About every three to six months, I read about another new trend in supply chain – sometimes procurement or demand planning or logistics or related technologies. The regularity of this rotation seems a bit peculiar as new buzz words and catch phrases make the rounds in industry reviews, software conventions and consulting organizations.
Hosted vs. Behind the Firewall, Gain Share, Drive Innovation, Asymmetrical Thinking, Outsourced, Off shore, Near Shore, Best Shore, Jersey Shore and the list goes on. I’m certain any day now someone is going to tell me, “There’s an app for that,” one touch iPhone® procurement operations management.
As I cull through industry predictions & trends, software reviews and other procurement focused materials, I see more marketing than advice. I see another set of metrics to implement and measure but little advice on how it will improve sourcing-to-pay operations (S2P). I see a lot of the what but not a lot of the how.
Cynicism aside, the point of this light-hearted rant is that there is a massive amount of information out there, and it is difficult sometimes to discern what applies, what makes sense for my industry, what will yield the most value for my operations and so on. At the end of the day, how do we help our clients manage the noise?
Resources and budgets are finite, time is a limiting factor and goals must be achieved within a set of parameters or constraints. You can’t do it all so what can you work on that will achieve the goals? Driving value, efficiency and effectiveness is all about capabilities, focus and execution.
A review of the operational maturity scorecard should include a robust discussion of constraints – budget, people, time, political capital, relationships, policies, systems, reporting, org structure and other factors. These will all have a bearing on the development of feasible options. This is where industry advice and white papers can highlight potential areas of opportunity. However, the key to getting it done is the personalization of the solution. A realistic or feasible area of focus for one company or industry may be completely infeasible for another. A great example of this is compliance management. The ability of one organization to drive compliance vs. another is usually very different. The operational and organizational structure necessary to deliver compliance is not trivial. And, as a result, many organizations struggle and sometimes fail to deliver this savings opportunity. Focus on the fundamentals that drive value and the ROI – investment of people, time and budget on driving value for S2P operations in pursuit of clearly defined goals. This focus should be on areas of expertise or change that can yield additional savings and/or value opportunities. This expertise or change may be in the form of hiring, training and/or leveraging 3rd party consulting firms for support. Building S2P capabilities should align with enterprise goals.
Focusing on Goals
For S2P operations, this usually comes in the form of cost savings or cost out targets from the executive leadership team. In some cases, the number appears to be randomly chosen (e.g., 10% off the top). It is incumbent upon procurement leadership to understand the capabilities of the S2P operations – levels of operational maturity in strategic sourcing, contract management, procurement ops, catalogue management, compliance, supply risk, talent development, S2P capabilities matrix and others. This operational maturity scorecard will help the procurement leadership perhaps influence the goals discussion with executive leadership. What’s possible and what’s not.
Executing on What Matters
It is said that success is a by-product of good planning. However, the best laid plans mean nothing without strong execution on the things that matter and make a difference. With the operational maturity scorecard in place and the goals clearly defined, the procurement leadership can now develop a strategy to deliver realized savings. Leadership should remain informed of developing trends and techniques within S2P operations through benchmarking, industry white papers & research and software solution conventions. These are all critical in maintaining a balanced view of the space as well as spotting the emerging opportunities specific to your organization.
Capgemini Consulting offers existing and potential clients the opportunity to complete a short survey called Health Check. This is designed as a first step in understanding your operational maturity scorecard. In addition, respondents have the opportunity to speak with a procurement professional from the practice to discuss the results and next steps. For additional information, please contact Matthew Shull or Adrian Penka.