Quiz: How should a Chief Procurement Officer implement eSourcing 2.0? (WWCPOD?)
(Answer found at bottom of page)
Our ongoing discussion of eSourcing 2.0 picks up from last Friday’s article which made the argument that there should be an enterprise-level system of record that captures the key elements of the discussion with suppliers that result in the final (or agreed upon) business requirements and associated terms. As a reminder:
eSourcing 2.0: Every negotiation that results in an executed contract should use an eSourcing solution.
Let’s say the CPOis now fully convinced that eSourcing 2.0 is the right path to pursue. How should the CPO pursue it? What would you do? eSourcing 2.0 is a big change to the natural order of things. It clearly requires some type of change management. The pros who commented on last Friday’s post shared different experiences and different challenges in rolling out their eSourcing initiatives. The approaches that they have taken may have shared some similarities, but must have differences too.
In general, there are two schools of thought on an approach to rolling out a new policy/process/solution – A. Sell the Vision or B. Mandate the Behavior. Let’s take a brief look at a thought process behind each approach. Better still, with election season in full swing in the UK, let’s have a mini-debate.
School of Thought I: Sell the Vision
Today’s professionals are increasingly adaptive and flexible. Their tendency is to do the right thing for the team/department/enterprise. A few carrots and a nudge in the right direction and you are off to the races. If the vision and leadership of the Chief Procurement Officer are on target (and eSourcing 2.0 hits the bull’s-eye ;-)), the procurement staff will have no problem following the suggestions made from the CPO’s bully pulpit. Then the loyal staff, acting as CPO-proxies, will work to ensure that the message is carried out to the business and functional stakeholders. To place more spend under management, the Chief Procurement Officer’s job has increasingly become one of marketing and sales to the larger enterprise. Selling fits this style. To quote Roy Anderson, “People are like water……” In nature, water finds a path, its path and flows ever gracefully to the sea. It gets there. Sell it, they will come.
School of Thought II: Mandate the Behavior
Today’s professionals lack the tools for change. Worse, they fear it. Yes, inertia and the fear of change have conspired to constrain and restrict the department. The only thing that outweighs this deadly combination is a big stick. SLAP! Can I have your attention please? The directive is clear, follow the code or else. Watch as the staff quickly falls in line and then actively trains and recruits the rest of the enterprise on the rigors of eSourcing 2.0. To place more spend under management, the Chief Procurement Officer must employ a command and control strategy. Mandating behavior fits this style. To quote Roy Anderson, “People are like water….” You must build dams and canals and guide the flow where you want it to go. “If you build it, they will come” is a work of fiction. Field of Dreams, the movie which introduced this phrase into the American vernacular in the late 1980s was a great an ok movie, but a work of fiction, nonetheless. In fact, the real quote is “if you build it, he will come.” Who’s got time to worry about one person? You want results? Lay a mandate and track it often. Full Stop.
Quiz Answer: While I have an opinion on this, there’s not necessarily one correct answer. And if there is, I might not have it — Let’s see if there is a consensus among the CPO Rising readers to provide a final Answer to today’s Quiz below. What would you do? Please comment below.
So as I’ve been saying for about 18 months …. “There’s never been a better time to create your own stimulus”. And the fastest way for a corporation to do this is to do a better job of buying 3rd party goods and services. I can’t think of a better way to both “amplify” and “accelerate” savings than using eSourcing. In the last 10 years that I was at pharma giant GlaxoSmithKline we conducted over 35,000 events in over 60 countries and had around 50,000 suppliers registered online. Huge incremental savings were delivered year-on-year and continues today. I see nothing wrong with a mandate. Need to combine mandate with ongoing education to the business clients you support. Just be prepared for some business clients to try every “trick in the book” (at least those that prefer cozy supplier relationships) ….
Thanks for the comments Gregg!
All — That’s one big, well-respected vote for Mandate? Anyone else care to weigh in?
Mandate without doubt with proper checks and balances in system. Companies which tried to put process checks earlier used to question why esourcing could be used for this, the scenario needs to be reversed now with the new question being – why esourcing can not be used – all such cases requiring an exception and reviewed periodically.
Rajiv
Still early innings but after two, it’s Mandate 2 Sell 0 —- who else has an opinion?
Apologies for being late to the debate, but I think it is important to provide some clarity on the question. As we all know, Procurement can be involved in the vendor selection process and not necessarily use “eSourcing” to run the process.
As I see it, there are 3 possibilities;
1.Procurement is not involved in the sourcing process.
2.Procurement is involved in the process, but doesn’t necessarily use an “eSourcing” tool.
3.Procurement is involved in the process and uses an eSourcing tool (i.e. Ariba).
In my opinion, a mandate for Procurement to be involved in the sourcing decision at an identified spend threshold ($100k, for example) is ideal. At that point, Procurement can then “sell” advanced sourcing tools as relationships are built. In my experience, once Procurement has shown value to their internal clients, they are very open to suggestions and techniques that will add additional value.
We are in the process of rolling out an eSourcing tool right now and this decision is yet to be made for us. There has been a lot of debate but I feel that the correct answer will be mandate. The real question is if the leadership even has this ability. The organization has only had a sourcing team in place for two years and our categories range in compliance from 30% to 60%. We need better than this and feel that an eSourcing tool will probably bring similar results even though the business case states that it will increase compliance.
I am not sure that it is the right approach but we are taking a wait and see approach hoping that the compliance comes naturally. I could continue on why we are taking this approach but it would not interest your readers….
Jim
I’m on the eSourcing 2.0 campaign trail next week again, but back in my office next Thu & Fri (am) if you would want to coordinate a call (with yourself and/or management) to talk through different strategies in more detail. Send me an email (found on the “About Author” page or by clicking my name on this reply), would be happy to chat. This offer is open to other CPO Rising readers too.