Daily Archives: January 13, 2017

Process Transformation: How Do You Get it Right? Part III

We spent last week talking about how we drive technological advances, because it’s one of the critical three T’s of Supply Management success, with the other two being talent and transition to better processes. The big C’s call this “process transformation” and each of these (including, but not limited to PwC, Accenture, Hackett [Archstone], etc.) claims to have the best advice [for a price] to help you along your best in class journey.

However, as we outlined in our first post, it’s hard to tell if any of the Big C’s have WHAT you need when, for example, the difference between the four-step framework promoted by one of these C’s (PwC) and four of the first eight random mission statements generated by the mission statement generator at cmorse.org is pretty hard to discern.

Then, as we outlined in our second post, we made it clear that what you really need is a simple process that starts with understanding where you are now, moves on to figuring out where you want to be, then creates a plan to get there and, finally, executes it. We started by outlining what is involved in understanding where you are now, which is more involved than you might think, but not so involved that you can’t manage it without a team of 10K a day consultants.

The next step is to figure out where you want to be. This will involve:

  • highlighting the process (steps) that are the most critical for improvement
  • outlining efficiency and effectiveness goals (to get your procurement value engine running smooth)
  • determining why the options you select are better than others and making the business case

Where You Want To Be

In order to determine the process (steps) that are the most critical for improvement, you will need to balance the processes where there are the most opportunities for improvement (and increased efficiency and/or effectiveness), with where the is the most vocal outcry for improvement, and where there is the most process avoidance. Sometimes you will have to sacrifice what looks like a great ROI on paper for a small improvement that will actually enable a great ROI down the road. An improvement will only deliver an ROI IF it is used by the people who need to use it. If those people are avoiding, or will continue to avoid, the platform because they find it unusable, the process improvements will be for not.

In order to outline efficiency and effectiveness goals (to get your procurement value engine running smooth), you need to look at where you are now, where the best in class are, and what is a reasonable goal for your organization. A journey to best in class begins with one step, and, more specifically, one percentage increase on the ROI scale at a time. For example, if your average invoice processing time is 45 days, and your best-in-class peers have an average processing time of 15 days, expecting to go from 45 to 15 in 90 days, even with a best-in-class cloud solution, might not be possible. The goal should first be a reduction to 30 days, especially since it will take a long time to get suppliers on-boarded, AP staff trained, and approvers comfortable with the new process. Then a stage 2 goal can be set once the organization determines how long it took to get down to 30 days and what the eventual end goal is likely to be.

Finally, you need a good, believable business case, because everyone is going to want an explanation as to why their request for process or platform improvement isn’t first on the list. While there should be an ROI, the whole case should not revolve around the ROI because support for organizational initiatives, solutions for issues that cause people to avoid the process, and aspects that can increase adoption are just as important.

Then, once you have figured out where you want to be, you can move on to the next step of creating a plan to get there. That will be the subject of our next post.