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Choose a wizard-like procurement partner to succeed or else? Fail...

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"We have been sold Dummies!!" - exclaimed Mr. X, flaring nostrils et al. "But Sir, we have a plan and I'm sure the C-Sat scores will definitely come up", muttered Mr. Z, the Account Manager from the Model Services. Mr. X, now all the more worked up - "When we signed this deal, you had provided us with the best of your people to design the plan, process and now people who are working on these requests are stuck at basic terminology and on top of it make elementary grammar mistakes." "Do you even understand as to how I face the CEO with all the ensuing escalations when I am the one who sold this 'brilliant' outsourcing idea to him? What am I supposed to do now?!! "

The above situation  may well be from a movie or sitcom, but it's the reality of what's keeping the CPOs awake at nights; especially during and after a procurement outsourcing decision has been taken.

To make understand this scenario better, let me take you back to the same story, only some six months back when Mr. X was still toying with the idea of outsourcing the entire Procurement and Sourcing landscape, leaving only the strategic area to his category managers to focus on. He thought to himself that this was the only way he could reign-in the operations costs under targeted limits and bring the much needed centralization to the Procurement organization, where-in different regions were working like silos. The thought of excellent RoI was just too enticing! So there he went on - inviting proposals from best service providers, getting detailed information on how the whole transformation would unfold. While reviewing all these proposals, he told himself not to be overly concerned with the cost and sell this proposal, within the organization, based on quality, efficiency, customer service and expertise that outsourcing will bring in. He also thought that getting the most established and top of the stack service provider will make his job that much easier and will also calm the gale of doubts from the BUs that think of him as the proverbial horse wearing blinkers to anything but Cost! All things nice, you might think! Then what went wrong? Read on...

Expectedly, Mr. X was very pleased meeting with the top of the brass consultants from Model Services - who had excellent domain expertise, were high performing,- added to his excitement. Also, rest of the Procurement organization was equally impressed with the experts deployed for the knowledge exchange sessions. And as it unfolded, the Project was perfectly managed by the transition team that had laid down the perfect wave-by-wave go-live plan.

Project Live! And Mr. X started planning for his next vacation to Hawaii (where else :-)!).

But wait, what were those flurry of emails bombarding his inbox? Escalations!  ... Processing agent wrongly sending the contract for signatures to another competing supplier with all the details on price, pay terms .... Process agents grappling with their grammar/pending PRs/process and what not!

As for Mr. X, the scene had dwindled into existential questions with the much dreaded "Why me?"!

Now, let's sit back and see what REALLY happened behind the curtains:

  1. The top brass, the high performing wizards that Mr. X met and got sold on were not the people who were actually supposed to work on the day-to-day process requests.
  2. The sourcing experts who received the key-stroke level, onsite training on SoP were not retained in the team and they went back to train a team, belonging to a different BU, recruited to work on operational requests (a process popularly known as RKT or Reverse Knowledge Transfer). Hence:
    a. The knowledge that the process agents received was not primary.
    b. The talent was not retained in the team as these experts flied away to a different deal, by the time the work actually begun.
    c. And the well-known - 'Lost In Translation'!
  3. Personnel hired by Model Services for this deal were not judged on their domain expertise. 40% of the staff was internally promoted who did not know the 'P' of procurement or 'S' of Sourcing! These resources were BPO resources who knew a lot about operations but nothing about Procurement outsourcing.
  4. Talent management for domain specific deals like this was not managed by domain experts. Hiring for the remaining 60% of these resources was done by the BPO team that itself did not know much about Procurement and Sourcing.
  5. The banding of the FTEs was done on similar lines as any other transactional deal. However, in Procurement and Sourcing operations, one requires highly skilled resources with good domain expertise and experience and hence a higher banding is warranted.
  6. Every effort was made to industrialize the process. This is nothing unusual; BPOs are traditionally supposed to do that, right? It's, as they say, the very essence of their DNA. However, what the Model Services failed to understand was the fact that clients would have their own domain specific nuances and that the operations team should be equipped to take that into account.
  7. Model services had a strongly driven Operational Excellence regimen that reflected in its processes, practices, feedback mechanisms and service frameworks. While their teams/processes were declared stable, capable and optimal based on above, they failed to represent the ground realities specific to the project. At some level, the sheer overhead of conformance took away focus from the core issues.

