Making the Case for Procurement

After false starts at other companies and a lot of hard work to earn both US citizenship and his MBA, Leo Esteban has earned the full backing of Veolia by showing the value of standardized supply-chain processes

Leo Esteban, Director of Procurement, Veolia

Ever since Leo Esteban sold his car in 1994 to come to the United States to learn English, he has worked to prove himself here, both personally and professionally. Born in Venezuela into a family of industry—his father owned factories there—he attended Universidad José María Vargas to get an industrial engineering degree but soon realized he wanted to keep learning. Plus, “my dad used to tell me, ‘If you are an engineer and you don’t speak English, you are not an engineer,’” Esteban says.

So, he gave up his wheels and most of his other possessions to attend three blocks of ESL classes at the University of North Carolina–Charlotte, and not long afterward, he made the move from engineering to the world of supply-chain management. His first job was with a Mexican building-materials company, Cemex, that had just acquired operations in Venezuela, and he spent the first years of his career in its Venezuelan and Cuban offices before it acquired a business in the US and sent Esteban there as part of a special task force. He was supposed to be there for just three weeks, in 2000, to align the new operation with the Cemex culture and help with post-merger integration, but he wound up staying.

Seventeen years later, after a couple of tough breaks with other companies and a lot of extra work to gain his citizenship and climb the corporate ladder, Esteban is the director of procurement for Veolia. It’s an environmental company that, until he arrived, had no standardized, centralized supply-chain strategies. He has helped consolidate its procurement operations, and in so doing, has been able to make a greater argument for the value of supply-chain work in general.

Getting to Veolia didn’t happen overnight, though. After coming to the US, Esteban spent ten more years working for Cemex, slowly advancing through the ranks of the company’s supply-chain arm, which was basically in charge of calculating and negotiating the purchasing agreements for all the materials and services the company might need. Knowing he wouldn’t be able to climb as high as he wanted to without them, though, he began to pursue both his citizenship and, eventually, an MBA. It took five years just to attain residency, but it was worth it. “You want to be a resident because when you are working with the type of visa that I had, you can only be in the US for seven years, based on immigration laws,” Esteban says. “That affects your growth within the company. There’s no incentive to retain you if they know you have to leave.”

He had to wait another five years to attain citizenship, and at the same time, he began taking MBA classes at Rice University in 2008—while still flying to different Cemex sites each week. “I wasn’t sleeping more than two hours a day,” he says. “But I did it. I was alive at the end of the program.”

He earned his citizenship and was set to graduate in 2010, but six months before he got the opportunity to walk across the stage at Rice to accept his degree, Cemex went through a company-wide restructuring, which resulted in the loss of his job. The building-materials firm was suffering directly from the plummeting of the housing market at the time, so “pretty much they dissolved most of the supply-chain organization,” Esteban says.

Luckily, he had managed to make a connection with another Venezuelan at Rice who was able to get him an interview for supply-chain work at BP, but soon after he landed a job there, his employment was once again in jeopardy. After being forced to pay at least $70 billion in damages for the Deepwater Horizon oil spill, BP, too, set about eliminating departments, including most of its supply-chain infrastructure. “Supply-chain organizations tend to disappear in the first or second wave because we are a cost center, not a profit center, so companies try to survive without us,” Esteban says.

It wasn’t until Esteban arrived at Veolia in 2015 that he was able to make a true case for supply-chain work. The growing company handles a diverse range of environmental-remediation, recycling, waste-management, and water-conservation projects, and a big part of the reason it hired Esteban in the first place was because it didn’t yet have a centralized supply-chain infrastructure. “They needed to implement it to start reducing costs and be more efficient,” he says.

“Procurement is one of the few functions growing, hiring people, because the company recognizes that we’re adding value and bringing so many benefits to the table.”

—Leo ESteban

When Esteban first got there, many employees, in different Veolia offices across the nation, were signing their own purchasing agreements with vendors, often using radically different contractual language and setting different terms—and sometimes simply making handshake deals “There were not procedures, processes, no legal language to protect the company, no requirements, no insurance, no nothing,” Esteban says. “Our industry is pretty risky. If we were to have an accident while cleaning a petrochemical facility or doing a turnaround in a refinery, we’d be exposing the company—as well as our clients—to significant losses, not to mention risking the safety of people. But, if you have an agreement that is very specific, with the adequate language around liability and insurance, among other important clauses, the level of exposure is minimal.”

Esteban and the rest of the supply-chain team centralized Veolia’s procurement processes by standardizing them, taking the company from roughly 150 types of purchase agreements to just a few that were preapproved by in-house counsel. The measure drastically reduced Veolia’s legal fees and even helped get the company special pricing and sounder deals from preferred vendors it was making more purchases with. “If you’re talking to a vendor in 150 different ways, you’re confusing them, and you cannot add value that way,” Esteban says.

He also helped Veolia set up a preferred-vendor list, updated monthly, that employees can now consult whenever they need a recommendation for particular materials or services, and his procurement team started a webcast that airs once a month to about 300 employees. “We give the organization an update on what happened in the last 30 days and what we are working on for the near future,” Esteban says. “Any new agreements, new deals, new issues, new benefits, and at the end we open the floor for questions, to give the audience the opportunity to communicate to us their concerns, questions, or any other input that would help us add more value.”

Taken together, these steps have already saved Veolia nearly $14 million, and Esteban expects to save even more as his supply-chain team implements more initiatives and good practices that he learned at Cemex and BP. “I have these tools, processes, procedures, and practices that I had in the past in other companies,” he says. “I know they work, and I will try to implement as much as I can to continue adding value to the bottom line of the company.”

And, as he continues to refine Veolia’s supply-chain network, he can finally be confident that he’s with a company that has his back and sees just how important his work is. “This is the first time that I’m in a company where I don’t see pushback from my stakeholders to procurement,” Esteban says. “We’re being accepted. Every door is opening. Like in any relationship, it’s based on building credibility. Procurement is one of the few functions growing, hiring people, because the company recognizes that we’re adding value and bringing so many benefits to the table.”