Guest blogger, David Kemp, recently Vice President-Supply Chain at the Engine Control and Electrical Systems division of Goodrich Corporation, continues his theme on organisational change.
When I wrote here in January about how to design a successful organisation, I set out to recommend three basic steps. The approach avoided the rush to define slots for your people, but rather took a more considered and purposeful approach as follows:
- Identify and define your purpose and processes;
- Build up an appropriate organogram with the capacity to operate those processes
- Assign individuals to their new roles in the organisation with training and development as required.
But the first of these steps is often the hardest, especially if you are operating under time pressure to get results quickly. And who isn’t? I remember when I took my role as the leader of the Supply Chain Function in my division in Goodrich, I was responsible for the supply chain and procurement activities of the four subsidiary businesses that made up division. I needed to move quickly to build an integrated organisation, in order to enhance our efficiency and effectiveness across the whole of the division. I had been appointed to find ways for the procurement and supply chain function to make its full contribution to the success of the whole business, and results were expected from the very beginning.
I set out with the intention of having my leaders across the business work systematically through the above three steps, starting with the project of integrating, commonising and standardising our processes throughout the division.
It was tough to know where to begin, and in truth we started off taking a populist approach to what would be the most fruitful areas for integration. We pulled a few procedures from the intranet for each location, and set a team to study them and write a version that would work for all the sites. This activity would have been followed by training and embedding a standardised way of working, with the checks and balances that I wanted.
Achieving this result for just one of the most basic processes in a supply chain department took much more time than we could afford. After many months, it became apparent that the approach was not going to work in our timescales, and that we had massively underestimated the task at hand. And of course, working through the on-line media, it is impossible to grasp easily the scale of the challenge – you cannot see how thick is the book that you are trying to edit! It was only when I saw the piles of printed paper that represented all the documents we had loaded onto the intranet, that I realised it was time to try something different.
So another approach which we tried was to draw a top level process map for the procurement function, showing the inputs and the outputs, and identifying the value added. Sounds straightforward? We found ourselves challenged but the complexity of a modern business, with multiple rework loops and support functions, each of which had its own set of process definitions to work with. We looked at sister business, and for ‘best practice’ benchmarks externally, all of which informed the discussions but did not move us forward with the required pace. Looking across the procurement and manufacturing processes in our multiple sites, this quest for a master process map became a project in its own right! We were not actually helping to build the integration in the businesses that we needed, but engaging in a theoretical debate as to what should be, rather than what is and what might be.
The task would have been so much more straight forward if we had been starting with a clean sheet of paper. But, of course, we were not – we were starting with a fully approved suite of processes with differing legacies that had been in use for a long period of time. These were complete, but with a scattering of inconsistencies and discrepancies, and with a general need for modernisation.
The discussion did progress, however, to the point where we found ourselves starting to identify areas of process groupings that we could focus the teams onto. From the highest level, what are the primary purposes of the organisation? What are the areas of the business that the teams work together in based on their expertise and skills? This somewhat empirical approach flew in the face of the systematic approach that I would have preferred, but as a way to get the whole team moving forward it was a correct and pragmatic adjustment.
Some groups of terms and definitions started to come together, ones that eventually became helpful. For example, one logical group of headings that came together embraced terms such as:
- Supplier selection
- Management of the Approved Supplier lists
- Commodity strategies.
Not everyone would agree with which processes belong in which groups, but as a leadership group we set about achieving a consensus and then backing it unanimously. And of course, semantics came into play, with the need to be mindful of the differing interpretations of words that occur in different countries.
We ended up with six groups of processes that would be recognisable in many businesses:
Commodity and category management, supply base analysis, source selection, price negotiations and approval.
Generate and fulfil orders:
All the transactional stuff of a purchasing department. Orders, Invoices, Goods Received procedures etc.
Supplier relationship management and performance:
Segmentation of the supply base, the spectrum of supplier management tools and process, performance scorecards, problem solving and escalation.
Regulatory requirements and their application. Inspection and product management processes.
Management of product discrepancies:
The handling and disposition of non conforming products to assure product integrity to the customer
New Product Introduction (NPI) and change management:
One of the hardest areas, reaching across all the disciplines and integrating new product launch, supplier transitions, and the procurement aspects of product lifecycle management.
With these six groups accepted by all the stakeholders as the right groupings, we then slotted into this structure all the existing processes from the different sites. If something did not fit, we took a decision to make it fit somewhere, rather than add complexity with an additional process group.
It became apparent quite quickly that we had devised a way to ‘eat the elephant’- one piece at a time! It became less challenging to integrate, commonise and standardise now that we had this overarching framework in place, and progress started to gather momentum as part of normal business improvement activities. Rigor could be applied within the process groups, to the point that we began to standardise, and remove unnecessary or duplicative steps that held the business back, with the result that a number of division – wide processes came into place at the tempo that we needed.
In summary, my top three tips for sorting out a complex set of processes in your area would be:
- Make a rough cut. Look for groups of processes reflecting the overall purpose of the organisation, and get your leadership to endorse them
- Stick with those groups until you have allocated every detailed process into one of them
- Rationalise one group at a time, into a standard format, using flow charts where you can
By David Kemp
David Kemp has held a number of senior roles in Procurement and Supply Chain, most recently as Vice President-Supply Chain at the Engine Control and Electrical Systems division of Goodrich with accountability for direct and indirect materials. Prior to this, he spent over 30 years developing his expertise in purchasing and supply chain management at Rolls-Royce, holding Executive positions for 12 years until joining Goodrich in 2009. He is considered expert in leading and managing complex supply chains, negotiations management, effective global team working and supply chain strategies.
He has delivered transformation programmes, major commercial agreements, new projects, and extensive work in developing worldwide supply chain organisations.
David became a Fellow of the Chartered Institute of Purchasing and Supply in 2002 and was elected to the Board of the Institute in 2008. He now serves as a trustee of CIPS pension fund. He is also a Fellow of the Chartered Institute of Logistics and Transport, and a Fellow of the Royal Aeronautical Society.