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.

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 yesterday’s 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.

At the most basic level, process transformation is the process of:

1. Understanding where you are now.
2. Figuring out where you want to be.
3. Creating a plan to get there.
4. Successfully executing it.

So WHAT you need is a roadmap that takes you through each step, outlining the key interchanges, stops, and information stations along the way. And if it’s your first time driving a big rig through the route, possibly some advice on how to drive that big-rig effectively.

So let’s take this step by step.

Understanding Where You Are Now.

This is a little bit more involved than one may think. One needs to understand:

• where the processes are efficient and inefficient,
• where the pain-points are for the team members,
• where a different process could unlock hidden value, and
• where the processes are being circumvented at each and every opportunity.

One needs to understand efficiency and inefficiency because efficient processes should not be change without deep consideration and analysis (because attempts to fix what isn’t broken don’t often go well), inefficient processes cost the organization time, resources, and money. So how do you do this?

Benchmarking. While benchmarking is not the be-all and end-all, and SI has even written a paper on The Dangers of Benchmarks and Trend Analysis) (as too much emphasis on benchmarking often blinds an organization to the real opportunities that are hidden in the organization), it is the starting point for an organization that doesn’t even have a good grasp of where it is (or could be).

The organization will start by identifying standard KPIs for the processes it is evaluating and benchmarking internal performance. Then it will look to third parties that maintain industry benchmarks for that process to get a general feeling if it is worse than average, average, or better than average. Any process phase where it is noticeably worse than average is a process phase it should focus on.

Then it will identify the pain points for the team members. It will do this by, surprise, asking them! And it might find that the places they have the most issues are where the organization is average, or even a bit better than average. For example, maybe the primary pain point that the team complains about is Travel & Expense. It could be the case that the team members get their requests in, approved, and expenses submitted just as fast as the industry average for their peers, but if they find it painful and it aggravates them, it should be looked at. Maybe your peers are even more behind the eight-ball than you and your team knows of a solution that makes it so quick and easy that it could be orders of magnitude faster, freeing your team up to work on more value-generating activities.

Then it will review published case studies that relate to the processes under consideration and identify results that are leaps and bounds ahead of where the organization is act, prioritize them, and evaluate whether or not they could work for the organization. (Not all will!)

Then, and this is critical, it will identify where team members are trying to circumvent the processes at each and every opportunity. This is a sign of a broken process that definitely needs to be fixed, even if there is no obvious detriment to the team members circumventing the preferred process (because there always is, even if it’s not immediately apparent).

And, finally, it will incorporate all of this into a cohesive whole — and that is how it will understand, more or less, where it is now.

But this is just the beginning. In our next post, we’ll talk about how it goes about finding out where it needs to be.

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.

PwC, for example, offers you a comprehensive approach to IT-enabled business transformation that combines:

• an integrated design model,
• “Right-sourcing” the delivery model,
• Transforming the operating mode,
• Driving [the] organization for change,
• Managing technology choices, and
• Defining a value capture plan

in order to help your organization optimize

• business process fitness,
• program value realization,
• enterprise resource planning, and
• customer relation management.

and do this through a four step framework centered around

1. strategic alignment of cost structure and investments,
2. end-to-end process redesign to isolate complexity and defect sources,
3. a functional business architecture to align capabilities, organization, processes, and technology, and a
4. continuous improvement culture.

But is this what you need? Is this even close to what you need? Heck, can you even understand what they are saying? In fact, can you easily tell the difference between this and a four step framework that:

1. pursues performance based infrastructures while endeavoring to globally embrace interdependent data,
2. operationalizes virtual meta-services while dramatically recontextualising functional paradigms,
3. embraces paradigm-shift services while pursing business methods of team empowerment, and
4. implements market-driven methods in order to continue to competently coordinate low-risk high-yield technology platforms.

If you look closely, they both look for alignment (with the cost structure in the first case and the market in the second case); they both focus on improving the functional business architecture (called paradigm in the second case); they both look for continuous improvement (called team empowerment in the second case); and they both look for a drastic end-to-end transformation (called paradigm shifting services in the second case).

So what’s the difference? The first is the process description almost verbatim from PwC’s website. The second, 4 of 8 randomly generated mission statements from cmorse.org (which seems to have replaced the now-defunct Dilbert Mission Statement Generator. (Gone, but not forgotten!)

So is this what you need? Maybe, but first you need to understand WHAT you need.