Tag Archives: developing teams

Building an effective team category sourcing strategy

rowingteam

It often surprises me that many purchasing organizations lack an effective process for building a team-based strategic commodity sourcing plan. Typically plans built with key stakeholders are more successfully executed, deliver high results and encounter less resistance in the organization when change is required. By working with a team, you can assure the greatest sum of knowledge, get a better understanding of the project complexity, increase creativity and assure acceptance and ownership of the project by all members of the team. While many purchasing professionals have trouble engaging stakeholders, I have found when you can engage stakeholders, you will improve and increase the opportunities for your organization.

Who should be on the team? Before I start a program, I typically engage a steering group. The steering group’s role is to approve the project, make recommendations and remove any resistance or roadblocks that stand in the way the team. If the steering committee is comprised of senior leaders of the multiple disciplines required for the project, it has a better chance of success. If the sourcing leader can engage the steering committee as champions, the project is primed for success. All sourcing professionals should understand the stakeholder in terms of how much interest they have in the project and how much influence they have in the organization; a stakeholder with high interest and high influence would be a good one to engage as a steering committee member. This process will also work for the selection of team members. Other criteria to consider for team members are their ability, availability, knowledge, experience and overall willingness to contribute energy and time. The team’s responsibility will be to develop both short term (tactical) and longer-term (strategic) category strategies and sourcing plans. The team is also responsible for effective communications, information control and internal briefing of the project progress. If the team is committed to success, you will likely have a great project and outcome.

How should the team kick-off?  I suggest that the team build a charter. The charter identifies the mission, focus, objectives and scope of the project. It is an essential tool for keeping the team on track and focused. If things start going off the rails, the charter will bring the team back in focus. It is also necessary early in the sourcing strategy process to build a plan with timelines and milestones to measure the team’s productivity.

What are some important tasks?

  1. The first step in developing a strategic plan is to understand the historical situation and trends for the category. Ask the question “why has the organization sourced this category this way in the past?” If your organization can standardize the way “what we’ve done in the past” is reported, the more time the team has to explore future options and to focus on the strategy for the category.
  2. The team must evaluate the current situation, new opportunities and forecast the future trends to consider when sourcing this spend category. It is essential that the team take a deep dive into business needs and requirements, including things like receiving constraints at each facility, personalized service, inventory requirements, pallet markings and anything else that is currently being done by the incumbent supplier. Once the team has identified all of the business needs, it must look at the category and make the determination if the category should be managed tactically or strategically. Key tactical or strategic decision influencers are the number of suppliers in the industry with the capability and capacity to supply, the value-add contribution of the supplier and uniqueness of the specifications.
  3. Part of the planning process is to take a look at the sourcing history, price analysis and do a detailed analysis of the cost. Every buyer should have the capability to break out materials, labor, overhead and develop some idea of the supplier’s profit margin. Without this data, it is impossible to quantify the opportunity available in the project and determine the return on investment. This is a key checkpoint and milestone of the project: the ROI will determine if the project should go forward.
  4. After validating the ROI for the project, the team should evaluate the risk, global or local sourcing, technical opportunities, supply chain implications and supply market trends. The team now has the data to decide the way forward and determine the best strategy–should it be RFI/RFQ/RFP, auction, buyer’s offer, contract extension, logical negation with the incumbent, make or buy, or acquisition or joint venture? I have worked with teams that have developed and implemented all of these options.

The sky is the limit if a team can present a good strategy with a high ROI and build a convincing fact-based case. It requires discipline, process, strong leadership and the right people.

Do you have what it takes?

5 Key Considerations for Developing Procurement and Supply Chain Teams

Great-teams

Back to the Future: what does your team need in 2020?

I was speaking to an old friend about how the development of procurement teams has changed in the past 5 years. I found the conversation interesting and inspiring as he and I challenged the wisdom of traditional programs. No longer can companies be satisfied with traditional programs focusing on tactical and strategic functional skills. In recent years much has been accomplished in both the Procurement and Supply Chain profession; costs have been reduced, inventories optimized, logistics closely managed and there’s a renewed focus on supply chain alignment and integration. Lifecycles are shorter causing velocity and flexibility to be key drivers of supply chain and procurement success. So what type of skills development do our teams need now?

As we look to the next five years, we will need to design development programs that are enable companies to extract value, get innovation, improve speed to market and gain supplier to customer alignment across the entire supply chain. This will involve business integration, transparency and relationships that go far beyond what we have today. Once these new skills are embedded, synergy and interdependence will drive the supplier/customer interactions as we quickly respond to customer and market demands.

Since competency assessment models are being developed for the skill sets needed for today’s supply chain professionals, they will be inadequate as the supply chain continues to evolve unless future skills are included. Standard training programs where everyone goes through fixed, common training modules and development programs designed for functional competence will not accomplish what organizations need. It is essential that learning and development professionals and providers realign programs to move from a functional orientation to a business and relational skill-based approach.

It is true that procurement and supply chain teams still need technical and commercial skills. In fact, a few hours ago a Bloomberg news story got my attention that commodities are crashing like it’s 2008 again. To be competitive in the next five years, especially when faced with situations like commodity fluctuations wreaking havoc on your financial supply chain, these core skills must also be developed:

1) Influence

Organizations have changed from the command and control management model to a matrix organization structure. The interaction between business units, conflicting priorities, business drivers, budget holders and stakeholders has driven the need to develop our teams in influencing skills. The new opportunity to tailor processes, develop high-performing business teams and deliver increased levels of value depend on our ability to influence others.

2) Leadership Skills

The supply chain and procurement teams have a big role in the value contribution to their respective businesses. It is essential that we identify the right people in our organizations through succession planning, then provide leadership rotational programs, development programs and interesting projects to prepare them for their eventual role as company leaders. Companies need multi-generational leadership, combining experience and new digital thinking, for optimal results.

3) Relationship skills

It’s often difficult to understand that relationship skills are not innate. To ensure competitiveness, value extraction, alignment and trust across the supply chain, it would be wise to develop our teams in strategic relationship skills. The ability to be analytical, trustworthy, create options and operate with a principled approach is a learned skill. People operating in a tactical mode will no longer fit as the profession evolves. Since face to face communication is becoming antiquated in a fast paced environment where e-mail and text messaging becomes more the norm, written and verbal skills are more important than any other time in the history of the profession. Both internal and external company relationships will determine whether company goals are met or not.

4) Onboarding

While we are bringing in talent when we find it, it is essential to continually assimilate new employees with the company mission, vision, processes and culture. These development programs require orientation and integration of new employees so they can quickly integrate and use their talent, thus making contributions as soon as possible.

5) Learning

Developing supply chain and procurement professionals for the future is not business as usual. Much attention must be given to the soft skills of business when there are dramatic shifts in supply chain. Learning will continue to be an ongoing process as we advance with our technology, industry consolidation and innovation.

I am glad that my old friend asked me to provide one nugget of my learning and development philosophy. It made me think hard about moving to the future now. I am invigorated to provide the tools of the future now!

What skills are you developing?