By John Hall
He was born in New Jersey and spent his formative post-college years there and in New York, working jobs in sales and procurement for plastic fabricators and food processors. He even traded orange juice futures. In June 1992, he migrated south to Macon, Ga., to begin a career in an industry that has weathered more challenges than most. Today, he hangs his hat in the bucolic countryside of Greensboro/Winston-Salem, the birthplace of his current 140-year-old employer.
He holds a patent and has spent nearly a decade leading procurement at the nation’s second largest tobacco company, RJ Reynolds.
For more than 20 years, Craig Demarest has held the highest positions in procurement for Brown & Williamson and later, RJ Reynolds and in January, not unlike the industry he’s devoted himself to, began to reinvent himself and apply his procurement skills to a new role as Senior Director in the company’s Strategic Innovations Group.
For the still relatively young procurement professional, the transition has been invigorating as he finds new ways almost daily to apply his skills to new products and innovating ways of marketing them. He even calls his teenage kids his “number-one focus group” upon which he often bounces off ideas about what makes young people tick.
From Chief to Individual Contributor
The affable procurement professional looks upon his new role with a great deal of vigor and a twinge of jitters. While Demarest has mastered direct and indirect procurement, and managed vast global supply chains in addition to overseeing the company’s extensive domestic network, he says, “This is definitely stepping outside my comfort zone. But it’s a great opportunity to expand my development. I have a reputation for thinking out of the box and being creative in terms of problem solving. But it’s very different when that is your full-time job, so it is a big adjustment moving from leading a large team to being an individual contributor."
The transition from procurement to the Strategic Innovations Group is part of a plan to rotate key employees in different roles for 18 months at a time. “Part of the plan is to cultivate the innovation mindset across the entire company,” Demarest tells My Purchasing Center. “It allows for different and fresh perspectives, plus it’s a great way to get introduced to different parts of the business that maybe I wasn’t closely associated with before.”
It’s not surprising that progressive companies would tap procurement professionals to “think outside” the proverbial box. Dennis Potter worked in procurement at RJ Reynolds before forming the Strategic Innovations Group in 2008 at Reynolds American, Inc. Potter joined the company as a research chemist in the late 1970s and worked in research and development roles after leaving procurement. (His name also is associated with at least two patents, one related to filter manufacturing and the other for the tobacco extraction process.) Potter once told a reporter innovation could thrive with a cross-functional approach.
In recent years, RJ Reynolds has expanded its offerings in nicotine replacement and electronic cigarettes (a market it now leads with its VUSE product line, according to Demarest).
Keeping the Funnel Full of Ideas
In his new role, Demarest and his cross-functional team from supply chain, R&D, manufacturing, engineering and strategy and planning will focus heavily in consumer marketing initiatives. “Some of the key objectives for our group are to uncover emerging trends, translate these into RJ Reynolds-specific insights and develop proof of concepts for products and packaging that support our brands,” he says. “We look at unmet consumer needs, develop potential solutions, use consumer research and work closely with the brands. Our focus is a long-term horizon, keeping the funnel full of ideas.”
Demarest has a history of developing innovative solutions to challenges. For starters, he holds a patent at RJ Reynolds “related to packaging” developed before he joined the group. He also has worked as a procurement liaison on many cross-functional projects.
One of the most challenging and exciting projects Demarest’s team has engaged in during his procurement experience is the development and rollout of the VUSE product line. “The technology is not unlike the iPhone,” he says. “The innovation curve is incredible and the pace of innovation is rapid. Being nimble is key. It’s very different from a sourcing standpoint than what RJ Reynolds has been involved in in the past. We’re now involved in sourcing electronic components, so that’s been quite a change.”
Demarest says he learned how to apply innovative solutions during and after the merger with Brown & Williamson, an event that brought him to RJ Reynolds from his purchasing director role in 2004.
Part of the success in melding the two companies and cultures involved some deft maneuvers in supply-chain structures, as well as outsourcing. It was that experience for which Demarest earned his stripes dealing with suppliers, statements of work, intellectual property, using third parties for research and benchmarking. “It’s also been about building credibility and relationships internally, cross functionally and selling ideas. To be successful in procurement, you need those so called soft skills for collaboration and project leadership,” he adds.
Demarest also hopes to bring his invaluable and extensive knowledge of products, materials and suppliers and their capabilities to the table in his new role. “Understanding this company’s supply chain also will help when we’re looking at developing something different.