So; what happened next?!

Mr. Z ruminated really hard and worked with his team to charter the six commandments to the so called 'Wizard of Procurement Operations' Hood!

  1. Centre of Excellence: The category and domain experts with strong experience of  Sourcing and Procurement would form a council for :
    a) Domain Specific Talent Management: Including, but not limiting to, hiring, training, promotion, IJPs, promotions, transfers, etc.
    b) Category Expertise: Provide in-house repository of category expertise on complex projects and designing roadmap for handling categories and driving savings. Provide benchmarks, Price Forecasts, Commodity Intelligence reports.
    c) Knowledge Management: To continually update and enhance the domain knowledge in through series of certifications, courses, webinars, etc.
  2. Resource Allocation: Operations and delivery team resources will attend on-site trainings with the client and would be involved right after solution has been formulated. Of course, this might not be possible all the time due to hiring and availability constraints. Still, at least 60% of the resources should be process team leads that will be retained and will be accountable-for the knowledge received/transferred in the long run.
  3. Right-banding: Domain specific and Knowledge Services delivery deals would have a higher branding compared to other transactional deals. The obvious rationale being, the higher skills that these resources would be required and expected to have, because of their role.
  4. Balancing the Operational Excellence Rigor: Retaining only the aspects that can be applied to the specific process and not just adhering to a cookie cutter framework. They would ofcourse continue to leverage the holy charms of RCAs, DMAIC, Voice of Customer to ward off evil spirits of customer wrath, queries, doubts, etc.
  5. Retaining Talent: As a strategic initiative - ensure that the talent hired for knowledge specific deals would be provided with their share of avenue to grow, contribute and learn. The resources should be leveraged appropriately rather than just managing the 'shop' and its people. They would be allowed reasonable lee-ways to get involved with other sourcing and procurement 'grass-root' activities such as help design strategy before an auction, frame supplier selection criterion, discuss challenges with stakeholders, analyze spends, etc.
  6. On-site support: Provide domain and client facing executives to generate that "near you, for you" feeling in clients. Obtain pipeline of work, report to each stakeholder the progress of their requests and promote the work done by off-shored operations center.

... their first but firm steps to the Promised 'Procurement & Sourcing' land ....Sounds familiar and just ? Do let me have your "for" or "against" views through comments...

Comments

How blatant and so very real. Excellent rendering. I really love the story line. Keep blogging

Superlative effort. The post is so well written like a business journalist with story telling style and also bringing out the real story. To me, such suppliers will not have a long run and will get exposed soon.Smart buyers understand these nuances well while selecting various different types of professional services providers.

Thanks DP and CK. I agree with you, CK. Sourcing & Procurement outsourcing is different ball game where one needs to service provider is required to create and re-create the values(spend reduction,unit-cost reduction, and compliance) on a continuous basis, unlike the other BPO intiatives where arbitrage is the only (mostly) source of value creation.

Fantastic post..kept me asking for more.Two things here that can be taken care of at the selection and contracting stage, one the evaluation criteria should factor questions on aspects that result from a deeper vizualisation of issues that may spring up from an outsourcing arrangement.Two, at the time of negotiations, these questions be raised and commitments obtained from the service provider, these should also be factored into the contract/agreement.These arrangements then should be reviewed over regular planned interactions between the service provider and service buyer.
Overall a very well written post. Looking forward to reading more posts from you.

Thanks Riya. Yes, you are right. Many of the points suggested are/can be part of 'continuous improvement' program and should be factored into KPIs and monitored on a regular basis.

Besides the content, its the narrative style and the pointed vocabulary, that has really got me. Despite being a long post, one reads on.....smiling at times, nodding at other.........always trying to connect with the situation. Extremely well written post........one of the best i have read..

Thanks Khalid! :)

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