Daily Archives: July 17, 2014

Once You Get the Three T’s, What’s the Next Step To Asia Pacific Dominance?

In our last post on Why There Are No World Class Procurement Organizations in Asia Pacific, we noted that the primary reason that no business head or CPO in Asia-Pacific reported their Procurement capabilities as great is the classic Triple-T problem — a lack of talent, technology, and transition management. When we reviewed the seven things that Bain indicated procurement teams lack, we noted that all were fundamentally an instantiation of a talent, technology, or transition management problem.

However, getting the three T’s in place is just the first step. The next step is to apply them properly. Where do you start? One place to start is with the six enablers outlined in the article. While the doctor thinks it is debatable that these enablers will help a company establish 4th generation Procurement, like the article suggests, it will definitely up an organization’s game and put them on par with their counterparts in the western world.

So what are these enablers?

1. Better Organization

This requires the organization to acquire a clear procurement mandate, a streamlined organization that appropriately delineates global vs. regional vs. local responsibilities, and clear roles and decision rights across Procurement. In addition, the organization needs to elevate critical decisions to senior management (to ensure they not only have senior management buy-in but support), implement a feedback loop from internal customers to end consumers, and establish effective reporting channels.

2. Better Processes

This requires better category management, vendor management, and information management. Sustainable savings come from holistic category management, not point commodity sourcing. Suppliers only improve when properly managed. And information quality is key to Sourcing, Procurement, and all related aspects of Supply Management.

3. Better Tools & Systems

Leaders have integrated and transparent data for both direct and indirect spending. Good decisions require good data. Good data can only be obtained from good tools.

4. Better P&L Effectiveness

Leading companies have pull-based demand management with enforced compliance and formalized budgeting for all categories. They employ sourcing platforms that allow a company to see the direct effect of a sourcing decision on the bottom line.

5. Better Talent Management

Just because you have talent today, this does not mean you have talent tomorrow. If you don’t continue to educate and advance your talent, they will leave you for a competitor who will. Plus, as your organization grows, you will need to add more talent. Without a proper talent management strategy, your talent equation can only be solved for a single point in time — if you are a lucky one.

It’s a hard climb, but a feasible one. And if you review the SI archives, you will find many posts about how to improve in each of these areas. Happy Hunting!