"One on One: An Interview with Debbie Manos" By Julie S. Roberts, Fall 2003, Vol. 39, No. 4, p. 2
Journal of Supply Chain Management Copyright © November 2003, by the Institute for Supply Management, Inc.
Julie S. Roberts
Interview by Julie S. Roberts, writer for Inside Supply Management®
Debbie Manos is senior vice president and chief sourcing officer of KeyCorp. She is responsible for corporate sourcing, which includes strategic sourcing, contract administration, purchasing and accounts payable, asset management, travel, food services, and corporate meetings and events. Manos began her finance career in 1983 with Peat Marwick Mitchell (now KPMG Peat Marwick). She joined KeyCorp in 1990 as a tax manager in Key's corporate tax group. In March 1997, she joined the newly formed corporate sourcing group where she held a number of positions until her appointment as Key's chief sourcing officer in January 2002. Manos received her BBA degree, summa cum laude, from Kent State University in 1983. She received her Master of Taxation degree from Golden Gate University of San Francisco and is a graduate of the Key Executive Experience at the Weatherhead School of Management at Case Western Reserve University.
The Journal of Supply Chain Management: KeyCorp has used functional integration, including integration with the accounts payable (A/P) function, as a strategy to create sourcing advantage. Please describe the integration with A/P.
Debbie Manos: The sourcing group is the strategic sourcing element of our organization. It's set up by category or commodity, and sourcing strategists are responsible for specific types of spend like corporate real estate or professional services, etc. Historically, the A/P organization had been a processing group set up to handle invoices divided by letter grouping. We determined in 1997, during a procurement reengineering initiative, that we could be more effective if individuals receiving and processing invoices were more familiar with the strategies behind a particular area or commodity. Thus, we reorganized the group by category instead of letter group, and the function is now included within corporate sourcing.
The Journal: What is the value of integrating with A/P specifically?
Manos: The benefits of any integrated functions include having the same goals, streamlined communication, and positive working relationships. However, integrating with A/P is also an opportunity to enforce compliance with strategies and policies since the function is responsible for paying invoices. For example, if the organization is implementing a particular policy to require escalated approvals (such as for travel or consulting services), then we can alert the team that pays those invoices of the new policy. Subsequently, the team ensures that the appropriate approval is received before the invoice is paid.
The Journal: What are the factors to consider when deciding whether to integrate functions?
Manos: Over the past five years, we've incorporated a number of units into sourcing. The decision is based on the interaction with a group and then determining that we could be more effective under a single leadership. This allows us to remove any individual silos and ensures that individuals are focused on the same goals. We've also considered the question: "What value is added by having a particular group integrated with sourcing?" Some value-added reasons include close proximity and better understanding of the objectives of the unit.
The Journal: Describe the process for integration.
Manos: We achieved integration with A/P by consolidating from 15 units to one central organization and by implementing an ERP system. Over a period of about two years, we followed a plan that detailed how we were going to achieve integration and the larger objective — procurement reengineering. We began by creating our value proposition. To do this, we identified everybody in the purchasing and payables functions within our 46-state geography. We totaled up the cost of those functions, including the total operating budgets, to come up with the value proposition for senior management: If we could eliminate some A/P positions, hire sourcing strategists, and build the capability to do aggressive category management and supplier reduction, then we'd obtain 20-30 percent savings within these categories.
The Journal: What advice would you offer to other organizations seeking to integrate functions into supply management?
Manos: After proposing the idea to senior management, we focused on people, processes, and technology. I don't think we could have done it without any one of those three. Similar to transforming purchasing to a strategic sourcing organization, A/P is transitioning from a highly intensive operating group that keys in invoices all day. So, if you're going to make it incredibly effective, you might create a lead position and an entry-level processor position within each spend category. The leads are responsible for working with the sourcing strategists to implement whatever strategy is being used. The lead does exception processing as well as a lot of change management, working with the business units to get them to change the way they're purchasing. From a process standpoint, you have to completely rethink how a typical A/P unit would operate. A simple example is when the mail comes in, instead of sorting it by letter, it needs to be sorted by general ledger account so that it is in the right category. Lastly, having a system that supports one centralized group is important. To strategically source, we needed to be able to capture all of our data in one system and be able to do all of the analytics. We realized the need for a system that the A/P group could enter the data in that sourcing would ultimately need to conduct analyses.
The Journal: What obstacles might be encountered when integrating any function?
Manos: We encountered obstacles when consolidating the 15 A/P functions down to one. Trying to get all of the files into the system was challenging, particularly because we were also doing a system conversion at the same time. There's also the risk of losing people who decide they don't want to transition into sourcing. Unfortunately, you may lose that knowledge and potentially lose contracts, agreements, procedures, or records. It's an important area to watch. Another obstacle is the resistance from units that currently have a function with which you could be integrated. Convincing those who have the function that A/P (or any other function) would be better off with you is a challenge. Also, the change in behavior from the processor in the past to the processor today is just as challenging as transitioning from traditional purchasing to strategic sourcing. It's an entirely different mind-set — taking responsibility beyond the processing of the invoice to the entire process.
The Journal: How did you overcome these obstacles?
Manos: One way is with a review and development of talent. You need to be able to identify leaders within the A/P processing group. These are individuals who are willing to make changes, and they must be given the additional skills needed for the new responsibilities. This is done with the help of training and development plans — we put development plans in place for everyone with specific, measurable goals. These goals support the overall goals of the sourcing organization and the entire corporation.