Why organisations fail to implement strategic sourcing effectively...

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Heleen Liebenberg.jpg“The drive to become world-class has seen many organisations implementing Strategic Sourcing philosophy and Supply Chain Management practices within their companies with various levels of success. So why do some organisations still fail, whilst others excel?”, Heleen Liebenberg, a Senior Sourcing Specialist at Volition Consulting Services, asked SmartProcurement.


Top management support & commitment is a criteria for successful implementation

Although it is common knowledge that no strategic intervention can hope to succeed without support from top management structures, little thought is given to inter-departmental dependency. Indeed, strategic sourcing is not an isolated procurement activity: “The development, implementation and management of a shared sourcing philosophy are one of the most crucial activities undertaken by any organisation, impacting on all other organisational departments whether directly or indirectly. Implementation therefore requires the breakdown of traditional departmental empires and functional walls in the drive to achieve a shared organisational strategic objective”, Liebenberg told SmartProcurement.

 

The objectives of an organisation’s sourcing division should thus support and enhance the overall corporate objectives, vision and mission statement. Although a professional science in its own right, the main function of the sourcing division remains to support the internal clients by assisting them in achieving their goals and project deadlines. If this cannot be achieved, the whole existence of the division becomes threatened.

 

All interested parties should be included from the early development stages ensuring that concerns and issues are addressed upfront with clear guidelines in terms of responsibilities, decision-making activities, communication, reporting and management. Objectives, shared vision and mission statements, including targets in achieving strategic operational goals, should be clearly communicated and agreed upon prior to the implementation phase.
 

Continued management of relationships
No relationship starts out with complete agreement and trust. Walls need to be broken down gradually and trust of performance needs to be earned. Once commitment and support have been obtained, care should be taken in the nourishing and management of the new relationship structures.

 

Regular feedback should be provided to clients both formally and informally. Nothing frustrates a client more than being left in the dark. Efficient communication, reporting and escalation structures must be put in place and maintained to ensure continued inter-departmental client support.
 

Ongoing performance management
Key Performance Indicators (KPI’s) must be set and reported, not only against departmental objectives, but also against the greater corporate objectives.

 

Care needs to be taken in the setting up of KPI’s. Before setting the criteria, the following questions need to be asked:

  • Is the information being measured key to the success (or performance) of the organisation and / or department?
  • Is it measurable?
  • Can it be managed and / or influenced?
  • Does it facilitate decision-making and provide future vision?


Investment in skills development & training
“Although the majority of implementation plans address skills development and training, this is often deemed a once-off exercise without any formal assessment or support in the implementation of learned skills in the candidate’s day-to-day activities. Ideally, conventional training should be followed up with mentorship or over-the-shoulder training with continued regular assessment and identification of further development areas”, Liebenberg continued.
 

In addition to the above, training should include the development of the following personal skills:

  • Interpersonal skills;
  • Presentation skills;
  • Problem-solving skills;
  • Analytical skills; and
  • Reporting and writing skills.

 

Effective cross-functional teams
Most organisations who fail to implement supply chain management initiatives effectively also fail to exhibit sufficient care and insight in the selection and development of cross-functional team leaders, which results in dysfunctional teams with no or little success. The strength of any cross-functional team resides with the team leader’s interpersonal skills, including the ability to steer, manage and control his / her team.

 

Very few people have the ability to function effectively within a team and even less so to function in a cross-functional team with a history of stained inter-departmental relationships. This, more often than not, results in the under-utilisation of specialised skills. Experience further shows that large teams must be avoided. In larger organisations, simply getting a full turn-out in a team meeting can take weeks. Therefore, these teams can become a hindrance rather than an asset. Leading a cross-functional team requires continuous proactive management, a great deal of patience and enormous maturity.
 

Effective policies & procedures
Policy and procedural documents - although comprehensive with flow charts, level of authority and minute detail with regards to functional activities - often fail to achieve their intent as the author loses touch with his / her audience in his / her aim to impress with his / her literary skills. Procedural documents should be written as a daily reference and guideline to operational levels in a language appropriate to the task.
 

Strong post award activities
“Many organisations still fail to understand the relevance and importance of post award activities with no or little attention given to active supplier management. The sourcing activity does not stop with award; the contract / order still needs to be seen through to final fulfilment”, Liebenberg concluded.

 

Again, no meaningful and mutual beneficial relationship can be sustained without any effort going into it. Time invested in ongoing post award activities avoid:

  • Uncontrolled and / or increased cost;
  • Non-adherence to cost and discount structures;
  • Delays in delivery and / or service activation; and
  • Poor performance with unacceptable quality levels.

 

The conscious application and consideration of the above-mentioned points will increase the probability of success for organisations who implement these initiatives.
 

Article submitted by Heleen Liebenberg, a Senior Sourcing Specialist at Volition Consulting Services.

Heleen Liebenberg can be contacted at the details below:
Tel: +27 11 259 4380
E-Mail: hliebenberg@volition.co.za 

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