And so the Journey Begins…

In my last blog, I began to introduce the concept of a Journey as an analogy to what a Procurement or Supply Chain Transformation might look like. And in it I posit that the first step in the journey is to recognize that you need to take one in the first place. Unfortunately for most executives, that realization comes only after their procurement and supply chains issues have reached such a level of pain and suffering that it can no longer be ignored. My hope is that this series will help managers try and change that.

So now that you’ve accepted you need to embark on a transformational journey, what is next?

You prepare. And that means pulling together the things you would typically expect to take with you on a journey:

1. A compass to tell you your true north
2. A roadmap so you can see where to go, what to avoid and alternate routes
3. The gear you’re going to bring along
4. A buddy to help carry the load, offer safety, security, and be there when things inevitably don’t go as planned

The Compass – The first thing you want to do is understand what direction you are going in. This means knowing what your end goal is, where it is you want to be when it’s all over. Knowing your true north. And how do you know what your true north is? Look no further than your corporate and business goals and objectives. A well-aligned Procurement Strategy directly advances the business goals and objectives of the corporation.

For example, if you want to be an Outcomes-based Medical Devices company or Healthcare Provider, your procurement strategy needs to reflect this. Perhaps you take these same outcomes-based metrics and break them down in a way that you can apply them to the products and services you buy. You can now add performance measurements to your requirements and create service levels, that if achieved by your suppliers, will directly contribute to your global metric.

Conversely, you may have identified a market for low price, no-nonsense “back-to-basics” solutions. In this case, you’re strategy is to strip the product of all non-essentials, allow high volumes to drive manufacturing efficiencies, negotiate volume discounts, and eliminate as many non-value added touches that you can, to name a few strategies. This can all be done while keeping with the regulated quality standards the market demands.

Designing a procurement or supply chain strategy that doesn’t directly contribute to the business strategy will not succeed.

The Map – Now that your compass is pointing true north, you need a map to tell you what path to take, where to pivot, and what you’ll need at different legs of the journey. A well-defined roadmap tells you the initiatives you’ll need to undergo, the sequence and expected duration of each, and their respective outputs. It identifies the critical path and the significant milestones along the way. The map is generally accompanied by a business case that clearly describes the associated costs, benefit drivers and the total net benefit. From a procurement or supply chain perspective, your roadmap may include the required organizational changes, a wave plan that sequences the categories to be sourced, and the operational issues that need to be addressed.

During the assessment phase, be on the lookout for quick hit opportunities that will drive near-term benefits. These are essentially the “low-hanging fruit” that can self-finance your transformation, but most importantly, gives leadership the early wins that well help validate the decision to embark upon the transformation journey in the first place. This is extraordinarily powerful for the success of the program.

The Gear – Who doesn’t love gear? All of those cool gadgets that provide instantaneous street cred. For the most part, small to medium-sized business may have what they need to get started. However, high performance organizations have made investments in tools that will help them excel on their journey. One of those might be a spend analytics tool that will help you aggregate and categorize your spend as well as help you build your wave plan. Artificial intelligence and machine learning are making these very powerful tools. Another might be a sourcing tool to help you manage solicitations. There are several products available in the market nowadays that are very good. Other tools that you might find helpful are dashboards and capacity planning tools.

Small and medium sized businesses can probably get away with some homegrown tools, or clunky modules from their existing ERP systems. The tools required to drive your transformation should be considered during the development of the road map. Weigh the benefit of a solution that might streamline and accelerate savings with its associated cost, and do this with the future in mind. Sophisticated procurement organizations rely heavily on these tools and you will too.

Your Companions – Difficult journeys are best when accompanied by a group of people that are as excited as you to be there and will help you overcome the challenges you will inevitably face. And in this sense, this is the leadership team and the stakeholders that will lead the organization through the transformation agenda. Procurement and Supply Chain transformations are strategic endeavors that require a cross-functional team of highly capable visionaries who embrace change. Adrenaline junkies are great, metaphorically speaking (but not the ones who want to jump off a cliff with a flying squirrel suit. Your organization is a going concern after all. I digress). The selection of your team and the support by your leadership are probably the two most significant factors that will determine whether the journey is successful or not. Choose wisely.

Another team member to consider is an outside advisor who can provide a specific expertise or otherwise complement the team. Consultants can help you think through your challenges and design much of what you need for your journey. They’ve seen the pitfalls before and can lower the risk profile, increase the benefits expectations, and streamline the process so that you get through it quicker. Outside advisories generally pay for themselves ten-fold. You wouldn’t climb Mount Everest without a Sherpa, you probably shouldn’t tear down existing organizational structures to rebuild anew without some outside help. A transformation is not the same as going to the local state park and hiking 3-miles around a loop. That you can do well enough alone.

One of the first things your team will do is build it’s Program Management Office. This is the brain stem of transformations, it’s where your cross-functional team comes together and where the flow of work is coordinated. Here the steering committee and project team work out their challenges and communicate key decisions down the chain and get input up the chain. It’s where the compass, roadmap and gear are brought together. This is where the hard work of the journey begins.

A journey can be simultaneously intimidating and exhilarating. There is sheer awe-inspiring joy and at the same time perilous obstacles to be avoided. It will require you to dig deep, to test your mettle, and will stretch you individually and as a team. But in the end, when you’ve reached the pinnacle and found yourself in a much better place, you will be more than ready for whatever the future will bring.

“Do the difficult things while they are easy, and do the great things while they are small. A journey of a thousand miles begins with one step.” Lao Tzu