I believe in three equal important areas when investing money in a purchasing transformation:
1. Hire the best people – Hire the people with the best education, ambition, mind-set and drive. These people will be able to take on the important leadership role and create an impact in the organization. The McKinsey Quarterly also covered this in the 2007 article “The talent factor in purchasing”.
2. Do it thoroughly – Set the vision, strategy and transformation plan for organization, processes, and systems. Execute according to plans. Do not underestimate the need for Change Management. Set KPIs for the transformation itself as well as for the expected results. Follow-up and report on progress and deviations. Do not give up, there will be ups and downs, people will come and go, but in the long run the improvements will come.
3. Use the right partners – As important in all purchasing, choose the right vendor. This includes choosing the right consultants, system vendors, and training partners. The right partners can boost the initiative and secure full effect of the areas above.
Now to the simple logic on how to spend the money assigned for the transformation. If the areas above are equally important, a rule of thumb would be to spend the money equally on the three different areas. Of course, it is not the money being spent that make the success but without enough focus on one of the areas above, I doubt that the transformation will be a success.
