Previously in this short series of SRM videos I have discussed the importance of having a clear reason for doing SRM – I called it the over-arching purpose; and then the question of who benefits – what stakeholders are likely to be interested in from SRM. In the third video I discussed the importance of delivering tangible results, followed by video #4 on the core SRM activities.
In this final video of the series I’m going to talk about skills development for SRM, IT and, most importantly, why CPOs should do all they can to ensure SRM is not perceived as a procurement initiative.
Want to be successful in implementing SRM?
Then….Be so good they can’t ignore you
The Deloitte Global CPO Survey of 2014 reported that 57% of CPOs felt their teams lacked the skills to deliver their procurement strategy. In this survey, most of the concern appears to be around soft skills, even though most of the training budget is going on technical skills.
Make no mistake, both are important, not just in practical terms, but politically too. If peer stakeholders and senior management don’t trust the procurement team to be competent, then support for programmes such as SRM will be withdrawn, leaving procurement trapped in a spiral of short-term tactical deal-making. Any CPO exhortations to re-focus on total cost of ownership and value for money will fall on deaf ears.
There’s no doubt there remains a talent shortage in the procurement field. Despite twenty years of Masters level education offered by a variety of business schools and CIPS for even longer, the demand for procurement skills shows no sign of receding.
This is why I firmly believe that ‘learning by doing’ is the most pragmatic approach to up-skilling an organisation in its SRM practice, not least because SRM is most definitely a cross-functional endeavour (you’re not going to get design engineers to devote their time to specific training in SRM, for instance).
The idea that key supplier relationships can be managed from the procurement office is wrong technically, and politically. Stakeholders won’t (and don’t) put up with it. Far better for the CPO to harness the skills, experience, insight and interest of stakeholders and involve them in the relationship analysis and strategy development work necessary to assure internal alignment and clarity of direction for strategic supplier relationships.
Working hand-in-glove with stakeholders is the way forward, and many organisations are already there. And when we consider the key value-adding processes that enable the CPO deliver outstanding customer service to stakeholders, and deliver value for money improvements, then we almost come full circle: we can’t do it without those stakeholders. This way credibility and a collective, team competence can be assured and trust between procurement and the business only enhanced.
Returning specifically to SRM, the CPO must understand the learning and skills requirements for the effective operation of those key SRM processes and ensure any shortcomings are resolved.
Develop the optimal organisational design for engaging key suppliers, blending technical procurement skills, leadership and influencing skills, as well as ensuring that clear roles and responsibilities and defined.
Finally, once the key processes have been defined, and optimised, then (and only then) consider what technology can further improve the operation of those processes.
Researchers Gauld and Goldfinch found that 30% of large IT projects fail, and a further 60% require more time, resource and effort to get working properly, so if you’re looking to technology to drive your SRM programme, then think again. IT can help, but don’t be a slave to it; I really believe that it isn’t the difference between success and failure in SRM implementation.
Finally….SRM is not a Procurement initiative
Managing key supplier relationships to protect the value you have contracted for, and to secure continuous improvements thereafter, should not be optional in modern-day business.
We’re on a relentless path towards the ‘virtual’ organisation as the preferred business model in both private and public sectors, as outsourcing continues its unabated growth. Being able to effectively manage external resources will become one of the genuinely core competences in our organisations, and the more it does, the more silly it will be to present SRM as an initiative from the procurement department.
Instead, CPOs should accept their role as one of educator and coach to key stakeholders and their cross-functional SRM teams.
The faster organisations establish SRM as an organisational competence, and develop programmes based on clear cause and effect relationships between action and purpose, then the more likely SRM can become a source of competitive advantage and a proven method of delighting the company’s customers, its clients, and in the public and private sectors.
I hope you have found this series on SRM illuminating and useful. If you would to discuss any of the items discussed, then please get in touch and we can continue the conversation.