Do You Know the Difference Between Strategic Sourcing & Category Management – Who is the First Person You Should Hire?

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As Strategic Sourcing / Category Management / Supply Chain consultants we advise our clients in a variety of ways, some of which are how to operate (which operating model to deploy?), how to organize (org structure) and what types of resources to hire (skillset / competencies). As the organization matures and attempts to move toward Category Management these elements must also mature. I am often asked – “if you were starting a new Category Management organization or evolving to one, who is the first person you would hire?” Clients expect the answer to be a seasoned Chief Procurement Officer or an experienced data analyst or a technology expert that has a number of implementations under their belt. But, much to their surprise it would be a Change Leader.

Now you are thinking – here we go again, another blog on change management (ho hum). But I have been giving this a lot of thought lately and I would like you to hear me out on this one. We have numerous clients that are trying to make the transition to Category Management and each one is approaching it in a different way. Most are focused on technology (new S to S system), some on process and a few on people. To be honest, “people” has been at the bottom of the pecking order. Large scale technology upgrades and / or process changes cause a great deal of disruption, loss in productivity and require a high percentage of adoption to be successful and to achieve the promised ROI.  Yet, the focus is mostly on the design and implementation of these changes and NOT on ensuring adoption.  I would argue that a good portion of your budget should be focused on adoption and that includes a leader (the aforementioned change leader) to ensure that adoption is the goal.

Some of our clients are on their third different Procure to Pay (“P2P”) system (all top tier software providers). It is because of the lack of adoption, that they are changing the software / system as opposed to changing the environment (that’s what a Change leader does) that the system is operating within. Keep in mind, there is a great deal of cost associated with these changes and NO ROI accrues until the changes are adopted by the organization.   It is only common sense to me then that the focus needs to be on adoption which is ALL about Change Management.  This also translates into the investment you make in adoption which is usually significantly scant. We would recommend that 50% of your overall implementation budget be allocated to getting your change ADOPTED yet that does not come close to what happens in the real world.

Back to the question at hand – who should be the First person you hire as you are moving from Strategic Sourcing to Category Management? It does not need to be someone that has years of Procurement expertise but instead should be someone that has the communication and collaboration skills to lead an organization through the change and ensure adoption (a Change Leader). Think about the scenario where a client is on its third P2P system. Obviously, adoption did not work the first two times so I’m not sure why they think the third time is a charm 😊 UNLESS they do something to ensure post implementation adoption. I would argue that before you start buying new operating models, systems, processes or people you should take the time to think about what did not work the first (or second or third) time which is a key role for the Change Leader.  And if you don’t have that Change leader today, it’s a great place to start.

Let us know what you think and join in the conversation . . . .

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Anne Kohler
Anne has been leading consulting and financial management organizations for over 25 years. She has extensive expertise in Strategic Sourcing, change management, contracting & contract management (both the buy side and sell side) organizational design and supply chain management. Anne has a passion for collaborating and educating her clients while helping them to uncover hidden value in their organizations. In addition, Anne has been named by Supply & Demand Chain Executive as a “Top 100 Provider Pro to Know” every year since 2007 and a 2013 Top Female Supply Chain executive.
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