“It’s a natural transition,” he says. “I’ve always tried to push innovation, whether it’s from my client area, but from the standpoint of working with people and suppliers, and understanding how they work. This new role is really about finding suppliers, and using third parties to come up with different ideas and perspectives.” Demarest says he also finds himself consulting with universities and engaging other third parties for ideas, as well as “small entrepreneurs who have great ideas but not a great bit of capital funding.”
Challenges in the new role will involve “getting people you have current commercial business with to do things for and with you,” he adds. “People we are in business with want to continue to grow. They understand our industry. So this is an opportunity for them to broaden their business with our company.”
Demarest says such challenges will summon all the procurement and people skills in his toolbox. “Internally, relationships are important. You don’t innovate in a silo. You have to sell ideas all over the place. As head of procurement or even a buyer, you’re always selling internally. That’s a great skill set – how to put together specifications, how to influence people, etc. It all fits.”
From Plastics to Tobacco
Demarest began his career in 1982 – a year before graduating from Rutgers University with an economics degree, at Plastic Engineered Products, a New Jersey firm that designed and fabricated such products as pipes, valves, fittings, tanks and pumps. “Working for a small company you do everything, so that was a great opportunity to learn,” he says. A typical day involved making a sales call, taking orders, procuring parts, fabricating tank valves, and in some cases, even delivering parts. “It was fun and I learned how much I loved business and that entrepreneurial spirit.”
He then worked for his father at A&E Products Group, a New Jersey injection molding firm, as a master production scheduler. “My father was the toughest boss I ever had,” Demarest tells My Purchasing Center. “But it was there I learned about materials, plastics, mold building and manufacturing,” experience that would prove useful later in his career working with suppliers because it taught him how to understand process inputs, conversion costs, and profits and loss statements.
In 1985, Demarest took his first pure procurement role as purchasing manager at Johanna Foods, Inc., a Flemington, N.J.-based producer of dairy and juice products. Because he was the first person at the company to have a computer, Demarest established the company’s inventory systems. “I learned how to buy in a place where 95% of the cost of goods sold was what you purchased, so how well you bought made a huge impact,” he recalls.
Buying orange juice futures “was kind of scary,” he adds. Despite the thrill of traveling to Brazil to learn the citrus business, it was often nerve-wracking. “You take a position on something and if the weather changes, you’re in trouble,” he muses. “That’s the bad thing about futures: Anywhere you’re hedging, you have to take a position and you’re undoubtedly wrong. But it was a great education.” He also learned a great deal about injection blow molding, rotational blow molding and packaging.
In June 1992, Demarest would begin a 12-year career at Brown & Williamson. As Purchasing Director, he served on the firm’s Procurement Executive Committee, which was responsible for setting strategic direction for procurement. He worked extensively with the company’s Global Procurement unit to develop and implement sourcing strategies around several global direct material commodities.
After the company merged with RJ Reynolds in 2004, Demarest was put in control of direct materials and production planning. Approximately three years later, Demarest was named Senior Director of Procurement. One of his greatest achievements was the opportunity to build a completely new procurement organization from the ground up. “When we came together, we experienced some downsizing and restructuring,” he recalls. “We also did some outsourcing, which created opportunities to design things my way in terms of structure and talent.”
Leveraging Talent, Relationships
Looking over his career, Demarest is grateful for the vast and varied opportunities procurement has provided. Many have come from successfully overcoming adversity.
“Like any business there have been challenges, but at RJ Reynolds, we are always reinventing ourselves, and there’s never a dull moment,” he says. “My teams have always met challenges head on and come out better on the other end.”
He observes how the procurement profession has changed into far more meaningful work. “When you think about the relationships you build over time, most of what we do now is not transactional,” he says. “Some supplier relationships we have are 75 years old or older, so we’ve been practicing Supplier Relationship Management longer than most. The key is to make sustainable value a good business proposition for both your company and its suppliers.”
Another important lesson Demarest has learned is leveraging relationships to achieve mutual objectives. “In procurement today, you have to be smart about leveraging third parties, whether it’s your suppliers or the people around you,” he says.
“You have to think about how to get the most high-value work while acknowledging individual expertise. It doesn’t make sense to try to get everyone to know everything. That’s not how it works today, especially as you expand the influence of procurement into different areas of spend. It’s impossible to be an expert if you’re only doing transactions every three years. The smart guy is leveraging third-party resources as much as he can. That’s what’s different.”
