Procurement department change management – are you doing it the right way?

The old adage “the only constant is change” may never have been truer than in today’s economic uncertainty. Amid constant calls to reduce operating costs, purchasing departments will be challenged to do things differently – centralise, decentralise, rationalise, even outsource. If your organisation has SAP (or any ERP system for that matter), these kinds of changes can more easily be managed by exploiting the functionality you already own to measure the adoption of any significant change in the way buying functions. In this month’s SmartProcurement, Steven Freemantle, of SweetThorn Thought Leadership, discusses how to use your SAP system to facilitate change.

It is all well and good to implement organisational change, but many organisations fail because they assume that a few change management workshops and some training will ensure that the changes are adopted. This is seldom the case. Significantly changing business processes or a procurement department’s structure requires careful consideration and lots of hard work.

For the purposes of this article we will assume that the change has physically happened, all the steps in traditional change management have been applied, and that the buying department has been resourced to deliver against the strategy that drove the change in the first place.

Now is when the hard work begins, and where the use of SAP’s standard supply chain management tools kick in, says Freemantle.

Address your SAP culture

There is a common view among many companies that use SAP that their SAP systems fail to deliver to the needs of their buyers and their managers. These views are characterised by:

• highly frustrated buyers and internal customers;

• little trust in accuracy of SAP data;

• extensive use of Microsoft Excel for reporting and even day-to-day execution of operational activities;

• various supply chain functions operating in independent silos (in extreme cases these departments may be close to war with one-another, where blame shifting and turf defending prevail);

• visibility of procurement’s impact on the value chain that is hard to come by;

• SAP is seen to hinder procurement’s ability to move quickly as market conditions change.

There is a need in the SAP install base to move away from the scenarios listed above, but seldom do organisations look to mechanisms that tackle these challenges as part of any new change initiatives.

Business maturity optimisation

If you have executed a major procurement department change within this poor SAP culture, then whatever changes you have embarked on are destined to limp along until the next change is proposed and executed. This change will also not stick unless, within the overarching change programme, you simultaneously address your SAP culture. Business maturity optimisation is a mechanism to dramatically alter your SAP culture, so that you can realise the value that your change strategy documents describe, says Freemantle.

By using your SAP data you are able to determine if the change has been adopted. Quite simply, you should be using SAP to see if buyers are doing their jobs as intended under the new dispensation. To do this you will need the following to be in place:

1. Your new business rules must be reflected in your SAP system. For the most part, these should find their way into your master data. 

2. Buyers and their managers must have visibility of any deviations to these rules – across the entire value chain, without having to develop new SAP reports.

3. Buyers must be trained to use SAP’s standard supply chain toolsets to assess their day-to-day impact on your value chain.

4. Each buyer must be driven to do today’s work today and procurement managers must have immediate visibility of when this does not happen (using SAP’s standard reports).

5. All value chain role-players must become exception-minded. SAP has powerful toolsets that will tell you when the intended results will, or have gone, awry. This significantly reduces work load on buyers, since they only have to manage the exception, as opposed to everything.

6. SAP rhythm is an absolute requirement. There must be a time in the day (ideally at the start of the day) when the supply chain role players connect with procurement to ensure that yesterday’s, today’s and tomorrow’s work is done. Once again your standard SAP reports determine this focus. If you are using spreadsheets in these sessions then you are doing it wrong.

7. The establishment of daily routine is essential to success. Buyers must be trained on steps and activities needed to fulfil their function using SAP. This routine is not only about putting data into SAP (for example how to create a purchase order), but also how to see if they will get the desired result and how to fix it now (with minimal impact on the rest of the supply chain and how to stop it from going wrong next time around).

8. Real-time processing is vital. If, for example, you record material consumption only once a week or once a month, then SAP cannot be used to effectively enable any of the points. SAP must reflect your reality at all times.

Deliberate, disciplined and measured

Whatever your change journey, ensure that it is deliberate, disciplined and measured. There must be very clear, non-negotiable steps (deliberate) to using SAP data to drive the change. The change programme must entrench strict routine and leading-practice habits (disciplined) and use SAP’s standard reports to track progress on procurement’s contribution to value chain success (measured). In essence, concludes Freemantle, if you use SAP then addressing your SAP culture is crucial in making sure that any other change initiatives realise their strategic intent.

For more information on streamlining SAP in your organisation, please contact Steven Freemantle of SweetThorn Thought Leadership, on stevenf@sweet-thorn.com.