Can We Fix Value Destruction?

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Yesterday we facilitated the regional meeting of IACCM (thanks to T-Systems for hosting) and I thought I would share some of the discussion.  As I’ve mentioned in the past, the confluence of the buy and sell side at these events is very stimulating and offers the best potential to start fixing the value destruction that occurs in all relationship establishing processes (sales and procurement).  We were asked to cover three topics and here is a brief synopsis of each.  As we suspected and as the discussion evolved, they all converged at the end.

Technology is clearly having an impact on these processes (CRM, SRM, e-sourcing, CLM, etc., etc.) and technology is starting to deliver benefits like real time problem solving, lower inventory levels, improved customer service, visibility to portfolio risk,etc..  Clearly though, significant challenges remain and the gist of the discussion was that technology by itself does absolutely nothing unless accompanied by a transformation of the rest of the organization (direct quote from a technology vendor!!!! Kudos!).  This is very consistent with the discussion we’ve been having around the consonants and the vowels and was very refreshing to hear, especially from a technology provider.  The second major point was that it was hard to get technology funding approved for these processes and there was strong consensus that perhaps the processes (and functions) are not generating strategic value or not communicating that value.

The topic of Supplier Relationship Management quickly veered into collaborative relationships and strong consensus emerged that collaboration was indeed the goal but  that changing our beliefs and attitudes about these relationships was the biggest challenge because those beliefs and attitudes have assumed an adversarial relationship for a very long time.  Clearly, the contract is not the end point since no value exchange occurs until  after the contract is signed yet our processes don’t extend themselves that far.  We spend all of our time and energy on the pre-nuptial agreement and hope that the marriage will work out great.

The event ended with a discussion around how the “commercial” function (buy and sell) can become a strategic function and not continue to be a back office cost center to ensure compliance with their processes.  We identified five different roles that these functions need to adopt – Process Leader (current role), Risk Manager, Change Agent, Strategic Business Partner and Relationship Manager.  Significant discussion ensued about also adopting the metrics that are important to our stakeholders and not to our processes – how many Chief Marketing Officers have been fired for exceeding their print budget??  Interestingly, we were quickly able to get consensus around the fact that the skills, competencies, processes etc. required in both functions were very similar.  Next Practice companies are already combining the buy and sell side functions to great success.

Through all three topics a strong consensus emerged that the competencies required to make the changes were all  Strategic Competencies (e.g. change management, communication, problem solving, etc.) and not the Functional or Technical competencies.  It felt like that was a big ah ha for the group and the talent Risk Snapshot benchmarking that was done at the event also validated the groups’ discussion.  As I’ve said before, this is one group that has the potential to systemically attack the value destruction going on and we will wait patiently and eagerly to see where they take it.

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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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