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Some time ago, I had an interesting call with two recent grads from a top-tier Supply Chain program that are now both part of a global supply chain rotation program at a large company that puts new hires onto a Supply Chain/Management fast track by exposing them to the variety of roles across the breadth of its business. Like bees hopping from flower to flower (or business unit to business unit) – a fantastic program – and, fantastic to see enterprises that emphasize the development of supply management executives. If you are part of a program like this (participant, organizer, sponsor, etc.), please let me know, I’d love to be able to share how different enterprises structure their programs. Programs like this are not today’s topic, but rather, one experience that this kind of program provided.
My discussion with the duo covered a bunch of topics but ultimately reverted to one – how can different business units within the enterprise (that have distinct procurement groups, processes and systems) and more specifically, how can distinct procurement teams better organize themselves to push best practices across the entire enterprise? Rather than organize by region, this enterprise has structured its business units by business function and customer market (the functions and customers are quite complex) with distinct procurement, finance, hr, sales, etc. departments that operate with complete independence (as do the business units themselves). The rotational program exposes the participants to many of the business units but also different supply management functions within them. For example, a participant could work in the procurement contracts area for one procurement group then to supplier relationship management in other, etc., etc.
As part of the program, the grads are encouraged to find opportunities to drive improvement and bring them to the fore. In their relatively brief tenures, the two I spoke with each had a laundry list of opportunities that started with the opportunity for the different groups to collaborate and leverage spend on supplier negotiations and contracts (they do not do this currently) to areas where one or more of the groups either far outpaced or far out-lagged the other groups to significant result. Their initial thought to take a top-down approach and centralize the procurement groups, placing them under a single leader (a queen bee, if you will) made sense on many levels, but are most likely in direct conflict with any number of the company’s core beliefs and practices. Had I been speaking to the CFO or those with the ear of the CFO, pursuing a top-down strategy, while extraordinarily difficult, would warrant greater consideration. But as it was, that path did not seem feasible, given the size and complexity of the business and the political nature of an organization that has many different procurement teams and procurement leaders.
My suggestions were for the pair to build consensus with the other member of the rotational program on the top 2 or 3 process improvement areas that would have the greatest impact (and ease in achieving) by being applied across different units – a bottom’s up approach looking at low-hanging fruit – and for this team (of worker bees) to design and introduce a program that would cross-pollinate best practices from one group to another (Root Cause analysis or Value Stream Mapping could be used). One prominent idea was the approach to contracts where one group had a fully-automated contract authoring and repository process while others were all paper, all the time. Then build upon those successes and broaden the scope and ambition of what to tackle next. I also believe that spend aggregation and coordinated sourcing is worth pursuing, possessing a difficulty level between the top-down and bottom’s up approaches just described.
I know that the grads were a little disappointed with my suggestions (I think they were looking for me to suggest they go to the CEO with their idea). But, given the scope of what a true transformation to align in a single organization with a single Chief Procurement Officer would involve, their early tenures, and their collective ability to initiate a true discussion, I suggested a less direct approach.
Was I pessimistic or practical? Something in between? What do you think? How would you approach this case? How did your procurement department evolve into its current structure?
