In his sixth and (and sadly final blog of the series), Peter Smith recaps what organisations can do to successfully implement and manage procurement change within their organisations. The time is now for procurement transformation – read to learn why.
This is the final article of six I’ve written this year about managing procurement change. When we planned the series, the intention was for this swansong to summarise the key points and make some overarching recommendations based on the previous articles. However, the unprecedented and unexpected events of this year take me in a somewhat different direction in terms of signing off.
Many years ago, I was temporarily put in charge of what was then a £10 million turnover food manufacturing and marketing business with about 150 staff. It had a pretty dysfunctional senior team, who opposed most of the changes I thought we needed to make in the business. The two board-level executives who handled our sales to supermarkets and our sales to non-retail customers (such as other food manufacturing firms) respectively were particularly hostile to each other, as they often competed for resources or even stock when that was in short supply.
Then one night, our factory and onsite warehouse, containing raw materials and some finished product, burnt literally to the ground. It was gone within two hours, and the smell was indescribable, but that’s a different story…
The next three months were the most stressful yet also the most interesting of my entire working life. But amongst the many challenges in terms of resurrecting the business, the most positive aspect was that (almost) everybody in the firm worked together, including the two sales heads, who worked together closely, making decisions in minutes on topics such as prioritising customers – issues that previously would have caused weeks of battling. As our very survival was at risk, minds were focused and petty arguments forgotten.
Covid has been horrible in so many ways, but it has forced many organisations to look at new business models or accelerate change that perhaps was vaguely planned or was being implemented at a leisurely pace. And I am sure that some of the opposition to change that might have been evident in normal times has disappeared or been more easily overcome because of the extraordinary situation, as I saw in my fire-ravaged business.
As we come through the pandemic, some organisations may go back to the old way of doing things, but many of the changes will stick because they are fundamentally the right things to do. For many firms, there will be continuing severe economic and financial challenges; for some, huge opportunities lie ahead. So I would suggest that the coming months will be an appropriate time to push for procurement change in your organisation if you haven’t already done so. You may well find people more open to change and willing to work collaboratively than would normally be the case, as I found with my recalcitrant sales directors.
So on that hopeful note, let’s revert to the original plan, and close the series with six key recommendations; there is more on all of these in the previous articles if you missed them the first time around. Whilst words in themselves cannot guarantee success, if you follow this advice, you will certainly improve your chances of driving change successfully.
Remember Machiavelli’s words around why change is difficult – basically, those who feel they will lose from it resist vigorously. So the “people” side of change is usually the biggest challenge, rather than the strategy, process, or technology. Success starts with ensuring you have the right people working on the program and that the senior procurement team is firmly aligned with and supportive of it. The “enemy within” can easily kill a change program.
Other key stakeholders inside or even outside the organisation (such as suppliers) must be identified and managed carefully, and if you can get support from the very top, your chances of success rise dramatically. So make sure you communicate in terms of benefits arising from the program that directly matter and are relevant to each stakeholder group, rather than just explaining through the procurement lens.
Procurement change needs to be planned carefully and have a clear sense of strategy and vision. But combining that with the delivery of some relatively quick benefits and gains (as long as they are consistent with the overall direction) can help show senior management that you’re working in an agile fashion and on track to achieve the longer-term goals. Waiting two years or more for “big bang” benefits is rarely acceptable to boards in today’s fast-moving world.
In many procurement change programs, it can be difficult to know what should come first – process change or technology change. But always make sure the two are aligned; the worst of all worlds is trying to tailor the technology to meet bespoke yet ineffective processes!
Governance can seem dull but it is important. The right program board or steering group can not only provide valuable input through the program but can help smooth the way in terms of internal buy-in. You might even create allies out of potential enemies by bringing them inside the “governance tent”.
Tracking and reporting the benefits delivered by the program is also key. Do make sure you have a robust and agreed baseline before you start; you can’t turn the clock back in 2022 when you suddenly realise that you can’t show the “improvement” that has been delivered, because you don’t have the data from 2020 …
Managing change is now a vital skill for almost every manager, I’d argue. Don’t be afraid of it, seize the moment, and if you manage that change sensibly, you can move procurement forwards, develop your own skills and credibility, and deliver real benefits, whatever your organisation. Good luck!
Feel free to revisit each one and take note of their wealth of useful information and insights. Learn about Basware e-Procurement.