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.

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.

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

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.