Tuesday, 27 October 2015

You need to get suppliers on board for your S2P journey (4) - Closing thoughts

Over the last few weeks I have discussed the need for supplier engagement in implementing a S2P. In this, the last post, I draw together the main points.
Effective S2P implementation cannot be viewed as something which the implementation organisation has ultimate control over, as it relies on the supply market also choosing to own the solution too. Implementers of S2P solutions need to understand that implementation is a boundary spanning challenge and can represent major change to suppliers.
Since S2P implementation is a change initiative, ensure it is used as a opportunity to contribute to wider strategic objectives, for example, responsible procurement and supplier rationalisation.
The lack of supplier engagement and ownership represents one of the greatest risks to any S2P implementation and requires significant management. Supplier engagement also needs to start early in the implementation – waiting until ‘go live’ is a serious under-estimation of the work required.
Successful implementation is dependent on creating a solid foundation, which includes budget allocation for supplier engagement and the designation of an empathic champion.
While there are many approaches to supplier profiling a simplistic approach, profiling suppliers as either ‘Users’, ‘Converts’, ‘Willing Novices’ and ‘LateAdopters’ can prove to be just as effective and fits well with the communications and training and skills development plans.
Suppliers will be faced with new training and skills development needs. These shortfalls will impact on the implementing organisation and can be reduced through the useof a Skills Framework, a Training Needs Analysis, and agreeing who hasresponsibility of the specific elements of training and development.

I hope you found the posts useful. 

Tuesday, 20 October 2015

You need to get suppliers on board for your S2P journey (3) Comms & Skills Development

In previous posts I highlighted that the lack of supplier engagement is one of the highest impact risks with a S2P implementation. To mitigate that risk a strategic approach is required which includes creating a sound foundation and taking a wave approach to supplier engagement.  In this post, I discuss the need for a communications plan, and a training and skills development plan aimed at the supply base.
The communications plan needs to be considered as soon as discussion on the potential implementation of a S2P solution is mooted. There needs to be some flagging that change is anticipated and that the organisation intends to ‘work with’ the market as opposed to ‘doing it to suppliers’. That early reassurance will pay dividends later and signal that the organisation has a strategic approach.
In a previous post I advocated that a categorisation of suppliers as ‘Users’,‘Converts’, ‘Willing Novices’ and ‘Late Adopters’ could be applied. That categorisation flows from the first stage of a Change Impact Assessment – identifying what the implementation of a S2P solution will mean to suppliers. If suppliers are unclear what the changes could mean to them, then it is not possible for them to make the necessary commitment to those changes. The change readiness assessment will draw on the change impact assessment and statement of technology requirements to contribute to the categorisation of suppliers as ‘Users’, ‘Converts’, ‘Willing Novices’ and ‘Late Adopters’.
Regardless of suppliers engagement with S2P it is unlikely they will not have some level of training needs to match the new ways of working. Therefore it makes sense to complete a Supplier Training Needs Assessment.
Categorising the supply market is an acknowledgement that each category of suppliers will have fundamentally different needs. The Communications Plan therefore

Monday, 12 October 2015

You need to get suppliers on board for your S2P journey (2) - A wave approach

In the previous post I discussed the need, when planning a S2P implementation, to createa sound foundation for supplier engagement. Now we move on to the supplier profiling and development of waves for supplier engagement.
Using a ‘big bang’ approach to supplier adoption is unlikely to be effective. It will demand a lot of resources and loses the benefits of lessons being learnt which can be transferred quickly. Most of all it frequently fails to recognise that not all suppliers are starting from the same position and tailored journeys to ownership are necessary.
A phased approach is therefore recommended with suppliers being on-boarded in waves.  Of course, that begs the question, ‘What does the wave choreography look like and what sequencing of suppliers should apply?’. 
Some advocate the use of spend analytics and detailed mapping.  But those approaches fail to recognise that a frequent justifications for the implementation of a S2P solution is that it will provide clarity of spend – in other-words, the reality is that spend analytics are unlikely to be available. Secondly, even if the data were available, is the investment in time required justified, given that the objective is to develop a wave plan which will lead to maximum adoption as opposed to a comprehensive scientific approach to ‘who and when’.
Don’t mistakenly think that the wave approach focuses on just one wave of suppliers before moving on to the next wave. Like waves hitting the shore as one wave hits the shore the next wave is already building up, so all waves are worked on simultaneously albeit with differing emphasis. A simple approach to wave designation is to categorise suppliers as ‘Users’, ‘Coverts’, ‘Willing Novices’ and ‘Late Adopters’.
1.     ‘Users’ are existing users of the chosen S2P solution who need to be on-boarded but with will face minimal change to their existing ways of working;
2.     ‘Converts’ are existing users of a S2P solution although not existing users of the chosen Solution;
3.     ‘Willing Novices’ are businesses which see the merits of using the proposed S2P Solution but as yet have no experience with S2P; and,
4.     ‘Late Adopters’ are those who lack enthusiasm to embark on the use of S2P.

