Transforming procurement - it's all about people | by Elaine Porteous

Transforming any procurement function usually includes documenting the “As-Is” situation and, using various tools, identifying the “To-Be” ideal. This required transformation process is more than some lightly scheduled improvements and fixes, it often requires a major overhaul of systems and processes as well as the introduction of new technologies.

Any transformation project requires committed leadership support and a lot of thought about how to manage the required changes.  Such a project involves detailed planning and implementation and can cover many months, or even years.

An expert commentator on procurement transformation, Raj Bhattacharya, VP at Genpact, a NYSE Company, sets out quite clearly what five elements are necessary to ensure a smooth transformation process:

o    Begin with (and maintain) an end-to-end process view

o    Data, data, data: metrics speak volumes

o    Phase and prioritize

o    Choose the right technology

These foundations are vital, but we are particularly interested in the fifth:

o    Bake-in organizational effectiveness

Organizational effectiveness means having the appropriate structures, the correct leadership and committed sponsors. Bhattacharya says that in world class organizations the benchmarks are that 40-45% of the supply management team would be typically focused on strategic activities and that each procurement professional should be able to manage a spend portfolio of US $15-20 m (R200m) per annum.

Significant leadership needs to be in place, and visible. Disruptions and changes in systems, processes and technology can derail any transformation project if there is no pre-planning on how to manage the inevitable changes. 

There are some documented lessons learned which are useful when considering a major change:

1.  Any procurement transformation project must be aligned with the overall organization strategy.  Sounds obvious, but it is not always the case. The project scope must be precise and alternative paths should be presented prior to launching a major project. Failure to establish the business case and confirm the direction, at the
highest level, will invite disaster. The project leadership must be both committed and accessible.   


2.  Gaining buy-in from stakeholders, that is, all the interested parties, is crucial. This includes suppliers, end-users, procurement  (both strategic and tactical), accounts payable and risk management staff. All supporting functions such as I.T. and  H.R. should be engaged early. Step One is to explain clearly why the change is needed.

KPMG reported in a recent case study that they addressed stakeholder challenges and objections through categorizing stakeholders by level of influence and developed the right messaging for each audience using the appropriate channels. This boosted engagement and participation which assisted them in developing
and implementing training on the new processes, policies, and procedures.


Their change management process included building powerful guiding coalition with key stakeholders to embed a common vision. They also engaged change agents to cascade the transformation into the organization. 

They also used a structured approach to managing change requests, a regular hurdle in the implementation of any improvement program. Many of the issues and concerns were due to a lack of awareness, sometimes stemming from lack of participation in engagement meetings and workshops at early stages.

For more detail see:  https://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/transforming-procurement-organization.pdf

3.  Engaging the human resources (HR) function early and having HR leadership represented in the program office ensures that response plans and backups are created for any managed and unmanaged attrition. Many transformation projects have crashed at this hurdle.  Resistance and stubbornness from employees when confronted with system and procedure changes need careful handling and expert guidance.  

4.  Listen to your stakeholders!

Achieving success in implementing organizational changes in procurement does require focus on the “hard” issues such as using new software solutions to handle spend analysis, tracking and monitoring savings and procure-to-pay processes. However, without proper attention to the people who have to make it work, it will not realise the stated goals.

Be agile and adaptable as problems and mistakes will arise. Don’t underestimate change management, make it a priority. 

Elaine Porteous is Senior Associate at Bespoke - www.bespokesourcing.co.za

References:

http://www.genpact.com/docs/resource-/Five-essential-procurement-transformation-levers
https://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/transforming-procurement-organization.pdf

Posted on March 06, 2014

Subscribe to our Bulletin

FREE-OF-CHARGE

Invalid Input
Invalid Input
Invalid Input
Invalid Input
Invalid Input
Invalid Input