With road-map in place it’s time to crank up the engines and race ahead and crash - Kabooom! Well, a more prudent approach could be to rev up the engine gradually until you are familiar with the landscape of scope of work ahead of you and gather speed as you get comfortable.
As indicated in Stage III Article-1 the area that I am concentrating the most is on procurement strategy and its support elements IT and project management.
ACE Model:
I designed the Assess-Consolidate-Expand model to act as a compass and a odometer to guide my journey of BPCI.
The Assess phase sets the coordinates and reference point; it tells you where you stand today and how the scene around looks likes. The audits & AS-IS (refer: Stage III Article-1) captures the current procurement & purchase (P&P) procedures and practices along with its IT systems that are in place at the three companies operating within the group. The P&P itself is driven by customers’ M&E service or install needs. By knowing where you are now and the amount of fuel (resources – hard and soft) that you carry and are willing & capable of expending, you set yourself the objective of traveling to where you want to be.
The Consolidate phase will then endeavor to pull together those parts of the car that have utility & life left in them so as to get cannibalized in to the ‘yet-to-be-designed’ sparkling new process. Process workflows will give the pictorial representation of the AS-IS of the procurement process today. These will then be valued and ranked against the benefits they are offering or have the potential to offer. The MD and the executive team at X will take the final call on what will be retained. Based on the management decision the design of the new procurement process will begin.
The Expand phase will finally deliver the value stream giving X an optimized inventory & demand management solution, centralized coordinated program management with integrated information flow across the value stream and therefore across the company using ICT.
A quick note here, the company’s culture and mind-set is ingrained in divide and rule and I am not exaggerating here. The HO of the three companies operate out of same building and has been doing so for last 10 years, but they do not work with each other although they have complementary skills to offer each other. And on the contrary these companies use each other’s competitors to undermine their sister companies most of the times.
Data to Information:
To give you a picture of scope and complexity of task ahead, I will give you an example. The company has around 500+ customers and it uses 600+ suppliers to serve them. Average value of turnover per customer is £ 21500. Average value of purchase per customer is £ 11110, add to these the cost of sales, depreciation of capital goods that are indispensible for servicing these customers, overheads etc and you can gauge the value addition happing at X. Average spend per supplier is £ 9500, not a big number; combine to this that top 10 suppliers take away 40% of business from X and you see where we are heading. It is really difficult to leverage on the scale and scope of purchases for any individual company within the group.
The group, all companies put together, purchases over 1500+ unique items, purchasing across the wide geographies nationally. A supplier with strong presence in Midlands might have no presence in North, and supplier holding bastion in North might have skeletal presence in South-East or East Anglia. A purchasing officers’ (a whole lot of them) convenience freely contributes to the complexity. One of the companies within the group that contributes to nearly 20% of turnover sources just one item - subcontractors.
How do you design an optimal supply-chain solution for the consolidated group without compromising on Quality, speed, dependability, flexibility & Cost factors?
Do you now, get the picture of what I am up against?
Between all these confusion it is important here that we don’t forget the real purpose of the current Business Process Change Initiative (BPCI) viz developing sustainable competitive advantage. Michael Porter, god of modern management, comes to rescue again.
The above figure is the Omni present generic value chain model from Michael Porter. This is a simplistic view of flow of value addition in an organisation. The blocks having ‘S’ within parenthesis are indicative of support function that enable value addition to primary activities indicated with an arrow-head flowing through them.
Ideally a business process cuts across traditional departments to combine activities in to a single process flow. Any value streams that will be designed will at all costs align with this value chain. More on value streams in future articles.
Capturing the AS-IS:
The above model helps identify levels of view from within an organisation that’s required to capture the goals and concerns of a process flow.
And how do I capture the goals and concerns? - Rummler and Barache’s Performance framework.
I love Rummler and Brache’s framework. You can see for yourself how it accommodates the concerns at different level with in an organisation with three unique dimensions of goals, design and management of processes. The performance matrix identifies nine different concerns that anyone trying to change processes in an organisation must consider and not just focus only on process or process measures or process management. I have used the performance matrix to come up with sets of questionnaire that I will be using in my company wide semi-structured interviews. Each of these questionnaire set fits in to each individual block thus helping me capture the AS-IS as comprehensively as possible.
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