Binoy Subba, Head – Sales Operations and Planning, Orient Electric
The progress in technology has been rapid and the implementation of technology for business enablement has not remained behind. This has led to a rise of many technology providers offering similar solutions. While the number of solutions offered has increased, the fundamental business needs have remained the same, i.e. growth and profitability. In such a scenario, the right solution may remain the overarching theme, but, the right partner will be the determining factor in choosing the solution. This is because the implementation of a technology solution equips the organisation to generate higher growth and profitability. However, unless the adoption of an implemented solution is prevalent, the benefit through it would be fictitious.
One of the areas where we use SAP in our organisation is to manage procurement across the organisation. It covers the entire process, starting at RFQ and ending at the business allocation to the vendors of the procurement process. These procurement processes expand across manufacturing units and other functions of different Strategic Business Units of the organisation. The solution of choice being a SaaS solution, the implementation was not a big challenge and implementation support from SAP team was excellent. The challenge, however, remained the adoption of the tool. Some of the major reasons causing deterrence in adoption as per the users were as follows:
1. Change in the way of working – While there are designated procurement teams for manufacturing units, there are other teams like Marketing, Administration, etc. partaking in the procurement of their respective needs who do not have resource specifically dedicated for procurement. This diverse nature of the buyers had resulted in the diverse methods of procurement. The implementation of procurement solutions means a standard way of working. This, while acceptable to many, was not acceptable to others, especially those who are not a dedicated procurement resource. Further, for dedicated procurement resources, while acceptable, a fear of obsolescence was observed.
2. Unclear organisational objective – The materials/ items being procured are usually of a diverse nature. While some were considered to have efficient processes and optimum results, others lacked it. Therefore, should there be uniform objective, or should it vary? In either case, what should it be?
3. Lack of ownership by the business/function heads – The organisation, having an SBU structure, has decentralised procurement functions and processes.
Experienced and resourceful consultants would not only help identify the cause of the problem but also resolve it in a seamless manner
The Project Management team was driven centrally, which resulted in a hard line and dotted line reporting of resources. This resulted in a lack of ownership by the decentralised functions.
SOLUTIONChange in the way of working
This is largely a change management problem and a resourceful and experienced partner can make a world of difference. Experienced and resourceful consultants would not only help identify the cause of the problem but also resolve it in a seamless manner. Creation of Standard Operating Procedures through the identification of pain points and their resolutions becomes the key. Some joint and some isolated sessions were conducted to understand critical issues and were resolved. A clear and relevant comparison of effort vs. result between the existing and new process were charted, and engagement of the resources were mapped. This showed how the pros of the new solution outweighed the cons.
Technology enablement is usually an opportunity to upskill resources but often considered to create resource obsolescence. While it might create a leaner team, it also creates opportunities for internal movement of resources, thereby making them more versatile. Since most organisations usually don’t operate with all its positions filled, this can be done in collaboration with the Human Resources and Management team of the organisation.
Unclear organisational objectives
It is always helpful to identify problems which can be solved through similar solutions. Applying the same principle, we divided the procurements into three categories based on the intended objectives:
1. Achieve transparency: There were many procurements where the underlying information was unclear. Also, there were exceptions being made for reasons which seemed avoidable but could be denied if reported earlier. All these procurements were categorized with an objective to achieve transparency across the value chain.
2. Vendor discovery: There existed many procurements which lacked an adequate vendor base. These were categorised with an objective to discover more vendors.
3. Cost saving: With an objective to reduce cost, a third category was made.
Lack of ownership
Assignments with missing ownership seldom have desired output. Lack of ownership is often noticed if the assignment has not come from direct superior/reporting manager. This problem often crops up when a project is executed centrally in a decentralised organisation. For us, effectiveness came when we appointed a Project Director and Steering Committee. The Project Director is usually a person in in leadership position of the organisation; the Project Manager reports to the Project Director. The frequency of discussions between the Project Director and Project Manager is very high. The objective of these discussions, besides status updates, is to seek guidance for the project.
The role of the Steering Committee is to guide the project from a larger perspective and support the implementation team on haunting issues. The Steering Committee is usually made up of the Head of the Organisation/CEO, a member of the leadership team from SAP and other relevant leaders of the organisation. The meetings with the Steering Committee are less frequent, usually once a month.