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.