6 Steps to Successful Procurement Change Management
Change is inevitable…managing that change is the hard part. One of the major reasons a change management effort fails is that an organization waits until a crisis hits to arrive at a plan. The best way to find success when attempting major changes is to plan for any eventuality.
However, even with the best intentions, the COVID-19 pandemic has shown how difficult it is to prepare for every eventuality. For those in Procurement, 2020 has been a year replete with multiple challenges, most of them a result of the global pandemic. A loss of business due to the virus-caused economic downturn has resulted in an unprecedented disruption throughout the supply chain; demand for many products is down and/or suppliers can’t get the materials they need to make the products that are in demand. For procurement, this drop in demand means less interaction with customers as well as a decrease in bringing new customers on board. That translates into an underutilized procurement team; however, companies with foresight can see how to turn this negative into a positive for the organization.
Take advantage of downtime to build a stronger organization.
Corcentric’s guide, Building Infrastructure Strength for Future Growth, lays out the 6 steps companies need to take to make full use of the downtime. Although this guide focuses on the procurement function, companies can use the changes instituted to positively impact the company as a whole, ensuring a stronger organization when the work returns.
- Cultivate Supplier Relationships – Treating your suppliers as business partners should be second nature. This is especially true with key suppliers. And as partners, both parties should look for ways to streamline processes and adjusting costing models that could ultimately save money. Although a good relationship with every supplier is important, this is especially true for your key suppliers.
- Assess Inventory Management – Are you looking at the optimal time for performing an in-depth inventory counting and reconciliation? Identifying that time is essential as is transitioning to automated rather than manual processes. Automatic identification and data capture (AIDC) tracking processes actually reduce the frequency of manual inventory counts and that translates to savings in labor hours, enabling employees to perform more strategic value-added tasks.
- Supply Chain Reconfiguration – Instead of operating in silos, those functions most involved in the supply chain, logistics and procurement, need to work more closely together. This collaboration will lead to finding whether a business is best served by a centralized, decentralized, or hybrid warehousing model.
- Introduce Automation – Automating processes throughout your business reduces significantly inefficiencies and inaccuracies that may be a result of human intervention. Manufacturing, procurement and warehousing processes are not the only area to benefit from automation. Doing the same for your accounts payable processes not only reduces costs and inefficiencies…it also increases productivity, improves cycle times, reduces payment errors, and enables the company to take advantage of any early payment discounts.
- Employee Training – Downtime is the perfect time to focus on internal training. Studies have found that companies that provide employee training are better able to engage and retain employees. One of the areas to focus on would be project management training which would help employees see the “big picture” and understand the complexities that go into every project.
- Optimize, organize and design – There is no one-and-done when it comes to making major changes in processes and procedures. As I noted at the very beginning of this blog, change is inevitable so growing companies that want to continue that growth need to continually assess and adjust how the business operates.
Complacency is the enemy of change. The worst thing a business can do is assume that what has worked in the past will continue to work in the future. It is necessary to challenge the status quo and downtime may provide the freedom to actually look at how your business is operating and assess how it could do much better.
Download the guide to get the important details that will help you make the changes necessary for growth.