It should also be noted that the wave approach advocated is based on an assumption that contracts are not currently in the process of being renewed. If however, contract renewals and re-letting are taking place, those sourcing strategies should be used as a parallel first wave means of ‘winning commitment’ through the award process. Equally, wasting resources on on-boarding suppliers who are unlikely to gain future business will ultimately lead to a perception that the organisation lacks a coherent strategy.
Some ask how many suppliers should comprise each wave and how long should be required? There is no simple answer to those questions as it depends on how large the supplier base is and the supplier state of readiness.

In the next post I shall discuss the need for a communications plan and a training and skills development plan.

Thursday, 8 October 2015

Fifa's "Unfavourable" contract should be a warning for all Board members

I'm sure many of you heard the news this morning of the latest PR disaster to befall FIFA, namely, that its President signed a contract "unfavourable to Fifa" and in doing so "violated his fiduciary duties and acted against the interest of Fifa...".

I have to admit this is the first time I have heard such a phrase used so I'l have to watch as the story unfolds to learn more.

I assume a contract can be unfavourable to an organisation under the following circumstances:

  • Contracting for something which is not required;
  • Contracting on contractual terms which place more power than is necessary with the supplier;
  • Contracting on commercial terms which do not represent value for money;
  • Contracting for a longer term than makes commercial sense.

However, the news reminded me of one of my early jobs which included the signing and sealing of contracts - way back in 1974 when I was a mere 17 year old.

Let me first tell you about 'the Seal'. The was stored in a strongroom. The key for the strongroom was kept in a safe. That key was used to open the main strongroom door - which was really heavy to move. Then a separate key was used to get through the next door which looked like prison bars. Then  a further two keys were used to unlock what looked like an enormous vice. Only then could you seal the contracts by placing each of the signed contracts in the gap between the vice and closing the vice - the contract then had the imprint of the seal embedded on it.

However, prior to sealing the contract, I first had to get the contract signed by the Town Clerk. I'd make an appointment, fold and mark each of the contracts so that the place for signature was clear and then place each of the contracts before the Town Clerk while he signed, in all probability multi-tasking by drinking a cup of coffee or reading other papers. Success, for me, was minimising the amount of time spent by the Town Clerk signing the contracts.

The contract signed by the Town Clerk then had to have the Lord Mayor's signature too.  Once again an appointment was made, I sat with the Lord Mayor and we made small talk as I placed each contract before him for signature. The objective: get in, get the contracts signed, and out as quickly as possible!

That's a lot of formality for a reason (and from memory the threshold at which contracts had to be sealed was as low as £15,000) but yet there was virtually no scrutiny. The contracts were signed by both the Town Clerk and Lord Mayor without their reading on the assumption that those in the Town Solicitor's Office and Purchasing had spent time making sure everything was in order prior to signature.

I wonder will Sepp Blatter use a similar argument as his defence, that he was merely completing a formality on the assumption that the due diligence was completed by others as part of their 'day job'?

But let's remember that those who 'sign on the line' do so for a reason, only they have the authority to commit the organisation to contracts. They are representing those who placed them in power and gave them the authority to commit on their behalf. Whether or not Sepp Blatter manages to exhibit the skills of Houdini is secondary, the allegation that he signed an unfavourable contract should serve as a reminder to all those Board Members who sign contracts of the need to protect themselves, if not their organisations.

Tuesday, 6 October 2015

You need to get suppliers on board for your S2P journey (1) - A sound foundation.

There is a need to think about supplier engagement when developing the S2P business justification – the lack of supplier engagement is one of the highest impact risks with a S2P implementation. Supplier engagement is a change management issue and needs to be managed as such. First create a sound foundation, then a concurrent three-strand approach is merited, namely, identifying the waves for targeted adoptions, a communications plan, and a skills development plan. In separate blogs each will be addressed.
Without a sound foundation the probability of an effective implementation is seriously compromised and, at worst, highly unlikely.
Be clear what the  future will look like and any organisational restructure, changes to processes and procedures before starting a discussion with the supply base. An absence of clarity will contribute to a lack of supply market confidence and reluctance to embrace the proposed changes. 
Critical to success is ensuring that the business case has recognised that one of the key risks to a successful S2P implementation is the failure to gain supplier ownership of the proposed new systems and processes.  Suppliers are one of the main stakeholders of any procurement change initiative, particularly a S2P implementation.
It is understandable that many suppliers will adopt a ‘wait and see’ approach with a S2P implementation and delay commitment.  After all, ‘what’s in it for them’, especially if ‘no change’ also means no loss of business? 
A S2P system is a two-way communication system and suppliers have to make a conscious business choice that they are prepared engage in that system and with the new ways of working.  Those new ways of working can be both new systems and new processes. For suppliers this could mean new investment in both technology and skills is required without any contribution from the customer organisation.
Part of mitigating the risk of a lack of ownership is the need for the implementing organisation to allocate a budget for supplier engagement. A second mitigation is to be clear which suppliers ‘need to be on-boarded’ to build up a critical mass which will enable the S2P implementation to be justified. It is a mistake to assume that there will ever be 100% supplier adoption of the new ways of working but there needs to be clarity of what the breakeven point of supplier uptake is.
Another critical success factor is the designation of a senior level champion who will be the public face of the initiative.  That person needs to be credible, empathise with the supply market and ensure their ‘voice’ is heard.

In a future post I will discuss Supplier Profiling.