often pressurised situations. Added to this is the complex nature of executing projects across Europe. In Mercury, the procurement department are responsible for purchasing of Goods/ Equipment, Material Control and Fleet, Tool and Plant requirements. This can only be done in conjunction with our Commercial and Operations teams.
Initially, we updated and released new processes and procedures in Q3 2018, which was very important in order to lay down solid procurement foundations. These were very different to what had preceded, so the change management was considerable and is ongoing. Once created, documents should be dynamic and change as the company changes and matures. In many ways, they were probably overzealous, which I trace back to my experience in the more stringent Oil & Gas industry. Working with the leaders in Mercury, I think we are finding the right balance between compliance and flexibility in the construction sector in order to execute accelerated projects.
You joined the business in 2018 and set about redefining the procurement function and aligning its structure to mirror that of the business. What was involved in this process? How did you overcome initial resistance? What instant benefits did this structural change create?
When I joined Mercury, it was already in a phase of restructuring from a business unit model to a divisional model, of which there were four, with each division having a Managing, Operation, and Commercial Director respectively. The divisions, though similar in many ways, had distinct differences, which procurement had to be able to support and to which we had to provide specifically dedicated personnel.
This was based on moving from a centralised procurement model to giving each division a dedicated divisional procurement manager who would support the procurement changes I wished to roll out. This was primarily based on getting procurement personnel closer to the projects and having buyers on site so that they were closer to being part of the project team. This is where I personally felt I learned the most at the outset of my career, gaining site experience and understanding the pressures and constraints of live projects.
This is still very much a work in progress with the change management and the acceptance of what changes the new procurement management team want to bring. There are different views on what supply-chain is within the organization, given the long-held views on the methods by which the construction industry have historically procured and built in the past.
We laid out some fundamentals in engaging in commercial negotiations with vendors directly, who can then make commercial commitments on behalf of the company, endeavouring to reduce the amount of maverick buying on projects. There are many stakeholders involved in the procurement process in any industry and so we are working toward finding the right balance. The executive management team have been supportive and recognize that the required changes don’t happen overnight. There are elements you wish would change quicker, however resistance to change means you have not won over or perhaps targeted the right stakeholders. Conversely though it is those elements you expect to be a lot trickier to get buy-in which actually sail through.
Creating a diverse and inclusive function was high on your priorities with the majority of your team now being female. Did your previous experiences working within a large multinational drive your desire to create a more diverse culture or was this a personal point of preference? How beneficial has adding a younger dynamic to your team been?
I do like to have diversity in my team, it makes life more interesting and the right dynamic of inclusion makes for a stronger team. This would primarily come from my time working in very diverse teams in the Middle East, Africa and Canada. It has happened organically in Mercury as I inherited some very strong personnel both male and female. Then as the new roles came up, we just seemed to find some very strong female candidates. The goal is always to find the best fit for the candidate and the team. Now we have a strong balance with Irish, British, Mexican, Italian, Brazilian, Romanian, Indian, German, and Polish nationals working together in our Mercury procurement team from junior to senior levels, female, and male.
The nature of the Construction business is evolving fast, and Mercury is changing accordingly. The Mercury mantra is to be brave and lead the way in all that we do. We are focused on creating diverse teams for a multitude of reasons. We want female leaders in our team, and we want to be able to converse easily in native languages and promote not only our company, but the industry. Changing the perception of how construction is viewed by younger generations is vitally important to attracting the best talent. We have hired some younger personnel who are so keen to learn, which drives us all forward to better define what is expected and map out career paths that keep them interested is very important.
My belief is that to get the best out of procurement personnel, they need to be on site to appreciate the urgency. This helps a buyer become part of the execution team which is important for them and the function. Smaller projects absolutely still require the centralised office support, but on the scale of projects Mercury were now executing it made sense to have site buyers and material control personnel. This is starting to pay dividends and build the trust that is required to buy into the supply chain method we are trying to deploy.
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What are the primary challenges of overseeing a procurement function of a projects driven business operating across Europe?
There are so many factors that can impact projects and the function on any given day. Especially now in the clutches of a pandemic and Brexit which complicates everything further. There are the external factors as stated previously around how aggressive schedules are now for projects. We would have faced struggles with language barriers in certain countries, which means that getting through the bureaucracy can be difficult sometimes. That has been alleviated somewhat by having so many different language speakers in our procurement and construction team. Dealing with the urgent requirements on projects present difficulties, as well as getting the balance between forward planning and a flexible supply-chain. Given that lead times of most materials because of commodity disruptions (copper, steel, rubber and plastic) have been stretched to a critical point, places additional pressure on everyone.
