Driving Change in Indirect Procurement

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2 Driving Change in Indirect Procurement A Workshop For MyPurchasingCenter.Com

3 Discussion Topics Selling the value of procurement Identifying and mapping stakeholders Stakeholder communications Developing a project infrastructure Choosing teams, building a charter and training Developing and leading cross-functional and cross-business teams

4 Indirect Spend Verses Direct Expenditure Indirect Purchasing Is Much More Difficult Than Direct! Budget holders have complete control Purchasing s role is to influence Purchasing is interrupting key relationships Everyone thinks they are the best purchasers Purchasing enables power among stakeholders

5 To Succeed You Must Have: A project infrastructure Formal mandate Category management process Relationship building skills Budget

6 Why It Is Difficult From the back room To the board room Resulting in a competence and skill set gap 6

7 Skills for Indirect Deep understanding of macro- and micro-economics Deep understanding of commodity management Ability to manage in a global market place Highly developed influencing skills Highly developed business skills Supply Managers Need Relationship management skills for internal and external relationships 7

8 Skills for Indirect Understanding of organizational political dynamics Deep understanding of Finance and Financial management Refined collaboration skills Persuasion skills Highly developed analytical skills Supply Managers Need The ability to think strategically 8

9 Skills for Indirect The ability to take responsibility, authority and accountability The ability to create a vision Outstanding communication and networking skills Execution skills The ability to lead and motivate Supply Managers Need The ability to lead and manage change 9

10 Five Key Recommendations for Selling the Value of Procurement 1) Focus on the big picture Understand the entire supply chain demands up and downstream Align forward strategies and develop programs to meet customer demand Engage stakeholders using data driven business cases 2) Move away from a functional orientation Collaborate across internal and external networks to meet the challenge Consider the short, medium and long range implications of your sourcing plans 3) Be a change agent Learn to lead and manage change while developing a support network Create opportunities for all to benefit from change and provide recognition/rewards 4) Build key performance metrics Measure and report performance including bad news Management dislikes surprises A view of reality is better that a false picture of utopia adjustments can be made 5) Add value to stakeholders Don t be the supply chain police or make compliance a burden Provide commercial and technical expertise Identify core competencies and make best use of them 10

11 Stakeholders Identifying, Mapping, Engaging and Gaining Commitment 11

12 The Role of Sourcing & Procurement Stakeholders Own the Spend Sourcing & Procurement Owns the Process 12

13 Identification of Stakeholders You will need to identify stakeholders on a category-bycategory basis Highly likely there will be several stakeholders and they will be spread geographically across your division Once identified, stakeholder information needs to be recorded for future reference 13

14 Low Power High Prioritize Your Stakeholders Power/Interest Matrix Keep Satisfied Manage Closely Monitor (minimum effort) Keep Informed Low Interest High 14

15 Low Power and Low Interest Stakeholder has low power and low interest Manage communication Keep a positive approach Maintain damage control Minimum effort monitor Keep Satisfied Manage Closely This stakeholder has low power, but can create a negative tone Monitor (minimum effort) Keep Informed 15

16 Low Power and High Interest Stakeholder has low power and high interest Advocate for the project Can be a promoter Low organizational power but they can influence others Keep Satisfied Manage Closely This stakeholder has low power, but can create a positive tone Monitor (minimum effort) Keep Informed 16

17 High Power and Low Interest Stakeholder has high power and low interest Has the power to derail the project and influence management Neither positive or negative about the project Will decide upon the data seen and influence of others This stakeholder is likely impartial, but will form a judgment in time Keep informed Keep Satisfied Monitor (minimum effort) Manage Closely Keep Informed 17

18 High Power and High Interest Stakeholder has high power and high interest Manage communication and have frequent updates Keep a positive approach For the project success this person must be engaged Without the support of this stakeholder the project will not likely succeed Maximum effort Keep Satisfied Monitor (minimum effort) Manage Closely Keep Informed 18

19 Stakeholder Mapping These individuals will have a huge influence on your sourcing activities Understand as much as you can about these individuals and groups A stakeholder map provides us with a means to group stakeholders together so we can think about managing them as groups rather than individuals This is very important in a large program where they could be many people involved or interested in the program The initial exercise of identifying your stakeholders will provide a long listing of the individual stakeholders 19

