Creating the Road Map for Successful Procurement Transformation
The third episode of Corcentric’s podcast series, Mastering Procurement Transformation, discusses how to ensure success in your transformation journey and create a world-class procurement function by following specific steps.
Supply chain and sourcing concerns, an increase in process automation and new technology, an ongoing search for cost reductions, a focus on supplier management: Procurement is dealing with many issues, leading many procurement leaders to look at changing the way this function operates; to consider digital procurement transformation. When you are completely transforming the way you do business, in this case, the way your procurement function operates, you are looking at an initiative that has different components, lots of moving parts, and multiple stakeholders. Obviously, you need to have an end-state vision, a clear idea of the long-term goals that this transformation will help achieve. And you need a well-structured plan to get there.
Building a Transformation Roadmap
Procurement transformation has to start with a baseline understanding of the current state of your procurement organization today and a clear vision of where you want it to go. But there’s quite a distance between those two points and a number of stakeholders who need to come along with you, so how you get to that end-state vision is incredibly important.
This is when you need a detailed transformation roadmap, one that lays out all of the steps that need to be taken along with a timeline of when these steps need to be taken and completed. But before you put the roadmap together, you need to get input not just from key stakeholders and the Procurement team, but from all the stakeholders and business units involved, regarding any concerns or issues they may have. This input needs to be part of your roadmap; if it’s not, you could easily lose the confidence of the team. And if you lose their enthusiasm and dedication to the transformation, you will find success difficult.
It’s a good idea to print and distribute (or at least email) the roadmap to all stakeholders, so they can feel confident that the initiative is on-track. As you go along on this journey, it’s important to be flexible; to understand that events occur that may force changes on a timeline; however, the end-state vision needs to remain the same. As these events occur, any changes need to be reflected in the road map and all stakeholders need to see these changes and understand whether their individual roles are affected or not.
The transformation roadmap needs to reflect:
- Timeline – Spell out what needs to come first, second, third, and so on. It’s vital to assess what things have to happen first before the next things can occur. How much time should it take for each step; what is the complexity of each activity? To make the team feel like something is truly being accomplished, you might consider going after the low-hanging fruit, the easier wins that are quick to achieve and create tangible value up front.
- Options – If problems occur…and they will…what are the options to solve each of these problems? All of these options tie back to the Pillars of Procurement: process, technology, and people. Are you tied to legacy procurement processes that are slowing down or getting in the way of completing a task? Is it a technology problem, where different business units are working with different software that is not compatible with other units? Or is it a personnel issue: do you have the right people with the right skillsets to handle these problems or do you have enough staff to deal with problems? If you don’t’ have the resources internally (for any of these three pillars), this may be a time to look to a third-party solution provider for expertise and help.
- Stakeholder engagement – Initiate monthly communications that spell out why certain actions are being taken and why. Too often, the team is so involved in the minutia they lose sight of the big picture. Tying everything back to the why and how of the transformation reminds everyone why this transformation is taking place and where you are in the process.
Selling the roadmap
You know why procurement transformation is so important to the overall goals of the organization; but you need to sell that to an executive team that may only be looking at expenditures and wondering why that amount of time and money is being spent.
If you are responsible for bringing this transformation to fruition, you need to be very clear who you’re selling to. Spend management and supplier performance may be top of mind for you, but that might not be the case for each business unit. Each time you present to a different business unit, you need to address that specific unit’s needs and how this transformation will help that unit as well as the business overall.
If you are presenting to the C-suite, you need to offer a business case that ties everything together. After all, you are asking them to make investments in items like training, technology, consultants, new hires, etc. You need to emphasize that this is not just a procurement strategy, but one that will benefit the business overall. Clarity is essential so you need to outline what number of resources are needed, what team members will be needed at what point, what funds are needed, etc.?
When you’re presenting, make sure, each time, you address:
- ROI – Procurement is one of the few business units that can easily show clear ROI (cost savings, efficiency gains, top-level revenue gains through supplier relationships, etc.). Present a solid business case with metrics that not only shows the strategic value of Procurement and proves the point for the individual unit, but also details how the business will prosper overall.
- Sponsorship – One of the side effects of a transformation like this is a potential change in operational structure. That means that some responsibilities being handled by one unit are now moving to Procurement…and that can be quite threatening. This can be a minefield and Procurement needs to ready for pushback. This is in addition to the change management that needs to take place whenever major transitions occur. That’s why you absolutely need buy-in from the C-level to make clear to all involved why this move is so important.
- End-state vision – Every time you make this presentation, you need to make it clear what it will mean for the company when this transformation is complete. Show how it will result in optimization of units throughout the organization and provide a competitive advantage by showing how it will stand up against industry peers. Make it clear how this will differentiate you.
If you sell the roadmap, you’re on your way
Transformation is always a thoughtful process. Yes, it must be linked to business-specific ROI but, bottom line, presenting this in the right way means that you need to be clear about the nature of challenges and how this transformation is the best way to not only face those challenges; it’s also the way to come out on top.
Listen to our Corcentric Conversations, Mastering Procurement Transformation, Episode 3 below.