Several years ago, RJ Reynolds engaged in some outsourcing in procurement (transactional procurement and some category management). It provided a wealth of insights to the procurement chief. “The fact that our procurement organization was credible and showed value all the way earned us a seat at the table,” he says. “It gave us autonomy to do things like outsourcing. It’s about being creative and learning every step of the way. We learned from our outsourcing in terms of how they approached the business. We picked up best practices. Many companies simply wash their hands of the process they outsource but it’s critical to stay engaged.”
Managing people often has been more challenging than processes or even multi-billion-dollar budgets.
“I can’t overstate the value of knowing how to deal with people above you who are not on board, and how to motivate your team to improve and put the effort forward,” Demarest adds. “Learning to manage up is a skill I’m still working on, but I think it’s about communicating, and understanding what a person is trying to achieve, and aligning goals.”
Talent management is often identified by leading procurement professionals as one of the important skills to have now and in the coming years. Demarest has been at it for a while. “Different people are emerging through procurement that may be more externally focused, more extroverted,” he says. And he’s found himself having to recruit for talent with specific skills. Many young graduates today have supply chain degrees. The best ones are best at communication.
Demarest is proud of the talent he’s brought on board and how they’ve evolved in myriad roles at RJ Reynolds. “We try to grow people who are multi-dimensional, have leadership capabilities, know how to collaborate and run projects,” he says. “Those are skills people need today. The future of procurement is in those soft skills – the whole strategic mindset, the business acumen piece, is unique and is valued a lot in business.”
Demarest is passionate about sharing what he’s learned, and helping young procurement professionals toward their goals. (He will present on responding to global macroeconomic and political conditions at ProcureCon Indirect West in Phoenix this September and in November, will present on encouraging internal and external innovation at ProcureCon Digital & Marketing forum in Nashville.)
“That presentation will explore how to build relationships and finding the best-third parties,” he says. “It’s about making your business attractive to people and incentivizing them. For so long, procurement has been the hammer. That’s not as effective any more. Today, relationships are essential for sustainable growth. There are people at small companies who have great ideas but little funding. In the old days, you’d probably run away from companies like that. When it comes down to it, we’re all just trying to find the smartest people to make good things happen.”
Demarest extends his passion to grooming young professionals outside of RJ Reynolds as well. For several years, he’s held top-level positions at ISM-Carolina–Virginias, an affiliate of the Institute for Supply Management. As president of the group today, Demarest spends his time helping to revive chapters and developing better methods for attracting new members.
“Membership organizations are always having to reinvent themselves,” he says. “There are different kinds of emerging professionals, young people, who think and collaborate differently, and look for membership groups to deliver different things than they have before.” (This is where Demarest calls upon his “focus group” at home for ideas.)
“We’ve been lucky to hire a bunch of bright and talented young people at RJ Reynolds too,” he adds. “We’ve cultivated our own talent in some ways. And that’s pretty cool. Young people give you energy. I’m trying to teach them and give back a little and that’s what the ISM effort is all about. If you’re involved in something you want it to be really good. It’s not in my personality to sit back and say OK, check that box. I have to work it.”
Advice for Emerging Procurement Pros
Like so many of his peers, Demarest has watched the procurement profession evolve and gain greater respect and influence.
“Business today values much more what procurement brings to the table,” he says. “The perception of the procurement professional has changed from an administrative tactical doer to a value-added contributor. We as a profession have done a great job penetrating the entire spectrum of business because we have produced results and helped our companies achieve their goals while reducing risk.”
When asked what advice he’d give if he stood in a room full of recent graduates seeking procurement roles, Demarest is direct.
“Understand your business, and your client’s business, and understand how the organization makes money,” he says. “Talk less. Listen more. Realize that it is not about who gets the credit but the success of the team that matters. Never forget that the people in your organizations are your biggest strength. Show them you value them. Help them grow. Give them opportunities to stretch themselves, and be supportive when they fail. Always celebrate their successes. One of the keys to being a good manager is not going crazy when you fail. Give people enough room to test themselves and try new things.”
Craig Demarest has participated in several My Purchasing Center Executive Roundtable discussions. Download the white paper on one of the discussions: Winning Influence: Procurement Leaders on Approaches for Sourcing Complex Services.
Also see the My Purchasing Center articles: Brainstorming at ProcureCon: Indirect Roles Tough to Fill and The Innovation Garage and Ideas on Procurement.
John Hall is a freelance writer who reports on commodities markets and procurement and supply management topics for My Purchasing Center. His website is jhallmedia.com.
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