Leading Procurement and Supply Chain Transformational Change – Do you have the right stuff?

astronaut photo: NASA

Never content with status quo, companies that excel want to be the very best. They constantly drive continuous improvement, yet many procurement and supply chain professionals lack the confidence and capability to assess, build a business case for change and manage change across the business. How can companies and individuals get “the right stuff” to get to best in class?

The process starts at the assessment of the current state of the organization. Typically, it reveals an inefficient organizational alignment, gaps in the processes, competency issues in the team and systems which may or may not support the procurement and supply chain mission. I have seen leaders shy away from and resist change, while defending the current ways of doing business. Over time, the resistors of change are displaced by more progressive individuals. Those who stand before the management highlighting the issues and delivering a plan for change always accelerate their careers in the business.

Early in my career I worked with a purchasing leader that attended a seminar at Penn State. He approached the CEO and Chairman of the company, detailed that his team was tactical and influenced the senior management team to let him to build a change program. The change was painful and difficult, but resulted in over 40 million dollars in savings, streamlined the organization structure and the company achieved a leadership position in their sector. He moved on to different positions in the company, eventually ending up as CEO of one of the major divisions.

What made this individual a success? He created the assessment of the current state of the business by looking at the core competencies required to be successful in the food business and measuring the gap to achieve the best organization, processes and people to reach world class in his industry. He looked at benchmarks with the understanding that they are merely data points. To make benchmarking successful, one must understand both the process implemented to achieve them and the business cultural adjustments required to make them work. Too many times, the focus is on the size of the gap, which can cause some to think “we can never get there.” The focus should be on taking the first step, then the momentum to keep the team moving. Whether it’s a meter or a marathon, some will run, some will walk and some will do both to reach the finish line, so a plan should be developed that considers the company culture and the speed that the team can practically achieve.

Once the change model is identified and a plan developed, it is only the beginning and once started, it is ever evolving. There are lots of drivers of change, like:

  • Technology
  • Economy
  • Competition
  • Innovation
  • Profitability
  • Industry consolidation

It’s important that procurement and supply chain team members understand that each of them has an important role in how these drivers impact the business and in making the changes needed for the business to succeed. For example, similar to, but broader than technology, product and service innovation occurs faster and faster, often making the ‘shelf life’ of current products shorter and shorter. Innovation in new product ideas, product packaging, integrated supply chain operations and distribution channels, customer service, and marketing are all examples of areas that can be market-changing for a business. Clearly suppliers can provide many of these innovations, if managed properly. The procurement and supply chain team is in the middle of the action.

What skills are needed for transformational change? One of the core skills of a leader is the ability to influence. The ability to evaluate your organization, develop a solution and build a business case to get the business to invest are critical skills of leadership.

Since change impacts every aspect of the organization, the change process really needs a good business case including all cost, risks and the measurable return that the company will see at the end of the process. The implications should be clear that the organization will be changed (reflecting the global, regional and local requirements of the business) to simplify the supply chain and increase velocity, flexibility, value and customer needs. As a result of the change, people will need development (some may no longer fit in the business) and processes will surely change.

Its always best to establish a management steering committee to remove roadblocks and select a project leader and a cross business/cross functional team to build stakeholder awareness and engage them. Build Change Champions and willing helpers to support the transformation and have a plan for the opponent and cynic who may work to disrupt the change.

There are many reasons change initiatives fail. Usually, failure is the result of:

  • Lack of management buy-in and commitment
  • Lack of leadership
  • Lack of focus and commitment
  • Resistant too hard to over come
  • Lack of knowledge
  • No process
  • No strategy

Procurement and supply chain transformation is exciting and can create competitive advantage for your company. It takes leadership, focus, influence, management commitment. It is a big task, but those with the confidence and capability will accelerate their careers.

Do you have the right stuff?

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