8 Tips for a Successful Procurement Transformation
What do we mean by procurement transformation, and how do you accomplish it in an organization with a multi-million dollar spend portfolio, and thousands of employees around the globe?
The ultimate goal of procurement transformation today is not just savings and process optimization. Increasingly, procurement management organizations are looking to shift from a reactive internal customer service function to a strategic function that brings innovation and competitive advantages to the business.
That means overhauling processes, rethinking the operating model, and bringing in new technology to support both—all in relatively short order. It can seem overwhelming, but at Coupa Inspire, KPMG Procurement Practice Lead Dipan Karumsi, and KPMG Program Manager Jaclyn Slotman took us through eight key tactics for process optimization design, operating model development and change management that their group has honed over the course of many Coupa implementations for complex global enterprises. These include:
1. Parallel development
When you’re going to transform the operating model, the technology, and the end-to-end process, it can be hard to figure out where to start. To drive speed to value they suggested working these in parallel, looking at the technology as well as all of the processes and the people to make sure that decisions are cohesive across all three components. That means working in close partnership with technology providers and relevant internal stakeholder groups to keep everyone moving in tandem as you touch each component.
2. One menu, many cooks
One of the goals of procurement transformation is to standardize on a single point of entry into a unified, global purchasing process. Think of a restaurant where customers are presented with one menu, yet there are many functions needed to deliver a cohesive dining experience. Similarly, procurement is tasked with presenting one view that aligns sourcing, legal, risk, finance, etc. all sitting together to provide an integrated purchasing experience.
3. Creating centers of excellence
Many global organizations grow through mergers and acquisitions, or by steady expansion into new markets, eventually creating a complex and often overlapping structure of regions and business units. It’s not uncommon for procurement to get into a situation where the same sourcing managers that are working on multi-millions dollars strategic deals are also handling $50,000 commodity deals.
Sourcing centers of excellence (COEs) help teams refocus on strategic sourcing and supplier management efforts within assigned categories. These can be organized around regions or business units, with the goal of bringing scale and eliminating duplication of effort.
4.Playbooks and bootcamps
Meticulous supporting documentation and training are required to support changes across a global organization. A playbook is useful in documenting the implementation, along with everything people in all the different roles need to do in order to do their day-to-day jobs. Training bootcamps bring people together from around the globe to solidify the new processes. These are also an opportunity for team building, and unifying everyone around the new vision.
5.Usability testing
Even with playbooks and bootcamps, it can be hard to know what’s happening on the ground in a vast organization. Recruiting people to go into the system and execute on different scenarios can be very helpful for refining change management efforts across different regions and segments of the company.
6. Speeding time to market
While one of the goals of a transformation is to speed up processing times, the end game is to help the organization speed time to market. As you design your new operating model, help everyone understand how speeding the timeline in sourcing can drive increased value on the back end. Leverage the visibility into approval workflows and handoffs in Coupa to drill into bottlenecks in a targeted way and figure out how to rationalize each process so as to create realistic, predictable SLAs.
7. Standardizing services
Companies are increasingly looking for ways to more efficiently source and manage services. Instead of digging into ERP data and into each individual SOW, create standardized forms for as many types of services you can, gathering all of the information for each category, establishing preferred suppliers, and implementing forms in the system.
For example, if you’re ordering a specialized service, no matter what group you are from, a standard form should go to the same category team, and the same risk management and legal people should be involved in that. This will not only be faster and easier on the front end, it will yield a more predictable cost and better data on the back end.
8. Accelerated localization
Successful companies don’t stand still for long, so having the ability to maintain controls and a single “menu” as you scale globally is critical. At the same time, you need to be able to bring additional markets, business units, categories and individuals into the system quickly. Each new country you go into, each new acquisition, or new market category shouldn’t go through an entire unique implementation. That could go on for years.
This is where the configurability of the technology is indispensable. KPMG has established “the big five” that are in the system and ready to go, so you don’t reconfigure everything every time.
Creating career opportunities
It’s a big effort, but by simplifying spend management, you can take highly compensated resources out of tactical day-to-day processes like answering questions such as “How do we get this P.O. out? When’s my invoice going to be paid? Who do I need to work with on this contract?” and put them to work on managing suppliers, developing category strategies, and driving supplier innovations and supplier diversity.
It creates opportunities for the company, and career opportunities for individuals. With COEs, entry level people can move into sourcing manager roles, and sourcing can move into category manager roles.
For anyone considering such a transformation, it’s important to realize that you don’t need to refine every part of your plan and your process. In some ways, it will always be a work in progress, and with today’s technology you have far more flexibility to iterate. So, don’t let ideas of perfection get in the way. Find the right partners, and get started down the path.
KPMG is one of the world’s leading professional services firm. They have worked on more than 50 Coupa deployments in over 75 countries. Dipan Karumsi is a Principal with KPMG and leads the, US Procurement Advisory Practice. Jaclyn Slotman is a manager in KPMG’s Procurement Advisory Practice.
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