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What You Can Learn from the U.N.

July 12th, 2006 · by Tim Minahan · 1 Comment · best practices, contract management, supply management

The accouncement this week that Secretary General Kofi Anan has personally stepped in to rectify the United Nation’s long-running procurement debacle led me to question what corporate supply management executives might be able to learn from the U.N.’s recovery plan.

Anan’s $4.8 million overhaul plan would add new procurement staff (including a new CPO), fund supply management technology investments, and support best practices and ethics training. In addition to inserting integrity into buying practices, the U.N. expects the moves to enhance its strategic sourcing performance, rationalize the supply base, better leverage its spending power, and institute supplier performance scorecarding.

Here are just a few lessons you can leverage from the U.N.’s recovery plan:

1. Get Commitment from the Top Brass

It may be too early to tell whether Anan’s is truly committed to change or is just caving to public pressure. However, there is more than sufficient evidence that when supply management improvements are driven from the top, change happens.

While in Washington during the first Clinton Administration, I saw how top-level commitment from the President — and Vice President Gore’s continued stewardship — accelerated streamlining and reform of federal procurement practices. Such senior executive support drove the Federal Acquisition Streamlining Act into law within a year — a goal House Finance Sub-Committee members had unsuccessfully tried to acheive for the previous five years.

More recently, I witnessed the CEO of a large space systems giant personally back transformation of his company’s supply management operations. He has publicly highlighted the goals and his support for supply management improvemetns. He has also personally tasked each business unit head with compliance supply cost savings targets.

2. Create a Crisis

I’m not recommending that you embark on malfesence, fraud, or covert operations. (Although, in the case of the U.N., this appeared to be a solid impetus for change.) However, I have seen how savvy supply management executives have leveraged a “crisis” or corporate initiative to secure support, resources, policy changes, and funding for supply management transformation.

Example: Qualcomm used corporate requirements for Sarbanes-Oxley compliance and IP litigation to secure budget and support for a company-wide contract lifecycle management initiative and solution deployment. Similarly, General Motors once used regulatory changes in Europe to gain funding and support for its own contract management initiative.

3. Recruit New Talent

Supply Excellence readers know that talent recruitment and retention is a hot button of mine. With companies looking to turn supply management into a competitive advantage, talent poaching has become more common. This was the case with one Midwestern manufacturer tasked with becoming a best-in-class performing supply management operation. One of the company’s first moves: recruit top sourcing and commodity experts away from other firms. No word on wages for the new recruits, but, knowing the companies they were wooed from, it was certainly an attractive offer. The firm has also devised a stock-incentive program for the group based on meeting clearly defined goals for supply cost reductions and performance improvements.

4. Select a Governance Squad

One of the secrets to procurement outsourcing success is to develop an effective cross-functional governance council. These councils typically include functional leads — such as the heads of finance and operations — as well as business unit leads. This senior-level, cross-functional alignment not only currys support, but, when done properly, it also makes these senior executives accountable (the the CFO or CEO) for achieving supply cost savings and compliance goals in their areas.

This same governance approach works equally well for internally managed transformation initiatives. However, too few companies employ it.

5. Train and Retrain

When I recently asked Dr. Joe Carter, Avnet Professor of Supply Chain Management and Department Chair at the W.P. Carey School of Business at Arizona State University, what it takes to build a top-notch supply management organization. He gave a two point answer: Train your existing team. Then, repeat step #1.

These comments were corroborated in a recent SupplyStaff study on job satisfaction among supply management professionals that found that training and improvement programs are a key tactic for retaining good employees. One strategic sourcing director participating in the study summed it up best: “If your current organization is facilitating an environment for continuing education and growth opportunities, then you’re in a great setting.” (Check back here for more on this study.)

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1 response so far ↓

  • 1 Supply Excellence » Aberdeen Reveals CPO’s Secret Fears and Strategies // Dec 7, 2006 at 12:43 pm

    [...] My own experience finds that this risk transcends geography, industry, and company size. Consider the VP of Supply Chain at a multi-billion aerospace and defense company tha launched a supply management transformation initiative by poaching sourcing and commodity experts from other companies. Or the CPO of a high-tech manufacturer who complained about losing five of his key sourcing and commodity experts: three to a rival company and two to the sales and marketing organization — of his own company. Or Volkswagen’s CPO who earlier this month said, “The single biggest challenge we face is finding highly qualified purchasing people. It is very difficult to keep them trained and up to speed.” [...]

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