I would like first to congrat Michael Lamoureux for his “Top Three Series” initiative, “asking professionals he knows to name their top 3 critical issues in the sourcing / procurement / supply chain space and discuss why the issue is important, what a company can do about it, and what could happen if it’s not addressed (Michael’s blog Source: here)”, not because of any complexity but simply because I feel it is great being able to mobilize resources in one direction and make them sharing ideas and perspectives. Aside from his blog, don’t miss his resource center: Analysts, Blogs, Companies, Events , Journals, Societies, Publications, White Papers are broadly listed there and constitute a wonderful source of knowledge.
From my perspective, as a former supply chain consultant and former CEO of a e-Marketplace for European Utilities, tools or solutions by themselves shall never be predominant versus the approach and methodology used to improve performance and efficiency. As a consequence and naturally, I consider as top critical:
- Enabling a live spend-analysis shared by all stakeholders
- Sourcing best of class suppliers
- Manage change and cultures
#1 – Enabling a live spend-analysis shared by all stakeholders
It is obviously a must to my mind, without a good and shared understanding of the current spend situation, how can anyone argue that his proposals and ideas to go forward are the best ones for his company? . Simply ridiculous. Second, share – what I mean here is to explain, to listen to counter arguments, to adjust conclusions and gather maximum positive opinions from the key people – your finding with other stakeholders as if you don’t it, you will not be able to mobilize as much as you need the key-actors towards the direction you would aim at. Worse, you might face in return an unbeatable resistance which could turn your best ideas into failure. Third and because purchasing is a non-ending looping process, your spend analysis shall be updatable at any moment – what I called live-, so that any specific category of product can be assessed just before the related contract has to be renegotiated (all categories are not negotiated at the same moment…) . This third and last point implies investing in a spend analysis study or tool and requires strong support from your top management.
#2 – Sourcing best of class suppliers
It’s already excellent to source for different suppliers so to create more competitive pressure and reach a better deal. Issue is to be able to invite the best. How do you do that? how can you prove you did so? A first option is to get new-entrants in. In my past experience, I have noticed that inviting new-entrants to participate – i.e. not the same-ones as 1 or 3 years ago, and especially new-entrants unknown from your regular bidders – created fantastic dynamics in the negotiation process, as soon as the offers you are receiving are comparable. Difficulty is to accept to invest time and money in market analysis, in searching and pre-qualifying new candidates that are not as well known as the one you already know, and in managing the increased risks related to using a new and not well known supplier. Being able to source for best of class suppliers is also dependant of the way you draft contracts: You should always think about it before lying down your signature and anticipate what getting out of a contract means from a time, effort and money perspective. How many times did I hear someone saying “yes, this supplier is better on paper, but it is impossible to shift to another one, because of the costs related to shifting itself”.
Last about that, I believe there is a still a wonderful B2B intermediary role for a service provider to take by putting all up-to-date critical supplier data at buyer disposal so to facilitate and speed-up the pre-qualification process. It would be a kind of “business network” similar to today’s successful and so-called “social network” where companies would accept to share who their current top clients are.
#3 – Manage change and cultures
I partially touched that topic in my #1. Change management is crucial for success. Changing any process means changing people’s behaviour and habits before all. To change people successfully, YOU have to make THEM lead their change (and not you), controlling their journey in the ADKAR* model. That’s the challenge.
So how do you come there? by mobilizing them, by involving and guiding them in each of the ADKAR phases, by understanding their resistance, by managing their fears, by incentivizing their creativity and responsibility, by pushing them to lead action and report to the top management, by setting up team building sessions, by helping them to find ways out and to feel responsible and owner of what’s happening.
The change is even harder to manage when you work in an international company, as you have to take into account additional complexities. You’ll have to manage different language, meanings, culture and leadership style that you can’t ignore or miss if you want or need to be efficient. There is an excellent 500-page book about that, called “When Cultures Collide: Leading Across Cultures” and written by Richard D. Lewis that I warmly recommend to all of you, even to those of you not working in an international environment. It is a real eye opener about diversity and about the fact that there is not only one truth.
Managing change is easier to talk about than to do, I admit. It’s like a cooking recipe with new and living ingredients. It’s never the same. You will always have to adapt yourself to the environment you are diving to.
Out of my top 3 issues, this one is definitely the most subtle, challenging and rewarding to manage.
The ADKAR model for individual change management was developed by Prosci with input from more than 1000 organizations from 59 countries. This model describes five required building blocks for change to be realized successfully on an individual level. The building blocks of the ADKAR Model include:
- Awareness – of why the change is needed
- Desire – to support and participate in the change
- Knowledge – of how to change
- Ability – to implement new skills and behaviors
- Reinforcement – to sustain the change