5 Questions to Ask Internal Stakeholders Before Changing Your Source-to-Pay Process
This post was contributed by Deepesh Jethwani, Consultant at GEP
Most of us, by default, are resistant to change once we are used to something. After a certain point, inertia kicks in and we sometimes resist change instead of adopting it for the good. The mind’s defense mechanism starts finding reasons, some rational and some completely irrational, for wanting to continue things the way they were in the past.
The Challenge of Change Management in Procurement
While every CPO (Chief Procurement Officer) or top executive wants to make their procurement department efficient, introducing any change is difficult. Getting people to change their style of work or asking them to get used to a new process is always tricky. As easy as it may sound, change management is one of the toughest things to implement in an organization. However, one way to manage change as a part of procurement transformation is to plan and implement it correctly from the beginning. Resistance to change can be minimized only if there is sufficient buy-in from the people that will actually go through the change.
As a procurement leader, you might decide that the buying team should work with only, for example, three preferred suppliers instead of a current 20 suppliers. You could formulate a sourcing strategy which allows only for centralized procurement and discourages regional buying. You might want to conduct a Zero-Based Budgeting (ZBB) exercise for the entire organization spend. However, the internal stakeholders (in this case the business user or buyer) play a pivotal role in the success of such initiatives.
So what should you do to get all stakeholders on-boarded in the organization’s procurement transformation journey? When any organization wants to change its sourcing or buying process, it is very important to hear the voice of the customer – in this case the plant, business unit, end user or buyer. Understanding their pain points and devising solutions in the resulting sourcing strategy goes a long way in getting them on-boarded when the change begins.
Here are five questions you should ask your business units, regional plants/sites and the end users before overhauling the way your organization spends. Their answers will help you understand the inner nuances and go a long way in explaining spending patterns in your organization.
What are your most common challenges in everyday procurement?
Whether it’s the Finance team taking too long to approve a purchase requisition, being unable to keep track of overall spend, difficulty in knowing which supplier to contact for which requirement, having issues in maintaining a contracts repository or anything else, it is crucial to understand the on-ground challenges buying teams face when you are overhauling the procurement process as a leader.
What is the rationale behind having multiple preferred suppliers as a part of buying? What challenges do you envision if we move to a single supplier model?
Answers from business users will give you insights as to why the sites prefer working with specific suppliers over the rest. Maybe a single supplier might not be able to fulfil all requirements of a particular site, maybe they believe that a single supplier might not provide them competitive rates, maybe a backup supplier is needed when there is an urgent requirement – but it is vital to know these inputs as a procurement leader if you want to change your sourcing strategy of consolidating spend to a single or limited suppliers.
What is the typical lead time available with the vendor to fulfil your requirement? Are the suppliers adhering to the required lead time? Are there specific delivery schedules that one should be aware of?
It is important to check if the business sites would like delivery around the clock or if they would like the supplier to be available on Sundays/holidays. Knowing the different expected lead times for different products will help negotiate with suppliers while deciding the terms and conditions of the contract. For your global operations, a specific plant or site might have a lead time of seven days, whereas the other might have a lead time of 15 days or even more. It helps to gauge the importance of such schedules across sites and check internally if users can modify their lead time requirements. You can then work with suppliers to meet the lead time requirements while finalizing a centralized procurement strategy.
How willing are you to adopt technology for your procurement needs? Do you foresee any challenges if a centralized IT solution were brought in place to enable buying?
As organizations grow, keeping track of the entire spend becomes a cumbersome task. With the advent and expansion of various IT and cloud-based solutions for procurement, companies have started increasing their technology adoption. There are numerous advantages of such solutions, but they can be achieved only if the sourcing and buying teams are willing to adopt and make full use of them.
Are there any continuous improvement activities that you currently are or would like to be involved in with the suppliers?
Many suppliers are involved in continuous improvement activities with plant sites wherein a supplier provides innovative alternatives, thereby unlocking significant savings or implementing efficiency improvement activities in the buying process due to their industry expertise. When procurement is to be centralized, it is important to take the best out of such activities and try scaling them across different sites as applicable.
These questions will vary from one organization to another and would be completely different for a category like Marketing versus a category like MRO (Maintenance, Repair & Operations). However, the key is ensuring that internal stakeholders feel they are a part of the entire change management process. Incorporating their feedback, wherever possible, goes a long way in onboarding them in the change management journey.
As a Consultant at GEP, Deepesh is a part of the Savings Tracking, Analytics & Compliance team. He prepares regional savings scorecards and informative dashboards to drive key business decisions. He has also helped design and implement key metrics that track the STP model’s governance and effectiveness. Deepesh also has experience in Strategic Sourcing projects for Marketing, where he has been involved in RFP development, supplier evaluation and creating vendor negotiation strategy.Rate this Post: