Purchasing Transformation

Perhaps its only coincidence but in the past few weeks I have been asked by several customers about the same problem: We have created a great solution but its usage is still quite poor. Why?
Well in general it is difficult to get a group of people to do what you would like them to do (every manager knows that by own experience). If you then add the nature of complexity and most peoples reluctance to change to it you end up with low compliance regarding processes, methodologies and system usage.
 
You could either shrug of your shoulders and pretend that this is just normal – thus accepting it and missing a big part of the benefits of your purchasing activities. Or you could do something about it – and there is plenty of things that could be done about it:

• Set up purchasing policies that include your processes, methodologies and system.
• Define a communication plan and use all existing channels (e.g. in a Newsletter, in your Intranet, in your Company Publication…)
• Perform trainings, roadshows and presentations to super-users, users and management.
• Form alliances by including other departments.

There are sure even more things you could do – just be creative!
 
But the most important thing is:
Assign a dedicated resource with enough time for this! And by that you shouldn´t assign this work to a strategic buyer that already has plenty of other things to do and isn´t measured on it. Assign someone who is measured on this compliance and who will fight for the usage of your tools.
 
In most of the cases where system compliance was low, change management activities have been neglected. Its about time to change this if you want to succeed with your initiatives!

/Abdülkadir Tekin / IBX Consulting

Lately we published the book Purchasing Transformation, which covers the necessary changes for a purchasing department to cope with the actual challenges of the global economy. When it comes to implement changes within an organization, one of the main drivers are still the people, who are supposed to adopt. According to the Handelsblatt businesss monitor, Europe’s top managers are displeased with their organizations when it comes to the ability to change. (The other main showstoppers are the qualification of the executives as well as the lack of customer focus).

In my opinion, the reason for that is that most executives are not focused on the human factor, when it comes to conduct changes in a big organization. First of all, they have already done the change process themselves: they understand already, that a change is necessary and they know, what they want to change and how they want to achieve it. They forget very often to communicate these findings to their employees. What does the market look like, what do we want to achieve with the new strategy, how do do we want to achieve it?

Besides communication, you have to understand, what is happening to people, when there is change going on. A good model was developed by the psychologist Cynthia Scott. People confronted with change go through four phases: ignorance, resistance, explanation and finally acceptance. The speed at which these phases are completed varies substantially from person to person. It is important that each of these four phases should be accepted and that active support should be provided.

Some very good inspirations about change can be found in the book “Who moved my Cheese” by Spencer Johnson. In the style of a parable, it describes how to anticipate, monitor and adapt to change. Actually, I would give that book to every new employee in my company. As soon, as you have the right attitude in a organization, enjoying change becomes a part of the culture.

A recent study of A.T. Kearny revealed that there are currently more than 6000 open management positions in purchasing all over Europe. This clearly underlines the shift of purchasing from an executing function to a top management position with a growing set of responsibilities.  Besides traditional tasks like managing the purchasing, the suppliers and the cost reduction programs additional topics have moved onto the agenda of the CPO organization:

• Supply Risk Management
• Sustainability
• Managing partnerships
• Achieving competitive advantages
• Driving external innovation

But due to the traditional image of purchasing attracting candidates won’t become easier. The new purchasing manager role requires a much more strategic skill set with a high focus on communication and networking. This change definitely makes purchasing more attractive for young professionals. On the other hand the role also becomes more generic and purchasing will compete with other departments for these candidates.

My current perception is that most young professionals with the required skills won’t  consider purchasing as their first choice so I highly recommend to invest in marketing the new purchasing function at universities, in the media and on the job market.

The hunt for talent is on!