Diane Brown, C.P.M., CFPIM
Diane Brown, C.P.M., CFPIM, Management Strategist The Consortium, Denver, CO 80202-1329, 303/893-6719.
Overview: Success today requires innovation and creativity in an uncertain environment that is often defined by scarce resources. Rising to this challenge demands that we think in new and different terms. The responses that guaranteed success yesterday are often not appropriate to meet the challenges of today.
How do you focus your energies on the areas that will add the highest value to your organization while improving quality, lead times and reducing costs? This paper and the corresponding presentation will explore the following activities and their relationship to this process:
Additionally, during the presentation, this process will be demonstrated using case study material and audience questions.
Goal Alignment. The first step in this process is an in-depth understanding of your organization. What is important to your organization? How does it define and measure success?
This may require putting yourself into an "objective observer" role where you put your preconceived ideas or what you want to accomplish aside and take a look at your organization with a fresh, pragmatic and unbiased perspective.
This also means analyzing the formal and informal information that is communicated to employees, customers and shareholders. Formal information includes documents such as: mission statements, strategic plans, objectives, annual reports, financial statements, marketing material, internal publications, articles and press releases. The informal information includes looking at what is said, what actions and results are supported and rewarded within the organization. What is your organization's "talk" and what is your rganization's "walk"'.
Once you know what is important to the success of your organization, from your organization's perspective, you are ready to define what your department must do in order to be a pro-active partner in realizing success. Why does your function exist within the organization? Where will you add value to the attainment of success?
There will be typically a few key objectives and performance measurements that have been identified. What are your key corresponding activities and performance measurements? A good source of data for this exercise will be your customers. Ask for their input. What is their perspective on the role your department plays within the organization? Where do they see your department adding value?
Process Analysis. The next step in this process is to gather the department in a conference room with a flip chart and some magic markers. In this phase you will be identifying the processes and corresponding activities in which the department is currently involved. Included in this exercise is identifying the position(s) currently executing those activities and the amount of time that is spent on those activities on a standard basis (daily, weekly, monthly). As purchasers work in a dynamic environment, it often seems an impossible task to develop these times. If you get bogged down here try approaching this process from a percent of time spent and work back from there.
Now, look at your newly developed goals. Repeat the exercise described in the previous section and generate a list of processes, activities, position responsibilities and time estimates of what will be required in order to be successful in supporting your organization.
Creativity And Innovation. Once the processes have been identified, consider documenting their process flow charts. The flow charts should include all of the information identified above: the corresponding activities involved, the position(s) executing the individual activities and the amount of time that each position spends on a standard basis (daily, weekly, monthly) on those activities.
These charts are particularly useful as you begin to analyze your processes and activities to identify those that add value to the organization from the organization's perspective and from your customer's perspective.
This is also where you may need to redefine the work of the department and think of it in new and different terms. Traditional activities may no longer be appropriate. There are no limits or formulas to apply here. Think of the different procurement strategies as an "al la carte" menu choosing and modifying where appropriate to meet the needs of your organization. For example, would it be more appropriate in the current environment to implement more systems contracts to eliminate redundancies and provide a higher level of service to your customers, which in turn would make available time in the department for activities with a higher rate of return?
As you go through this process include individuals from other departments. They will bring a fresh perspective to the process and will be able to point out any blind spots. Also, think in terms of the efficiency of the entire organization, not just your department.
Resource Analysis. Now compare the revised lists or flow charts of current processes and activities to those proposed. Where do you have time constraints between where time is currently being spent and where it needs to be spent in order to add value to your organization? Also, look at the strengths and weaknesses of the department in terms of skills required to execute these activities.
Identifying Areas of Opportunity. From this information you will be able to develop a departmental plan indicating what activities the department will be engaged in and the corresponding resources that will be required, including equipment, employee skill sets and any corresponding training. You will also be able to develop timelines to indicate any departmental infrastructure development followed by activity execution.
Developing Meaningful Performance Measures. The last phase in the planning process is to return to the information gathered on how the organization defines successful performance. This will typically be in the form of financial measurements. What are the key departmental performance indicators that will relate directly to the organization's performance measures? They should be easy to track, maintain and report.
Timing. The ideal timing of this process is during the development of budgets. Your planning documents will support and justify your budget.
The plans you develop should be considered to be "living" documents that are monitored on an ongoing basis and updated as required. The underlying precepts should also be reviewed on a quarterly or semi-annual basis.
Implementation. Implementation is probably the most difficult part of this process. on a daily basis most of us are bombarded by what often seems like an endless amount of "fires" that appear to require immediate attention. One tactic that I have found useful is to ask myself (what often seems like a hundred times a day) "Where do I need to be spending my time right now that will have the most important return to the organization?" It often is not the "fire". The trick is to develop the ability to differentiate between true emergencies and those situations that masquerade as emergencies.
Communicating Performance. Your success in supporting your organization needs to be communicated on the key performance measurements on an ongoing basis. After you have determined those performance indicators that have meaning in relationship to the overall success of the organization, identify to whom performance should be communicated and how often.
Also, spend some time determining the format of that communication. How does the person receiving the information best assimilate it: by reading it, hearing it, seeing it or through a combination? This information is readily available by observing the person(s) in question. One key to remember is to make it easy to understand and assimilate, regardless of the format.
Summary. Effective execution of the procurement process is essential to the success of any organization. As purchasing professionals we can assume a leadership role in our respective organizations by aligning our goals, analyzing our processes, committing time only to those activities that will add value and communicating our contributions to the organizations success.
In uncertain times it often seems safer to support the status quo. However, just the opposite is true. Uncertain times demand that we tap our creative and innovative talents, that we critically look at how we do things and have the courage to walk away from traditional practices that are no longer effective.
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