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  • Gordon Donovan

The times, they are a changing…….

Executive Summary

Procurement, like other functions, has a lot of research reports that get produced about how it evolves and the value that it can, or could deliver. When considering how to operationalise and deliver against the outputs of these reports, Procurement must ensure that any deployment has Agility, the ability to manage change, have built in reflection points and has alignment across all aspects. Failure to include all four of these key points may result in outcomes that do not deliver the intended value that the reports identify could be delivered.


Introduction

As Procurement continues its evolution and increases its strategic importance and relevance to organisations, research and analysis reports help to shape what Procurement needs to look for in organising itself and aligning skills and capabilities.


In late 2016, Phil Ideason and myself collaborated to review some of these research reports from 2002 - 2015 to see how much had changed in the predictions.


The purpose of this post is to review a couple of the recent reports and see how procurement could operationalise some of the takeaways and what it means to Asia Pacific procurement professionals.

We will review and seek to identify some of the underpinning factors associated with the reports, and through working with around 50 procurement and finance practitioners over 2 separate sessions in May & June 2019, seek to identify what these actually mean for procurement professionals and what it could mean from an improvement perspective.

Literature review

According to The Hackett Group [1] Procurement critical focus areas need to be

· Improving analytics which includes

  1. Standardising master data definitions, frameworks & KPI’s

  2. Upgrade data management architecture to support accessibility

  3. Invest in critical thinking techniques, to produce data modelling and predictive analysis

  4. Pilot tools that can identify performance patterns

· Aligning Skills with business needs which includes

  1. Invest in hiring, training and retention of talent

  2. Look at skills matrix, including business acumen, relationship management, and strategic thinking

  3. Leverage automation to reduce time spent on low value tasks and spend time on supplier innovation, and relationship management

· Leverage Supplier Relationship Management, which includes

  1. Assess existing activities to ID areas for improvement

  2. Leverage digital tools to streamline process

  3. Invest in supplier training and information sharing

· Improve procurement functional agility

  1. Apply design thinking to processes to develop customised services to its customers

  2. Leverage new technologies to reduce response time

  3. Modernize core systems that can assist in delivering timely insights

· Improve Customer Centricity

  1. Leverage customer journey mapping to understand impact when designing strategy

  2. Cross train procurement talent in the business to develop deeper understanding of needs

  3. Create omni channel experience for all interactions

According to a recent CPO Survey[2], the top areas for procurement to concentrate on included driving the digital transformation of procurement including its outputs and team:

Some key takeaways included:

· Over 80% of respondents stated that this will affect procurement in 2019 and that it was central to drive improvement.

· Goals for this include automation, improving data, cost reduction, compliance improvements.

· Adoption of mature technologies is moderate but emergent technologies is low.

· Data insights, talent shortfall and budgets are the largest roadblocks for procurement.


Summary

In reviewing the articles and studies above, it is possible to summarise all of these points into 4 key areas. Data, Technology, People, & Strategy.

Research Review

Over the course of two separate events, we workshopped with over 50 finance and procurement professionals and asked them in the context of the above reports, what they believed to be the important factors for the 4 areas indicated. We added in a catch all, of “other” to capture any areas that didn’t fall into these topics. We have built word clouds to summarise the outputs.



Reviewing these outputs, it is possible to bring some common themes from all these areas.

· Change

· Reflection

· Agility

· Alignment


Change

The art of managing change, and indeed being fatigued by the amount of change was identified by the team as being something that would cut across all of the topics. A former manager of mine once said, “…. in procurement we are basically change agents.” Every organization needs to bring about changes in its management and policies, but besides the improvement of systems, there must be a change in the people as well. If not, then the thousands of dollars invested will go to waste. Therefore, every organization needs to support the employees in the process of making transitions or changes. These individual transformations can be traumatic and may involve a lot of power loss and prestige issues. None more so that in the evolution of skills to meet the changing needs of stakeholders, customers and the wider business


Two of the most used change models are;


Kubler - Ross

The Kubler-Ross Change Curve is a model consisting of the various levels or stages of emotions which are experienced by a person who is soon going to experience change. The 5 stages included in this model are denial, anger, bargaining, depression and acceptance. This model was introduced by and is named after Elisabeth Kubler-Ross in a book called ‘Death and Dying’ which came out in the year 1969.