20 Steps in Successful Stakeholder Mapping 1. Identify Stakeholders All whose needs/views should be considered, and who can impact or may be impacted by the sourcing decision 2. Develop Stakeholder Support Map Position stakeholders according to their level of involvement and how strongly opposed or in favor they are of best value 3. Prioritize Stakeholders Position them in the Power/Interest Matrix to identify each as monitor, manage, inform or satisfy 4. Engage Stakeholders Based on their role and their level of support, potential and opportunity 5. Complete Stakeholder Mapping Template Identify each stakeholder s role, interest, agenda and interaction level 20

21 Opponent: takes every opportunity to undermine your effort Profiling Stakeholders Involvement Change Champion: takes personal responsibility for ensuring success Cynic: fires cheap shots to test your resolve Willing Helper: anxious to lend a hand Fence Sitter: not engaged, waiting to see how it goes Against For Stakeholders offer different levels of support 21

22 Profiling Negative Stakeholders Opponent This stakeholder does not want the project to succeed There may be a personal interest at play Perceived loss of power Perceived loss of status Potential embarrassment Not invented here Loss of budget Takes every opportunity to derail you and the project Cynic This stakeholder is somewhat negative There may be a personal interest at play Perceived loss of power Perceived loss of status Potential embarrassment Political Many not want colleagues to look good Takes every opportunity to take cheap shots at you and the project 22

23 Profiling Positive Stakeholders Willing Helper This stakeholder may not be directly impacted but is positive There may be a personal interest at play Perceived gain of power Perceived gain of status Potential recognition Change agent Takes every opportunity to support and participate in the project Change Champion This stakeholder is a strong advocate There may be a personal interest at play Perceived gain of power Perceived gain of status Potential recognition and reward Political influence Takes every opportunity to lead and promote the project 23

24 Profiling Stakeholders Fence Sitter This stakeholder may or may not be directly impacted Will not commit Worried about the political implications if the project is a success or failure Wants to see who and how the project is driven and supported Will join in if the project is well received Will not support if the project hits rough spots Uncommitted until the project gets traction 24

25 Engaging Stakeholders When and why? Depends on stakeholders role early enough to make a difference Because your analysis may suggest: Good savings potential Increasing (and unmanaged) demand Opportunity for process and/or performance improvement Opportunity to aggregate Poor organizational support/buy-in (maverick buying) Other opportunities to drive value? Don t involve stakeholders too late in the process 25

26 Phillip/SC VP Thomas/Finance Jim/SCMP Steve/Purch Paul/Project Mgt Margaret/Purch Ross/SC Adrienne/QA Robert/Plant Ops Ray/R&D Nanette/Regulatory Ken/Engineering Laura/Risk Stephen/Risk Rachelle/SC Judith/Purchasing Erick/AOW Bill/ADB Carl/ADB Use RASCI to Identify Stakeholders R = Responsibility A = Accountability S = Support C = Consult I = Inform Activity\Function Sponsor Team A A Lead Team R R Project Management A A C I R Create RM Dbase A A I C R I I ID Suppliers/Items A A I R R I I Draft Conditioning Ltr A A I R I Distribute Conditioning Ltr A A I R I I Draft RFI A A I R I Distribute RFI s A A I R I I Eval/Val Returned RFI s A A I R R R R R R S R R I I I S Input RFI s Share Drive A A I I I I I I I I I I R R I I I Create Scoring Forms A A C C C C C C C C C C C I R Create Scoring Dbase A A C I I I I I I I I I I I R Score RFI s Purchasing A A I R I I I Score RFI s SC A A I R I I I Score RFI s Quality A A I R C I I I Score RFI s Production R R I C S I I I Score RFI s Preparedness A A I R R I I I Score RFI s Regulatory A A I C R I I I Score RFI s Finance A R I I I I Score RFI s AON A A I S I I Complete Risk Model A A C R I C Map Supply Chain R R I C C I C Quantify BIC A A I C C R I C Dev Supplier/Mkt Analysis A R I S C C C C C C C C C C Dev Supplier Qual Model R R C C C C C C C C C C I C Create Options w/costs R R I C S C S C CI S C C S I C Develop ROI Model A A I I I S I I I I I I R C C Dev Recommendations R R I C C C C C C C C S C C C Final Report to Sponsors R R C C C C C C C C C C C C C 26

