Category Archives: Process Transformation

Get With the Program!


Sourcing only identifies value. But value is not realized until it is captured. Capturing value requires each purchase to go through the system and be realized as a perfect order — the right product at the right place at the right time for the right person at the right price using the right delivery method, and so on. In order to make this happen, an organization has to do more than source — it also has to execute, track, report, and correct. Otherwise, it will fail to realize 30% to 40% of negotiated value (which is a statistic that has been well known for almost a decade).

However, the only way an organization can properly source, execute, track, report, and correct procurement operations is through proper program management, which is much more than just executing an event, negotiating a contract, and filing it away in the contract management system. It’s taking that e-paper and making an e-process out of it, preferably in an integrated Source-to-Pay platform that can insure each step of the program is followed.

This requires a program-management based platform, something which the average Procurement organization does not have as most first, and even second, generation sourcing platforms did not have any real program management built in.

And when one thinks about what is involved when one tries to consolidate the messy and muddled functionalities scattered across the ERP, analytics, invoice processing, contract management, supplier management, and other supply management platforms across the organization, supply program management can be a difficult and complicated task. The solution of which is an effective program management strategy, backed up by an appropriate platform-based solution.

To find out how to get started, download the doctor‘s latest white paper on The Importance of Program Management For Savings and Value Realization”, sponsored by SynerTrade. The read will be worth your time.

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

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 blunt, outright suck harder than a Hoover. 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 Big C’s 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 we do seriously mean any one 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, 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, continued on by specifying how you go about figuring out where you want to be (which is often more difficult than one may think), discussed how you how you put together the plan, and then, finally, in our last post focussed on execution — which is always harder than you think.

So where does this leave us? Frankly, with a focus on Adoption, Adoption, Adoption, Adoption. Just like Ballmer used to go hysterical for developers (even though anyone familiar with Brooks’ work on software engineering and The Mythical Man-Month knows that sometimes less is more, especially when you have top talent), you need to get hystical about adoption. If the software is only used by 25% of the people, and even these people aren’t using it all the time, it’s not worth whatever deal you got on it.

And adoption needs to start day one. The users who need to use it everyday need to be involved in the plan from inception through execution. From day one, the cross-functional team needs to include a representative of every user group who will make sure key processes are supported, usability is high, and concerns are met — and if necessary, ensure you sacrifice the few “power features” that only a few will use in favour of the “adoption features” that will ensure a mass roll-out. (Remember, for highly specialized needs, there’s always a point-based best-of-breed solution out there you can get for the power users. And sometimes the ROI from getting two solutions [even at twice the cost] outweighs the ROI from a single solution. Remember, ROI is only X/4 with a 25% adoption rate. With 100% adoption, it’s X, so even if you have to pay 2X for 2 solutions … you still get twice the return.)

So focus on adoption during your process transformation efforts and you will truly achieve process transformation and the results you desire. Otherwise …

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

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 blunt, outright 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 Big C’s 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 we mean any one 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, 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, continued on by specifying how you go about figuring out where you want to be (which is often more difficult than one may think), and, in our last post, dove into how you put together the plan.

But a plan is just a plan is just a plan until it is executed.

And execution isn’t just throwing the plan over the wall and saying “Go”.

In order for plan to be successfully executed their has to be focus, alignment, and drive – not just in the plan, but in the talent. Not only should the plan be focussed on achieving the goals of closing the gaps but so should the talent. Not only should the goals of the plan be aligned with the overall goals and objectives and strategy of the business, but so should the talent. And, most importantly, the talent should be driven to achieve the focus and alignment in all that they do.

But this, as any change management manager will tell you, is much easier said than done. You will meet resistance every step of the way. It will be a slow slog and you will have to get your champions to convince the talent leaders to get the talent in line. You will have to watch for process and platform bypass. Etc. Etc. Etc.

Why? Because the plan, and more importantly the people executing the plan, are always focussing on the process and platform first, and not the people. People who are continually overworked, underpaid, continually pressured, and micromanaged by at least one pointy-haired boss (to the point that all you need to do to get them to quit is promise more boss time).

The key to execution is the talent, and the key to success is fostering a drive in the talent to implement the plan and achieve that success. This means that you have to go back to the WHAT, listen to WHAT they said they needed, and start by giving them all of the capabilities in the process or platform that they wanted FIRST. Now, sometimes you will have to implement technology X before you can implement feature Y, and that’s okay, but the features and functions desired by the team members who will be using the platform every day have to come before the fancy reporting or oversight functions the CXOs, who might use it once a week or once a month, want. Focus in on anything that will make someone’s life easier, and start there. That’s how you get interest, drive, and adoption — which is the ultimate key to process and platform success. (There’s a reason that even among organizations that utilization is a mere 25% even among organizations that have adopted modern Supply Management platforms, and it is partly because they focussed on feature / function / executive wants / price and not every day user requirements in selection, and went about implementing the feature / function / executive wants first.)

In other words, successful execution is all about focussing on the needs of the talent, and helping them achieve success. If they see value, they will make the project successful. It really is almost that simple. (There will always be a few curmudgeons, but most people will migrate to anything that makes their job easier. It’s psychology — everyone wants to work smarter, not harder, so take advantage of that and give them something to makes their lives more productive and easier.)

And you don’t need a 5K/day consultant to tell you this — you just got this advice for free. (And if your old-school boss won’t trust free advice, feel free to send SI a $5K cheque or wire (USD) and we will happily send this series to you in a fancy PDF with your logo so you can make the boss happy. Contact the doctor for payment details.)

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.