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"One on One: An Interview with Patricia Hanson" By Roberta J. Duffy, Winter 2002, Vol. 38, No. 1, p. 2

One on One: An Interview with Patricia Hanson

Journal of Supply Chain Management Copyright © February 2002, by the Institute for Supply Management, Inc.

Author(s):

Roberta J. Duffy
Interview by Roberta J. Duffy, editor of Inside Supply Management®

Patricia A. Hanson, C.P.M., is vice president and director of purchasing operations for J.C. Penney Company, Inc. in Plano, Texas. She is responsible for the purchase of non-resale products and services, totaling $3 billion annually. Since joining JCPenney in 1988, Ms. Hanson has held positions of increasing responsibility including purchasing manager of the fixtures and building equipment division, purchasing manager of the packaging and operations division, and assistant director of purchasing. She was appointed director of purchasing in 1997 and vice president and director of purchasing operations in 2001. Prior to joining JCPenney, Ms. Hanson worked for Gulf Oil Corporation in Houston, Gulf Oil Services, Inc. in Caracas, Venezuela, and First City Bank of Dallas.

The Journal: What is your background and how did you get into purchasing and supply management?

Patricia Hanson: After I received a degree in business administration, I went directly into purchasing, in the oil and gas industry. After seven years, I moved to purchasing in the banking industry, and, finally, for the past 14 years, I've been in retail. I've learned that the skills associated with purchasing can be applied toward any industry - whether it be buying drilling-related equipment, MICR-encoded documents for banks, or merchandise bags and fixtures for retail.

The Journal: What is your role within the organization

Hanson: As the vice president and director of purchasing operations, I direct the company's day-to-day non-resale purchasing activities. My group is segmented into four major divisions, by commodity: (1) print media; (2) business systems and services; (3) fixtures and building equipment; and (4) packaging, marketing properties, and supplies. The associates on these teams act as consultants to various business units and are the ones who make it all happen. My position, along with three other areas - vice president and director of strategic sourcing, vice president and director of B2B, and manager of performance management - report to Bill Alcorn, senior vice president, controller, and chief purchasing officer. This reporting structure has gained purchasing a great deal of support because there's no one who cares about the bottomline more than finance.

The Journal: What challenges is your organization facing? Are any unique to your industry?

Hanson: Our main objectives tie directly to four of our new CEO's five main strategy priorities: marketing, store environment, expense control, and people (the fifth being merchandise). One challenge is performance measurement, which I suspect is common among industries. You can realize savings every day through solid practices, but how do you track the contribution directly to the bottomline? Sometimes the money you were able to save ends up being spent somewhere else. So, it's a continual challenge to aggressively track the savings and actually realize it at the end of the day. Another challenge is ensuring compliance from internal groups. We can establish excellent sourcing strategies and practices, but with so many internal units and stores, communicating and demonstrating the value of those practices is definitely a priority. Ironically, another challenge has emerged from a positive. Over the last three years, our business has tripled. We have earned the respect of so many in the company that sometimes it is difficult to manage the increased need for our services without increasing head count.

The Journal: How is purchasing and supply management helping to resolve these challenges?

Hanson: One large emphasis has been a rigorous professional purchasing push. In 1997, there were two individuals with a professional certification. Today, we have over 30 associates who have their C.P.M. or A.P.P. Another effort has been to market our department to other business units. When you are trying to change attitudes and spending habits, it helps to do a little marketing. For example, we've developed an internal Web page that allows people to access information on contacts, products, and services, and we plan to launch a poster campaign ("Purchasing Power - Get It!") touting the power of purchasing.

The Journal: What is your vision for purchasing/ supply management at JCPenney?

Hanson: We are looking to build a sustainable process that supports the company's objectives. On the non-resale side, some key components include reducing and leveraging costs, reducing risk, and tracking savings to the bottomline. Another lofty goal is to arrive at 100 percent internal compliance - getting to the point where internal units actually seek out purchasing as a consultant. We have already grown our business immensely. Measured in payables, non-resale purchasing handled $1.3 billion in 2000, and in the first 10 months of 2001, we handled $3.6 billion. We managed this with a minimal increase in staff, because as you upgrade the quality of people, you can do more and hit the ground running. Our savings through the first 10 months of 2001 have been $69 million. Now we're bringing in all outside services, so we're negotiating the contracts for consultant services, travel, temporary labor, etc.

The Journal: What kinds of research would you like to see being done on behalf of purchasing and supply management? What types of information do you seek out?

Hanson: We have yet to find the perfect way to measure purchasing performance. If we're going to market our purchasing organization, we need to be able to show our contribution in terms of meaningful data. Also, any research related to best practices - in any industry - is helpful. Not all industries move at the same pace, so it's important to hear what the forerunners are doing in the purchasing arena, no matter what industry that may be.

The Journal: What are you doing in the area of e-commerce or e-procurement? Are you being pushed to use e-business tools?

Hanson: Seven years ago, before it was fashionable, we created an in-house order processing system. It is now Web based and used by 1,200 stores and busi-ness units throughout the country. The billing process is automated, orders are transmitted via EDI, and it interfaces with all of our other legacy systems. Early on, we realized there was a more efficient way to process approvals and paperwork, so our e-commerce direction stemmed out of that. We are also founding members of the World Wide Retail Exchange. The creation of the vice president and director of B2B position ensures that we keep our fingers on the pulse of new innovations, pilot new products, and collaborate with other major corporations. We have had solid success with the auction tool.

The Journal: What do you see in the future for purchasing/supply management at JCPenney or the function in general?

Hanson: I hope to see increased involvement of all purchasing professionals at a more strategic level. I want our people to continue to be active participants in the decisionmaking process, valued commodity experts, top-notch negotiators, and outstanding team members. Companies who grasp the value of a professional purchasing team will soon build a distinct competitive advantage. Purchasing continues to be a fulfilling career choice.

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