The ADKAR Model

This Model was created for individual change management by Prosci. This model demonstrates the 5 ingredients needed for change to be possible and successfully implemented. These 5 ingredients are given as follows:

• Awareness

• Desire

• Knowledge

• Ability

• Reinforcement

The common point about change is dealing with people as individuals and recognizing that everyone reacts to change differently and if we don’t acknowledge the issue, people won’t really change and will find more passive ways to resist, when the ideal is to accept and even drive the change though.


Reflection

The need for strategies, people skills and change implementation to have built in reflection points to ensure alignment came through strongly across all topics and both groups. Reflection is scalable, it can be targeted to be quite small, such as a single piece of data or large in terms of a 5-year technology roadmap.

Reflection, can be defined as examination of actions, gaining feedback and seeking to improve the outcome.[3]

During the reflection process, we consider the original ideas and identify ways to improve or do differently the same ideas that were identified. The need for these reflection points in any change plan or strategy indicates that having these points could allow for greater alignment with the organisation depending on how these are designed and would increase the ability to change the approach.

Agility

A definition of Agile from the Collins Dictionary is to move quickly and smoothly. When applied to strategy Forbes states that Agile enables organizations to master continuous change. It permits firms to flourish in a world that is increasingly volatile, uncertain, complex and ambiguous.[4]

In a dynamic marketplace, organisations have less and less time for a more traditional way of creating and implementing strategy. How often have you crafted a meticulous three-year strategic plan, only to have it become obsolete after a few months, or even weeks?

Strategy is becoming more fluid, two concepts for Agile strategy are becoming popular. Vision and Improvisation. Vision incorporates the long-term, if not permanent, purpose and principles of an organization. Improvisation suggests a fundamental openness and flexibility at the tactical level — the willingness to explore, experiment, and iterate. Having these included in approaches to change, and driving the procurement transformation will allow the strategy to move with the needs and wants of the organisation and market.


Alignment

It starts with why[5] for me is one of those books, or Ted Talk that changed the way I looked at things. To summarise Sinek states that success is dependent on people buying into the purpose, the why, of why something is done, rather than the how and what. I translate this for procurement as the vision of why we are there. The How (Strategy Principles and operating models) and What (Objectives and measures) come later and flow from this vision.

Having the alignment with Procurements “Why” which in itself must be aligned with organisations Why, I think must be the starting point of an transformation agenda is going to allow buy in from both senior leadership as well as the wider team. There was a recent podcast from HBR[6] that discussed that companies that are not simply profit-driven are more likely to succeed and that the same goes for people. He says individuals who align their daily job with their life’s work will be happier and more productive. This is their Why.

Ensuring we have alignment across all elements of the change and strategy with Procurement, and therefore organisational why is paramount for ensuring success


Summary

I find it interesting to note that the 4 takeaways from application are all interrelated. From the need to be aligned to the organisation, to have reflected checkpoints to allow for change, and therefore having the ability to be agile are all interlinked with each other.

What’s clear is the need to properly plan the change process, with in built reflection points to ensure that all people are being brought on the journey, both in and outside of procurement. The need for that change process to be agile and have the ability to itself be changed is vital and should eb inbuilt into the overall process.

Finally the need to be aligned, to have defined the why these transformations, improvements, evolutions are happening is critical. Without this purpose being defined, we are likely becoming copycats of others strategy and this will not deliver the competitive advantage that procurement can deliver.

As Bob[7] said

Come gather 'round, people

Wherever you roam

And admit that the waters

Around you have grown

And accept it that soon

You'll be drenched to the bone

If your time to you is worth savin'

And you better start swimmin'

Or you'll sink like a stone

For the times they are a-changin


[1] 2019 CPO Agenda: Building next generation capabilities – The Hackett Group


[2] University of Mannheim, Procurement, Finance and Supply Chain Survey 2019


[3] Kolb D (1984) Experiential Learning: Experience as The Source Of Learning And Development


[4] What is Agile – Forbes Aug 13 2016


[5] It starts with Why – Simon Sinek 2009


[6] Why People — and Companies — Need Purpose April 9, 2019 HBR


[7] Bob Dylan. The times they are changing - 1963

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