To conclude this blog series we will take the Procurement Transformation process from the planning and evaluation stages to the “What happens next…” stage. Now that you have completed the evaluation of Processes, People, Technology, Reporting, and Continuous Improvement and how they all relate, what do you do with this information? The results of the evaluation are really just one piece of the puzzle. You cannot get the whole picture of how your organization is performing without some kind of comparison or benchmark exercise to determine where exactly you fall in line with your competitors in similar industries. We will discuss what that involves here. However, while that is one important next step, it does not end there. You cannot simply tell management that you have performed the evaluation and compared yourselves to your competitors and that’s that. You need to take this information and build a plan of action to start making improvements in areas of deficiency and taking advantage of where you have stronger areas. Finally, you need to actually take action on that plan and establish roles, responsibilities, and a timeline to act against. All of this will ultimately tie into the goals and objectives you initially established and the vision of a best in class procurement and sourcing organization you are working towards.

First things first, the evaluation you performed should have produced results that were assessed through a scorecarding method. Each area should have been detailed into subsections and weighted based on importance as it related to the specific objective within that focal area. For example, when analyzing the People within the SS&P organization you may weigh the skills and knowledge they hold higher than staffing levels overall. All questions in the People section in other words, need to be defined on a level of how critical that portion of the assessment is to meeting the goals set forth. Once a weight is assigned to a question, the response from each interviewee should be scored on a predefined scale. This is not something set in stone and can vary from assessment to assessment, but one scoring method might include a competency score based on a 1 to 5 scale. This step again emphasizes the importance of two things: 1) the assessment is carried out with experienced people that understand the overall goals of the organization and have the ability to accurately score response, and 2) significant planning and preparation are critical to producing valuable, actionable results.

Then you will need to access valuable benchmark data that allows you to compare where your company falls as it relates to the industry standard within your business type. This information is accessible through various means, most popularly through purchased data points or third party consulting services that perform these evaluations and benchmarks. Of course information can be readily found through detailed research on best practices. Essentially if you are looking to perform a thorough benchmark of your organization, you will want better quality data to compare to. Once you have lined up the data points you will be able to more clearly see where deficiencies are more prevalent and therefore where you need to focus attention on improving.

In order to develop a plan of action you will need to determine the resources and timing that you can allocate to the effort. This plan will require some dedicated resources who focus the appropriate time and effort into carrying out the plan as scheduled.

Some thoughts to consider when developing and prioritizing the plan of action:

  • Timing – what is the expectation of management on when the end result should be achieved and what kind of timeline would you need to establish to meet that goal 
  • Correlating projects (for example if your IT department was already planning to roll-out a new ERP system, figure out how this initiative can reap the benefit of timing for that project and ensuring the system roll-out aligns with the best practices and needs of the SS&P organization) 
  • Resources - Select experienced resources and ensure they have the right level of authority to carry out their specified function 
  • Benchmark results – areas of deficiency may warrant a higher priority, then again while they may represent a larger gap they may not be as critical as something else, consideration needs to be taken also when evaluating the timing and complexity of each task not just the overall purpose (for example, staffing levels may have proven to not be sufficient for the needs of the organization however hiring 5 new people and training them may not be realistic as a first step in the process) 
Ultimately you will need people to spearhead the plan through to execution and then ensure that continuous improvement efforts are managed. This plan will help lay out those activities including who should be involved and how much. Regardless of who is managing the plan, there should be some sort of steering committee representative of those departments that are involved in any way – directly or indirectly. Just as in any systematic overhaul of a function, not having buy-in or at least input from all decision makers will eventually lead to roadblocks and even significant delays in achieving your goals. As mentioned before, this is not a small undertaking and requires a great deal of planning, preparation, and expertise to evaluate, carry out, and manage the efforts of a Procurement Transformation.
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Jennifer Ulrich

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