27 Communication Plans Are Critical Leadership Team Category Category Category Category Teams Strong communications both ways between category teams and leadership team Category teams should have elevator conversation ready for your initiative 27

28 Communication Plan Objectives Stakeholders in a project need to be informed, involved and motivated to support the program and the associated business benefits. During periods of change, people need extensive information, particularly if they are directly affected by it. Communication Plan Objectives Explain why change is required Reinforce sourcing & procurement strategic objectives Inform key audiences about projects, current status and upcoming events, contribution Inform and educate audiences about the new way of working, multifunction and about savings potential Manage expectations The Communication Plan Will Not Function as a substitute for executive sponsorship Act as a substitute for real ownership and participation in realizing the success of your team s work 28

29 Communication Plan is Key to Get Leadership Support Key actions Comments/benefits Senior leadership and management support are key for success in your project Make sure you engage their ownership by: Engage early in the sourcing process Periodic s to review status and progress on effort Periodic reviews as planned in work plan to leverage leadership support Make sure site management and procurement leadership are aware of your efforts Leverage their support to help with implementation 29

30 Awareness Knowledge Self Concern Trial Run Buy-In What is a Good Stakeholder Communication Plan? The communication strategy will lay out a plan to answer the following general information needs of stakeholders at each stage in the buy-in model. Refer to RASCI slide for perspective. What is the change? When is this happening? What is the schedule? What is the frequency of the plan? What kind of change does this represent? Why is the change important to your company? Resist business as usual. What is the precise content of the change, what does it mean? What are the roles? Insure management involved. Manage expectations. What will this change mean to me? How will the change affect the job I do? Resist business as usual. Ah, so this is what it is like Sounds good, but I ve heard it before when can I get involved? What do I think about the change? How do I feel about changing? How do I provide feedback? Manage expectations. What will my long-term role be? What happens if there are problems? Is management engaged? How can I convince others? Review the plan and adjust as necessary. 30

31 Relationship & Stakeholder Mapping: Communications Plan Identify affected stakeholders from the Stakeholder Map Determine or request their information needs Consider best method of communication (phone, , face-to-face, videoconference, webcast, etc.) Determine how often to communicate Determine who will do the communicating Think through communication issues ahead of time 31

32 Activity Example of a Communication Plan (from a Sourcing Process Key Initiative) Objectives Frequency/means Sender Audience Initial information on sourcing process key initiative Inform the procurement community that a strategic sourcing process key initiative is under progress, Create awareness on this key initiative One time November by Each representative in the project team sends to own procurement community Procurement community Breakout sessions in regional procurement seminar 1 on phase 1 & 2 1 on how will I get trained (in people dev. session) Inform senior management on sourcing process main steps Build knowledge on the sourcing process Test some of the training components (phase 1 & 2) Make procurement community willing to attend new training modules Have senior management understand that early involvement of buyers in the sourcing process maximizes value Once at each regional procurement seminar January/February Once, according to training sessions timeline Category leader Team members Trainer Plant management Senior management Information to supervisors on sites Build awareness of supervisors, they are a key contributor to maximum value as they are the main users They are a key lever to reduce the spend Include in training sessions Trainer Supervisors: Maintenance, storeroom Booklet Give a body to sourcing process Create a sourcing process bible Create a sense of community Once for existing procurement community To be distributed in welcome package of new procurement employees Global sourcing director + Location sourcing leaders Procurement employees Include information on 5 phases in regional meetings Get the message through the functions community that close relationship with procurement brings value to company To be defined according to these different communities timelines Category leader Functions: HR, finance, EHS 32

33 Communications are Critical Some day very soon you will have an opportunity to communicate with someone about sourcing and procurement. It may be the next time you introduce yourself in a meeting. What will you say? Are you ready? Do you have an Elevator Conversation? Something that can be delivered anytime a colleague asks about the efforts of your team Source: CI; George group curriculum 33

34 Building a Project Infrastructure Every project needs an infrastructure Always set up a steering committee Senior management Key stakeholder representatives Build a charter Allow eight weeks for a team

35 Build a Project Charter Mission Role Goal Members Budget ROI

36 Conclusion It is essential to build a project infrastructure Develop a opportunity analysis Engage key stakeholders Build a project plan Deliver results Add value Don t tackle projects with the highest resistance Work on meaningful projects