Lessons Learned from Best-in-Class, Part V

The following are some more of the lessons learned shared by some of the participants at this year’s Hackett Best Practices conference in no particular order.

21. Make people a priority
Sourcing Innovation has already established that talent management is a top priority, and that must start with making people a priority. They must be supported, empowered, recognized, and rewarded appropriately as they are the most vital part of the Procurement organization. After all, results require more than processes and technologies, they require intelligent and creative people driving them.

22. Move to One System
Larry Ellison has always known the power of One. That’s why Oracle was one of the first companies to have the enterprise system vision as it is impossible to get more leveraged than one system across your entire enterprise.

If the organization has one system, then it has one transaction store. If it has one transaction store, then even the most unsophisticated transaction processor can easily do highly accurate and levaregeable spend analysis and spend forecasting at any time.

If the organization has one system, then it has one maintenance contract and one head to roll if something goes wrong. No worries about the endless finger pointing and blame games between two (or more vendors) refusing to admit fault when they should be getting it fixed.

In other words, the fewer systems the organization has, the more the organization can leverage its IT model, which is often a key to success.

23. Never forget the value add
Just like a consumer will always prefer the product from the manufacturer with a great warranty and a great service record if everything else is equal, the internal business partner will always prefer the Procurement organization that goes the extra mile to deliver more value. To insure that the Procurement organization, and not a GPO, outsourced / shared services center, or consulting / vendor organization is seen as the go-to organization when needs and challenges arise, the organization constantly has to add value, otherwise the Marketing department might be swayed the next time a specialist consultancy calls up and explains how they just saved the competition 30% in their advertising budget.

24. No matter the value delivered, it is never enough
It’s a great success that Procurement managed to get the customer free maintenance for two years in their IT buy, or a few weeks of free lean training from the consulting organization that is designing the new plant, or managed logistics for their retail distribution channel, but it’s not enough. The internal customers of the Procurement organization will always expect more, and to continue to be seen as the go-to organization, Procurement will have to find new ways to constantly delier more value every time it re-sources a category or undertakes a major new project for the organization.

25. No matter how small the fee is, it is never small enough
This is especially true if the Procurement organization is based in a (global) shared services organization and is forced to charge-back the organizational units for its services. Even if it saves the Marketing organization 10 Million dollars, they’ll still bicker over the 500 Thousand support bill (that will barely cover the personnel and systems cost) despite the 20:1 ROI. Procurement will have to find ways to constantly lower costs internally or add value externally and raise the ROI, be it hard or soft, over time to maintain credibility and gain influence.

Our next post will continue our overview of the lessons learned that were shared by some of the participants at this year’s Hackett Best Practices conference.