Supply Excellence
← Supply Management: Big Apple Style Supply Management Successes and Surprises in Second City →

Supply Transformation: Avoiding Margaret Thatcher’s Mistakes

May 14th, 2007 · by Tim Minahan · 1 Comment · best practices, supply management

On my travels back from the ISM Annual Conference in Las Vegas, I came across an article in Vanity Fair on Ronald Reagan’s long forgotten diary. (A must read for anyone interested in the inner-workings of U.S. politics or anyone who was a fan of the 1980s. I’m both.) One entry recounts Reagan’s first meeting with U.K.’s then-Prime Minister Margaret Thatcher (shorthand is President Reagan’s):

“[Thatcher] was as firm as ever re-the Soviets and for reduction of govt. Expressed regret that she tried to reduce govt. spending a step at a time & was defeated in each attempt. Said she should have done it our way–an entire package–all or nothing.”

The comment was reminiscent of a meeting I had a week earlier with a supply chain technology director and newly appointed CPO at a U.K. public sector organization. In the throes of a major supply management improvement initiative, the two execs debated whether it was better to start with a few trial online sourcing projects or to push forward with their broader transformation plan.

The supply management overhaul was already greenlighted (mandated, in fact) by the organization’s top execs. Funds for supporting supply management software were earmarked. So the debate over whether to toe the supply management improvement waters or to just jump in centered on the concern that the rank and file would resist efforts to improve or change operations.

“Many of our [supply management] team have been doing purchasing a certain way for decades,” argued the technology director. “They are uncomfortable with adopting new processes and systems. I am concerned about driving adoption.”

Now, I am the first to stand up and warn of the challenges of driving adoption and changing old habits. (And I’ve seen first hand how these challenges are magnified in the public sector.) I am also a fan of tempered roll outs when used as a proof-of-concept to secure executive support and budget for a broader project. (Evidence my applause for a newly minted Boston-based CPO who first ran four online sourcing projects, saving his firm millions, and then asked for funding for the e-sourcing solution.)

Yet, scaling back a supply management overhaul to satiate uncomfortable employees is akin to letting the inmates run the asylum. It is also the surest way to ensure that your supply management improvement initiative with fail miserably. The whole point of transformation is…well…changing and improving upon the old way of doing things. And change isn’t easy. It requires retraining existing staff, other internal stakeholders, and suppliers. It may even require upskilling (i.e., a euphemism for churning) the workforce.

The episode is emblematic of the biggest challenge facing supply management today: the talent crunch. The harsh reality is that supply management discipline is currently the victim of unfavorable demographics. Old-school purchasing folks that have been processing purchase requests for the past 30 years are ill equipped to utilize the more strategic approaches (and technologies) required to succeed in today’s global supply management environment. To make matters worse, as the above episode indicates, many purchasing personnel are unwilling to change.

Considering this stance, you won’t be surprised at how pleased I was when the newly arrived CPO looked across the table at the technology director and said bluntly, “I’ve always been one to jump right off the cliff [instead of doing a trial]. I’m certain it will be painful for a few months, but, after that, people will become familiar with the new process and systems. This will put us much further ahead in our goals. And reduce the opportunity for [employees] to sabotage our transformation because they feel it’s only a pilot.”

The discussion provides a cautionary tale for other supply management groups launching improvement initiatives. Making change happen requires a clear vision and full commitment. As Prime Minister Thatcher learned, tip-toeing into transformation arms the naysayers, giving them ample opportunity to stall or thwart your improvement plans.

Email Forward & Bookmarks
[del.icio.us] [Digg] [Facebook] [Google] [Reddit] [StumbleUpon] [Technorati] [Email] More »

Tags:

1 response so far ↓

  • 1 Supply Excellence » Purchasing is a Dead End Job. (And Other Conspiracies.) // Jul 25, 2007 at 10:54 am

    [...] Or the U.K.-based procurement executive that worried that his veteran team lacked the skill set required to compete in today’s global and technology-proficient marketplace: “Many of our [supply management] team have been doing purchasing a certain way for decades. They are uncomfortable with adopting new processes and systems. I am concerned about driving adoption.” [...]

Leave a Comment