In part 1 of my SRM leadership challenges, I defined the first three being around implementing successful SRM programmes. Let’s continue with the remaining two.
Challenge #4: How to establish a consistent and repeatable way of working so that you can begin to predict future value potential
Once you are clear about the purpose of SRM, the stakeholders your programme impacts, and the tangible (and intangible) benefits it’s expected to deliver, then next on the list is deciding what the SRM day job is going to be. In other words, what process and tools will you put in place to assure that results are consistently delivered in line with expectations? It’s no good just throwing in a few four-box matrices and declaring you have a process; you have to define the end-to-end process, to be explicit about what you want active participants to actually do, and to a standard that gives them confidence that their work is important and valued.
Later in this series I will lay out the SRM process (including key analysis tools) in some detail, but for now I’ll simply say without a defined process, SRM will not deliver the requirements of stakeholders, nor deliver on the finances or the overarching purpose.
However, the following principles may help SRM professionals in their defining what that SRM ‘day job’ should be:
- Ensuring that SRM efforts reflect the strategies of the organisation and its stakeholders;
- Working cross-functionally internally to create relationships strategies (that include multiple value improvement projects), and that detail how best to manage those relationships with rock-solid internal alignment;
- Embed a culture where the concept of continuously improving performance and value for money is at the heart of all key supplier relationships;
- Establish collaborative working with the most critical suppliers to explicitly meet the requirements of internal stakeholders;
- Maintaining pragmatism by recognising that proactive and intensive engagement with the number of key suppliers will be limited by your team’s capacity (you don’t have the bandwidth, so choices have to be made).
Challenge #5: Creating the right structure and developing SRM competence
It’s one thing to suggest cross-functional working, but what does that mean in practice? Organising for SRM is a relatively straightforward business. Once you decide which suppliers are to receive priority attention, then the setting-up of a cross-functional team to bring data and experience, to do the analysis required of your SRM process, and to develop the strategy, is all about selecting the most appropriate people from your organisation. By appropriate I mean those whose job is most impacted by the supplier, and who have most to gain from any performance and value improvements that are secured.
My preference is for such teams to complete their strategy work before deciding on a leader for the relationship, usually the person best placed to make things happen. For sure, this person may well sit outside of Procurement, leaving the CPO to provide mentoring support as necessary. For the most critical of suppliers, then a C-level sponsor to oversee the relationship (and possibly help secure resources for the team) is also a good idea, and helps the relationship leader proceed confidently, knowing that the organisation is aligned behind them.
Then there is the issue of competency development. You should concentrate on improving the technical skills required to use the analysis tools for strategy and the process improvement tools to identify and secure improvements when working directly with suppliers (you might appoint specialists to apply the latter, many organisations do). What mustn’t be forgotten are the interpersonal skills necessary to enthuse stakeholders and encourage suppliers to cooperate.
Only you will know what investment in competency development is required, but if the latest Deloitte Global CPO Survey is anything to go by, this remains an area of concern, with only 38% of CPOs confident their team has the skills to deliver the procurement strategy (we can assume the figure for SRM skills would have been lower still).
This exploration of the challenges facing CPOs intent on establishing SRM has, I hope, been helpful. In my view it’s perfectly possible to create a truly successful programme, but it must be based, not on a ‘hope for the best’ or ‘me too’ approach, but one built on a clear strategy that explicitly recognises the casual links between the overarching purpose, stakeholders, value delivery, process and competency development.