Change Management — A Survival Skill for the Senior Purchasing Manager

Author(s):

William L. Michels
William L. Michels, CEO, ADR North America, LLC, Ann Arbor, MI 48106-0366, 734/930-5070, bill.michels@adrna.com
Michael L. Quick
Michael L. Quick, Consultant, ADR North America, LLC, Ann Arbor, MI 48106-0366, 734/930-5070, mike.quick@adrna.com

86th Annual International Conference Proceedings - 2001 

Abstract. There is little doubt that the purchasing profession is undergoing major transformation and change. Purchasing can no longer survive in a tactical leverage mode with buyers focused on transactional management. With the development of e-commerce and streamlined processes, many of the transactions will disappear and the purchasing team who is not capable of developing a strategy to cope with changes in technology, industry consolidation, global marketplace management, and strategic purchasing will not survive.

In many cases businesses lack the capability to change and must identify the enablers and blocking forces to be successful in transforming their businesses to meet the challenges that they face. Development plans and robust metrics to evaluate, develop and motivate staff to change must be developed. Not all people embrace change and this session will address resistance to change in a straightforward way.

Introduction. This session will discuss the need for change, outline a model for managing the change process, detail the enablers and blocking forces of change, detail processes necessary to deliver high performance and provide keys to successful change.

One of the key questions that must be considered is, "What process will be required to achieve major change?" The need for change is driven from both internal and external pressures. The internal pressure results from corporate demands for higher profitability, which translates into lower costs from purchasing. Since the internal pressure for increasing profits and the external pressure from customers for price, delivery and quality improvements is constant, the need for continuous cost improvement is also constant.

This continuous cost improvement can be achieved in two ways: the Task Oriented Approach or the Process Approach.

Task Oriented Approach
projects are created to achieve an annual goal
Advantages
Disadvantages
Achievement of goal makes management happy Suppliers get tired of the approach
Forces the staff to work hard Does not allow for breakthrough
Minimal investment required Staff tires and turns over
  Results are under-maximized
  Results can't always be sustained

Process Approach
Business processes are revised and practices are developed which bring short and long term results-considerable investment is required.
Advantages
Disadvantages
Cost improvement can be forecast over a long time frame Requires personnel with higher skill level
Forces the team to work hard and smart Requires new tools
Can achieve tactical and strategic control Requires following a methodology
Can achieve tactical and strategic control Requires metrics
Sustainable results Requires investment

Developing a process approach requires a rigorous change management model.

The Change Model. Our firm uses a three-stage model for change (see Exhibit A).

(Exhibit A is unavailable in the text-only version of this document.)

The premise of the model is one of unfreezing the old model, introducing the change model and freezing the new model.

Stage I: Insight is critical as it sets the vision, focus and expectations for purchasing in the future.

Stage II: Improvement is vital to the success in the creation and implementation of change. It is internally focused. Here capabilities, processes, strategies and culture are modified and enhanced in support of the vision, focus and expectations defined in Stage I. Exhibit B identifies four essential elements for change. Through Stage II, it is necessary to expose, train and develop the team to work within the new framework. It is also necessary to develop an internal mechanism (steering group) to assist with organizational obstacles.

(Exhibit B is unavailable in the text-only version of this document.)

At Stage III Independence all of the essential components and processes are in place for the long-term sustainability of the change. It is necessary to pilot new ways of working, collaborative team approaches, policy and processes, and to revise them as necessary.

Transforming the business change model into a model for purchasing requires a number of practices and processes. They are detailed on Exhibit C.

(Exhibit C is unavailable in the text-only version of this document.)

Conclusion. The transformation of purchasing from a tactical model to a strategic, continuous improvement model is a long journey. It can be done with a strong map and project plan. Many companies who have made the investment in time, energy and resource have reaped the rewards and are achieving competitive advantage. Companies that have not done so must transform or they will not survive.


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