Category Management of Professional Services – Part Deux Applying Value Drivers to Sourcing/Supply Chain

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Apparently, I struck a nerve (in a positive way 😊) with my post last week where I asked how  you would measure Professional Services.  I ended with this provocative question: And here is the biggie – Are you asking your customers/stakeholders to measure you utilizing a similar list of Value Drivers???  After all, you’re a service provider too!!!

I received a number of comments/question/queries about how you could  use that list to measure Sourcing/Supply Chain and what advantage it would provide.  I will take a few examples to illustrate and hopefully get you to think about your metrics differently. VERY IMPORTANT CAVEAT: YOU NEED TO CHANGE THE WORDING ON THESE AND TO FRAME THEM IN TERMS OF STAKEHOLDER VALUE DRIVERS!!!

This is based on the premise that you have heard us talk about for a long time – we think all of our clients (the Sourcing/Supply Chain organizations) are small consulting companies.  The only difference is that they are owned by their corporation and that is their only client.  Other than that, there is not much difference and therefore, the Value Drivers that we proposed to our client in Part 1 should be very similar to the VDs that you can and should propose to your Stakeholders (with the above caveat in mind 😊)

  • Better than: On time, On budget, Savings Target – This is the most obvious and expected. This will allow you to have the discussion around what role they (Stakeholders) will have to play to achieve this. 
  • Transfer of Skill & Knowledge to the Client (Stakeholder) team – You should absolutely commit to this because you will be providing lots of knowledge about the supply market AND Best Practices that you would have gleaned from suppliers that they have collected from all of their customers,
  • Focus on Change Management & Stakeholder engagement: This is an important message for your Stakeholders to hear. They need to know that they will be paid attention to.  They need to be confident that you have identified all the right Stakeholders and their issues.  They need to see that Change Management is embedded and integrated into ALL your processes.  They need to see that your people have strong CM capabilities.
  • Expertise – The best way to break this down is to list the two types of expertise that will be needed. This ensures that you have the expertise you need from the Stakeholder’s organization and you can commit to the expertise you will provide (Sourcing process, Market analysis, Decision Making/Governance, Change Management etc.).  Make sure you focus on the Strategic Competencies that you will provide to make the initiative a success.
  • Access to proven process, tools, methods – This will add to the credibility of your organization. They need to know that you have what will be needed for them to be successful.
  • Focus on Adoption – (ensuring Value Drivers are ACHIEVED and not just identified) – This one is critical because they need to understand that you are measuring your success by how they define their Value Drivers
  • Sustainable solutions that suppliers support over life of contract – This is a major concern about Sourcing from the Stakeholders. They believe that Sourcing will drive the price down to a level that supplier can’t sustain over the long haul
  • Active Risk Management – Again, critical – especially when framed from their perspective. 
  • Contracts that focus on mutual value creation, not just contract compliance – Where the Stakeholders are mature enough to understand the value of better supplier relationships, this can be important. This will also help justify their involvement in the relationships post contract.
  • Strategic long-term partnership between Stakeholder and you – Obvious
  • Enhance the credibility and reputation of Stakeholder in the organization: This may sound like a throw-away but you would be surprised by how positively your Stakeholders will react to this.

Any thoughts, comments, challenges would be welcomed 😊!

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Dalip Raheja
Dalip Raheja is President and CEO of The Mpower Group (TMG). Dalip has over 30 years of experience managing large organizations and change initiatives. He has worked across the spectrums of supply chain management, strategic sourcing, and management consulting.
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