Do You Know the Difference Between Strategic Sourcing and Category Management?  No Sponsorship; Limited Success!

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Over a year ago we, at The Mpower Group, tapped into this major conversation around the difference between Strategic Sourcing and Category Management.  So many of our client organizations are trying to make that journey and finding it to be quite challenging.  Let’s ALL acknowledge the fact that it is HARD and it takes TIME because it is a significant change for both the Procurement organization AND the rest of the company.  Here are the major differences between Strategic Sourcing and Category Management:

I’ve highlighted the one area that provides significant challenge to MOST organizations – getting proactive Executive Support or Sponsorship.   This is a tough one because it requires enrolling an executive in your organization to support YOUR transformation and help make it happen which may be one of many transformations underway in your company.  Even if you find an executive that is willing to play the role of the Sponsor, we often don’t do a very good job in letting them know exactly what we need from them.  Interestingly enough, most change efforts fail for the following reasons:

How do we fix this?  Let’s start by defining the role.  Here is the definition we use in our Category Management Bootcamp:

A Sponsor:

  • Is an individual designated as the Executive “Change Agent” of the Initiative / Change
  • Legitimizes an Initiative / Change through their proactive, “visible” support
  • Provides / allocates resources (dollars, people, political capital, etc.) to ensure success of the Initiative / Change

If your organization is serious about successfully making the journey from Strategic Sourcing to Category Management, identifying and engaging a Sponsor is REQUIRED – IT IS NOT OPTIONAL.  Trying to make the journey without a Sponsor (it’s been done) will significantly increase the time and effort it takes (many, many years) and will significantly reduce the benefits achieved.  Here is the impact of no (or passive) Sponsorship vs. active:

  • Business Units and Corporate Departments are allowed to opt out and not participate
  • Full Purchasing power of the organization is not available
  • Resources ($$, people, etc.) are not available when needed
  • Processes are not adopted across the entire organization
  • Internal Personnel do not believe in the Transformation – morale diminishes
  • Timelines and Deadlines are missed
  • Little to no visibility across the C-Level (Executive leadership)
  • Savings and Benefits are not realized

Here are some characteristics of an effective Sponsor:

  • Exhibits a dissatisfaction with present state
  • Articulates a clear vision of the desired future state
  • Strongly believes the change will occur
  • Understands the Organizational impact of the change
  • Understands the Human impact of the change
  • Anticipates and manages the reactions to the change
  • Appreciates the amount of resources (people, talent, time, money, etc.) required for change and have a commitment to provide those resources
  • Capable and comfortable demonstrating public commitment to the change
  • Possesses the political savvy and capital necessary to privately develop support “behind the scenes”
  • One must sit in the “C- Suite”
  • Committed to “seeing the change through”
  • Provides consistent and sustained effort and support

Once you find the right Sponsor within your organization, you must help them play their required role.  Spell out specifically what you need them to do, the time commitment required and even provide them with tools to help them play the role.  Don’t make the mistake of assuming they will know what to do.  Sometimes lack of engagement on the part of a Sponsor is simply because they are stuck.  In addition, let them know “what to expect”.   For example, there will be “NOISE”!  As soon as a change is announced or becomes apparent, turf issues and Sacred Cows will lead to attempts to take spend / categories “off the table” and even the most senior people will attempt to avoid making the change.   If you believe that “forewarned IS forearmed” then this is a critical step.

As you are working toward moving form Strategic Sourcing to Category Management, PLEASE take my advice and secure an active sponsor because NO Sponsorship leads to limited success.  Let us know what you think and join in the conversation . . . . . .

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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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