Category Management: The BIGGEST Secret is Change Management – No Joke!!

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I know, I know – we’re back to the same old topic of Change Management but this time I want to take a moment and talk about the one thing that we tell every single client that they must have for effective Transformations and Category Management and that is GOVERNANCE.  Without effective governance, you might as well acknowledge that you will end up with sub-optimal results, significant delays, massive adoption challenges and total absolute fatigue (and no I’m not being overly dramatic).  Governance ensures effective and efficient decision-making and the converse of that is immense friction and delay.  That’s just a factoid and not an opinion.

So that’s the biggest secret and the secret buried within that is that it’s not the design or model of governance that determines its effectiveness – it’s the process of putting it in place.  The key to governance is adoption and the key to adoption is the process you use to design and deploy the governance.  That is why when we are having discussions with clients, we often offer to give them all of the designs and models because in our opinion they have very little intrinsic value by themselves.  Their value is only in facilitating the process of deploying the solution.  I hope I’m not getting too esoteric and into the weeds, but I think that’s an important point to make.

Let me share a couple of examples to illustrate what I’m talking about.  Here is a list of responsibilities that we laid out for what we call Level 1 and it’s the Executive Steering Committee (ESC).

 

  • Identify Key Sourcing Areas (new targets and large enterprise initiatives)
  • Facilitate adoption / change management of Key initiatives
  • Ensure significant organizational obstacles / issues are addressed – e.g. Business Units that want to opt out of company-wide Supplier agreements, supplier relationships that are touted as sacred cows, etc.
  • Ensure realization of the SS&P Business Case (Sourcing Benefits / Savings) 
  • Enforcement of XYZ  Procurement processes and policies
  • Determine how benefits / savings are managed to ensure capture in Financial Statements

 

We can create a document and attach a cover note and send it out to the members and ask them to validate it and adopt it for the ESC.  We may get some comments back from a couple of people and perhaps a question or two and we would assume that we’re good to go.  Or, we could hold a workshop (the dreaded workshop) and get everyone sitting across the table and forming a common understanding of each of the bullets and collectively agreeing to each of them knowing that it means the same thing to all and agreeing to hold each other accountable.  I’ll let you be the judge.

Here’s another example of another template from our work on governance.  Our alumni and clients will recognize it right away and it’s essentially the glue that holds the entire governance model in place.  It also allows each level to project its decision-making power over the entire process without ever getting in the way or slowing things down.  It’s a beautiful thing to watch when done right 😊.  They’re call Decision Principles and here are three examples of Level 1 Principles:

       Principle                               Rationale                           Implications

Information Sharing and Status Updates will be conducted outside the Governance Meeting Do not want to “waste” time of executives with updates that can be standardized in reports •      Face-to-Face meeting time will be well planned and reserved for major decisions and actions

•      These are NOT forums for P2p implementation updates

Decisions made at the Executive Steering Committee will be considered to the decision for entire company. Decisions will be acted on and need to be supported by the committee members •      Attendance and participation in the Committee is critical

•      Ensure membership can commit the entire organization to the decisions

Active and Visible support from  Executives will be required to be successful Strategic Sourcing will fail regardless of the resources unless Executives are committed to make it happen •      Strategic Sourcing must provide a “contract” that outlines what is needed by Executive Sponsors and the Executive Steering Committee

 

I know I’m stating the obvious but publishing these as the Principles of the ESC versus having a knock down drag out discussion for 30 minutes on a single word(actual story) with an ESC may lead you to the former as the easier choice.  But it would absolutely be the wrong choice😊.

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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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