Daily Archives: January 16, 2017

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

Two weeks ago, we talked about how to 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). But technological advancement is not enough if your processes, to be frank, suck. That’s why, as the Big C’s say, you will need to achieve some “process transformation” if you ever want to become best in class (and why each of these claim to have the best advice [for a price] to help you along your journey).

However, as we outlined in detail in our first post last week, it’s very difficult 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, although SI could have picked any of them) and four of the first eight random mission statements generated by the mission statement generator at cmorse.org (which is almost as good as the now defunct Dilbert mission statement generator) is pretty hard to discern!

Then, as 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 the plan. Then we began our series in earnest by outlining what is involved in understanding where you are now (which is more involved than you might think), which often doesn’t require a team of 10K a day consultants, and continued on by specifying how you go about figuring out where you want to be (which is often more difficult than one may think).

The next step in our simple process is creating a plan to get there. This can be very, very complicated, or very straightforward. We will focus on the straightforward way, and this can be summarized in two words. Gap Analysis.

A gap analysis looks at where you are now, where you want to be, figures out the gap, and comes up with a sequence of steps to get there.

For example, we will assume that the gap analysis determines that, right now, only 20% of invoices are 100% processed and the goal is a best in class rate of 90% of invoices being best in class processed within 12 months. It also determines that the primary method of achieving this success has been identified as technological transformation as well as process transformation, with the goal of receiving 95% of invoices electronically within 12 months and having an automated review and verification rate of 95% within that same timeframe.

The gap analysis would determine, based upon a review of case studies, white papers, current technology, that the organization has to:

  • implement a new platform that supports XML, EDI, and PO-flip
  • enable the suppliers that supply 80% of the products and services within 9 months
  • implement the rules to match an invoice to PO
  • implement the rules that verify units and amounts match (within tolerance) and that key information (SKUs, purchase order ids, sender address info, delivery location info, etc.)
  • … and the rules that bounce back an unmatched invoice to a supplier with a description of the problems and resubmission procedure; this will take care of 90% of issues without manual intervention

Then it will review these steps and realize that it needs to:

  • insure the vendor provides adequate XML and EDI descriptions and (API) submission rules for suppliers through review and testing
  • identify the top suppliers and break them into waves (a handful of key, a few dozen heavyweight, the rest) and onboard them in those waves
  • define rules to match an invoice to a PO if there is no PO id, based on time range, supplied products, locations, etc. and then test the rules
  • define all required fields and tolerances
  • define the responses when there is an issue

And that testing, supplier on-boarding, and rules definition and testing will take time. That time will be estimated with an appropriately sized team, and a plan will be made.

And then that plan will need to be put into action. But that is the subject of the next part of our series.