This is a conversation that I’ve had with a number of CPOs and the good news is that it is taking less and less effort to convince them. You can’t expect to deliver exceptional results if your processes were never designed to do that. You may remember the series we wrote that invited a lot of derision and attacks many years ago. In it we argued that we needed to “kill” the sourcing process because it was not designed to deliver value – in fact it was probably destroying value. Fortunately, the thinking evolved into supporting our position over time (Phew!! 😊 ).
There is a large gap between our tactical processes and delivering value and that gap is bridged by focusing on the strategic processes. Bridging this gap is critical for us to:
- Deliver value and not just TCO
- Change our role from a tactical transactional center to a business partner
- Be recognized as critical to achieving corporate strategic goals
- Becoming a competitive advantage for the corporation
- Being an “employer of choice” and attracting the best talent
Making this shift is not easy and it starts with an acknowledgement of the criticality of the strategic processes. Once you have done that, then you will need to convince many others of the same thing, primary amongst them will be your own organization and your Executives/Stakeholders. This may seem easy, but it will be a challenge. Turns out you need a lot of Change Management to convince others of the importance of it. You then need to develop those strategic processes and make sure they are truly, seamlessly integrated with your core sourcing process. You will need to train your people and your Executives/Stakeholders because they have an important role to play in those processes. You will need to build up the strategic competencies and make sure that your CBTM strategy reflects that. This is not easy but also not impossible. It is also mandatory so plow through it (contact us for a guide).
The road to Category Management (CM) goes right through these strategic processes. You may remember this model from our very popular webinar series – “Do You Know the Difference Between Strategic Sourcing & Category Management?” (if you missed it, ask us for access 😊)
You will notice that Category Management is more about changing the context. It is collaborative in nature. It shifts the focus from just TCO to making TCO merely another Value Driver and Value is only defined by our Stakeholders. We start paying attention to our Stakeholders’ Stakeholders. The time horizon changes dramatically. All of this is impossible without the strategic processes. At the end of the day, it is hard for you and your organization to differentiate yourself from your competitors based on the tactical processes. After all, if you are more effective at them you deliver some incremental TCO benefit. If you are more efficient at them, you may deliver some incremental internal cost benefit. Both of those combined will not mean a hill of beans to differentiate yourself from your competition or other functions within your company.
To make the kind of impact that you want to have, you will have to rely on the strategic processes and make sure you get them adopted. The processes are of little value by themselves (we give those away for free to our clients 😊).