Supply-chain has a major part to play in Mercury navigating through the next few quarters especially. The shortages in the market mean that due diligence and relationships with suppliers becomes critical to delivering successful projects. As such we need to create an environment where projects are not siloed, for their own benefit and Mercury. Our purchasing personnel are dynamic with a focus not solely on purchasing, but also the expediting and logistics. With the direction we are heading the skills and knowledge required for the movement of goods is increasing rapidly. Our aim is to have a department that is flexible and innovative to all the supply-chain needs.
You operate in an innovative sector. How important are strategic supplier relations in driving innovation? Are there processes in place to involve suppliers at the onset of projects? How have supplier relationships developed since you joined the business? Would you say that the success of a project and the potential to win further contracts is often dependent on the level of cooperation with a given supplier?
Yes, it is a very innovative sector with a lot of smart people working on next generation methods of construction (i.e. 4D modelling or virtual site walks/ inspections) to meet the schedule demands.
I would attribute a lot of the success to the performance of our subcontractors and suppliers on projects. The repeat business comes from Mercury and our supply-chain collaborating well together and successfully delivering projects for our clients. Projects are holistic and the sum of all parts, and construction is tough and fast paced. There are always issues on projects and equally for supply chain, but it is how a company deals with a problem that is the true acid test.
Thankfully we have good partners who, like Mercury will always own up to mistakes and ensure that we find solutions. Quite often, it can come down to a specific project team, or a specific country where a company who has otherwise performed well can struggle. We continue to try to develop and take heed from lessons learned. This is easy to write, but more difficult to put into practice with the pace and nature of projects these days.
As well as Mercury leading the way in data centre construction, Mercury enjoy continued success in the life sciences and pharma industries along with our fire protection and new TSS division. None of which would be possible without Subcontractors, suppliers and partners who can support our aspirations to deliver best in class projects. The schedule pressures are getting more and more compressed as the demand for data increases.
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The procurement function has a significant role to play in driving the sustainability ambitions of a business. Your clients demand for sustainability to be positioned at the heart of their projects is becoming paramount. As a business you are aware of the need to stimulate sustainability within the supply chain. What steps are your taking at present?
Sustainability is such a broad topic covering everything from diversity to the environment and how we treat the planet and other human beings. Whether it is looking at environmental product declarations for carbon emission calculations or diversity in the workforce, procurement will be at the forefront working with our supply chain to bring the new changes about. There are so many different new initiatives that we have got to be pragmatic about setting the priorities and the approach.
Mercury focused on what pillars mattered most to our personnel, communities, clients, and suppliers. We set up a committee of which I am part to lead sustainability in the group. We have recently conducted a sustainability survey with our supply chain which returned an excellent 60% response rate. Based on that, we will get some key actions for the future. But the carbon footprint is vitally important to us all so that is getting a lot of focus and support from the business. It is important for me to do the right thing as an individual because then I can speak to my team who can influence others in Mercury so that we truly live the Mercury Mantra of “Our Planet, Our Duty”.
It’s fair to say that since 2018 your function has progressed significantly and has embedded itself as a key partner to stakeholders throughout the business. If you could point to one reason that your plans have come to fruition, what would it be?
I believe there are 2 keys reasons for this. Firstly, the department has progressed enormously, and a considerable amount of that progress is down to the hard work of the divisional procurement managers and their teams. They work on a daily basis with our commercial and construction teams to bring good solutions. Having a consistent and simple message is important and I had probably over complicated certain elements when I first came in. I think when I initially introduced the full procedure suite of documents it was too much too soon.
Secondly, changing the focus to working with the divisional directors to simplify and collaborate more on the direction they need procurement to go is proving far more beneficial to all concerned. There is still frustration and arguments on both sides, but it is a lot healthier and more proactive in nature. We all want what is best for Mercury and it is important not to lose sight of that when evaluating conflict situations.
The last twelve months have been the most turbulent in recent times. What have you learnt about your function during this time and how have you adapted?
It has been an incredibly uncertain and difficult time for all concerned. All Mercury personnel working on projects never stopped and have been working through incredibly difficult and unprecedented times. Those working in Europe had to leave their families for months at a time to ensure that projects meet the ever-present aggressive schedules. Between Covid and Brexit many of the impacts have pushed procurement to be constantly on alert and providing solutions to problems that never existed on projects in Europe before.
What I have learned is that our people are so resilient and very dedicated, which in a working from home scenario for many is very difficult. The procurement personnel have brought many smart solutions throughout the pandemic. The human impact to a lot of what the last year has brought is humbling. We all share the same frustrations with the limitations placed on our lives. We just have to look out for one another as some deal better with stresses than others. The trust in systems and technologies to work remotely has increased dramatically which I think stands us in good stead for the future.