Today’s guest post is from Dalip Raheja, President and CEO of The Mpower Group (TMG) and a contributor to the News U Can Use TMG blog. It’s a response to Tim Cummins, President of IACCM and a contributor to Commitment Matters, post on his blog.
You can read the entirety of Tim’s post, The Death of Procurement: Nightmare or Nirvana.
This blog entry marks the beginning of a series that will explore ways that Strategic Sourcing and Supply Chain Management can be used to effectively drive competitive differentiation. Here at TMG we believe that these functions are among the most value-laden (and consequently possess the greatest potential for value creation) across industries. Companies that figure out how to unleash the value trapped along the supply chain will drive exceptional business results over the long-term. The problem holding most companies back in this area is that the best practices they follow are highly tactical in nature, and by definition conservative in nature. Think about it; how can anyone drive truly EXCEPTIONAL results doing the same thing that everyone else is doing (that’s what a best practice is after all!!!)
This series is dedicated to changing all that. It’s dedicated to sharing the NEXT practices that are ahead of the curve today. These NEXT practices are a mix of what TMG is currently implementing with some clients, and a compilation of cutting edge “stuff” that we’re either thinking about or have heard about from friends. We’re looking to you, the reader community to help flush out and solidify the more nebulous ones. Others have been successfully tested on a select group of TMG’s clients, but have not yet been adopted by the greater market. They are truly the NEXT best practices that industries will be implementing over the next few years. Today, however, they are competitive differentiators for the lucky few who read these posts!
The first Next Practice, which we would like to release to this community, is that the Sourcing organization MUST be a part of the sales process, including face time with the customer prior to winning the business. After all, I assume that we can all agree that one of the most critical roles that the Sourcing organization plays is that it represents what the client’s needs and wants are to our supply base (please, NOT the Supply Chain). How confident are you that your current Sourcing organization accurately and totally reflects what your customer’s needs are to your suppliers??
If you are doing that without being actively involved in the sales cycle and actually dealing with the customer prior to and after the sales process, I assume you are depending on the kindergarten game of “telephone” where your customer’s sourcing organization has conveyed what they think their customer’s needs are to your sales organization. From there, it is fed into multiple channels (Sales, Finance, Logistics, Engineering, Manufacturing, Quality…well you get the picture? Or maybe you won’t!). Because now your sourcing organization takes all these various elements from all these various channels and tries to paint a picture of what your company’s customer thinks they need (remember, that’s another poor old Sourcing organization working with the same darn set of issues, trying to represent their company’s customers’ needs!!) and represents it to a number of different suppliers. Should I go on or do I have your attention?
On the other side, the Sourcing organization MUST insist that their supplier’s sourcing organization accompany their sales force and be part of the sales process! In addition, what that also means is that if the Transformation is about changing behavior (ummm, otherwise why bother?), then we need to talk about metrics. We cannot measure the Sourcing organization on QDC (Quality, Delivery, and Cost). Their Balanced Scorecard (ugghhh!) must contain a healthy dose of Customer related measures. And by the way, most organizations measure QDC on the inputs to their value conversion process. So if your leadership is measuring you on QDC and putting you through all kinds of training..ummmmmm, well you think about it! Moreover, shouldn’t we be pushing QDC on the input to our supply base? (More on that later.) At least if we are going to measure QDC, let’s measure it at the end of our value conversion process, not the beginning?
So whether you agree with us or not, we certainly hope that you will join in on the conversation and help us validate and improve the set of Next Practices that we have developed.