As discussed in the
second blog in this series, setting the stage for the evaluation includes ensuring that you have acquired executive buy-in; established dedicated teams to facilitate the initiative; created overall objectives and communicated them; and developed the plan of action including milestones, timelines, and responsible parties from all correlating departments. Now it is time to get started. Before you can make any notable change happen within the organization you need to understand several key points about the existing operation including: WHAT processes are currently being followed to carryout activities; WHO is performing these tasks; HOW are they executing on strategy including what technology and tools are they utilizing; what are they doing to demonstrate the value of their function, in other words what metrics are they reporting on and WHY; finally WHEN do they factor in continuous improvement efforts to ensure the results they are producing are sustainable? In order to truly understand
how well the existing SS&P function is operating and where they fall within each of the aforementioned areas, an evaluation needs to be carried out.
Processes
When focusing on
Processes there are certain considerations to include in the evaluation. Starting with what processes are in place and how well they are documented. Each SS&P department will have unique requirements but regardless there needs to be structured processes that establish standard operating procedures for all of the roles in the department. Processes fuel efficiency and ensure that activities are carried out in a consistent and effective manner. Then again these processes can be incredibly effective but if they are not documented properly over time they will deteriorate and lose efficacy. Subsequently emphasis should be placed on how well those processes are followed, documenting them is a big step but adherence is just as critical.
Make sure that when reviewing the processes they capture all stages of each process from the very first task, such as the requirement or request itself, through to the end of the lifecycle including continuous monitoring where applicable. In many cases processes are a continuously fed loop of steps that should be reviewed periodically and improved upon. Also ensure that all corporate policies and procedures are noted within the process so that those performing the work can ensure all correlating functions are aware of their involvement in the process. Finally, is there enough cross-training of the processes being carried out? Relying solely on one person to complete a process is an incredible risk.
People
The people who carry out the processes can and should also be evaluated during this stage. This step however can vary depending on the objectives of the PT initiative. As such the personnel evaluation can be as high level as:
• Ensuring that there are adequate staffing levels to meet the demands of the department.
• Assessing whether the individual has the skills and knowledge to perform the role in which they are placed in.
• Determining whether the teams function cohesively, both with each other and with other correlating department.
• Reviewing the training and development plans to ensure that personnel is adequately prepared within their role and continuously trained for top performance.
The evaluation of personnel can however get to a much deeper level including:
• Delving into the responsibility level of an individual within a role to determine if it is appropriate, whether it should be more or perhaps less.
• Evaluating how well the person is performing within that role overall, including whether they are performing more or less than the role has defined.
• Assessing whether the title of the role is supportive of the authority assigned to it.
• Benchmarking the salaries as they correlate with their function and determining if they are appropriate.
• Reviewing the organizational hierarchy to understand if adjustments are recommended based on reporting structures.
Each step of the evaluation links to another, therefore whether the personnel evaluation is role based, performance based, or both, it is important to understand how the people fit into the SS&P organization. Not only is fit critical, but the personnel are vital to the overall function of the department.
Technology
The technology evaluation includes understanding the platforms and solutions used within the SS&P function along with those that interact with the systems used in this department. With that said this type of evaluation may not make sense to be included in the overall evaluation, but carried out by non-bias experts that can adequately perform the assessment and make appropriate recommendations. A non-bias party is critical to avoid running into a sales pitch for specific systems that a company sells or supports. This evaluation can be quite extensive from a labor and time perspective, with that said there are aspects that can still be included in this overall evaluation stage of the PT initiative.
Evaluating the technology in place is important because in order for processes and people to perform adequately they need the right tools in place. Even at top performance, the SS&P function can be greatly hindered by antiquated toolsets. A high level assessment of the toolsets in place is a great start including the sophistication of the toolsets in use. This can include very basic toolsets that operate independently like a simple contract management tool or e-sourcing platform, to a fully loaded ERP system with all the bells and whistles. What you need to understand first though is what the department’s requirements are, it does not always make sense to buy a Porsche if you only need a Toyota. Having an incredibly robust system in place at top dollar when it is not needed leads to wasted costs and inefficiencies. Some other aspects that can be assessed include reviewing the number of tools in place and how well they all integrate together. It is important to get feedback from the end users as well in this case. System costs should also be evaluated, as well as understanding how particular systems were selected. In other words, did someone just think something was needed or was a proper assessment conducted including proper requirement building and evaluation of the options available.
Reporting
One of the most critical components of a successful SS&P department is being able to show the value it brings to the organization. In order to produce valuable reporting there needs to be metrics and KPIs identified for which to measure against. Oftentimes the purpose of reporting can be misconstrued because the wrong information is reported. Furthermore, reporting is most useful when communicated to the right people so it’s important to understand who is receiving the information and what are they doing with it.
When evaluating reporting it is important to determine who is responsible for establishing performance metrics as well as ensuring that all the right people are involved. Who actually produces the reporting and from what system should be reviewed to ensure they are following the correct steps and using the best system to pull the most accurate information. Once the reporting is communicated, what happens next? There should be a standard process in place for the review of the information as well as clear actions as a result. Most importantly is the reporting tied to the organizational objectives and reviewed periodically to ensure it continuously meets the needs of management.
Continuous Improvement
Each of the above four areas are connected to one another and naturally need to all operate effectively for another area to function at its best. With that said one key element to maintain top performance is continuous improvement efforts. While it has been mentioned in some of the notes above, continuous improvement in itself needs to be addressed. All of the processes, people, technology, and reporting need to be reviewed periodically to ensure they are meeting the needs of the organization from an objectives standpoint as well as from a growth perspective. With so many changes occurring within an organization over time, for one reason or another, the SS&P function overall needs to adapt and evolve as well.
One of the primary goals of a procurement transformation is to ensure these elements are performing at peak levels. Therefore those measures that are put in place to enhance the functions should also be reviewing and improved as needed to ensure that they remain effective.
In our next blog in this series we will cover the importance and steps to take to benchmark the existing state against best-in-class solutions and peers.