While a well designed Sourcing / Procurement / Supply Management organization will have as many functions center-led, if not centralized, as possible, in a large multi-national, some groups will have to be regional to be effective and some purchases will have to be local. For example, fashion purchases will have to be driven regionally by someone with a pulse on the market and it does not make sense to ask the central asset management organization in (southern) India to manage snow removal operations in (northern) Canada (unless someone wants to see some really strange looks).
But how does your hybrid center-led Supply Management organization effectively manage these decentralized / local groups for best results? A great post on how when managing complexity, less is more over on the HBR blogs had a great suggestion — restrict activies at the group level to a core set of five that enable and enhance business performance. Specifically, focus on:
- Portfolio Management
which activities fall under Supply Management purview - Performance Management
what are the cost / quality / value goals for each unit and how will the center-led Supply Management organization help the units achieve the goals - Capital Allocation
what investments can be made in each unit (in terms of technology, process, and people) to deliver the greatest returns - Talent Management
are the best people working the right jobs - Synergy Capture
to identify new or large opportunities that should be pulled up into the center-led Supply Management organization
It’s all about the selection of the handful of critical leverage points that will have the biggest impact on success and [a] relentless focus on doing them better. The purchase was pushed out to a local group because it wasn’t of a high enough value to manage centrally or because the central organization did not have the (local) knowledge required to make the best decision, so it needs to focus on the leverage points that will help the local organization, not on the task itself.