Program and Project Planning
Based on the same premise as the need to ensure clarity and consensus around the e-procurement initiative, the planning phase drops the level of discussion from the strategic to the operational and begins to develop a detailed program plan for the project. Accordingly, the planning phase is usually conducted in a similar workshop setting—to gain the same level of interactive, multifunction discussion and consensus-building—but the attendees are operational-level managers and specialists (from purchasing, finance, MIS, manufacturing, etc.) who know the current procurement process well. This is essentially where the specialists will put the “meat on the bones” of the project initiated by the executive alignment workshop. Key steps, which we will examine individually, include:
Reviewing the company’s strategic direction, guiding principles, and project goals
Reconfirming and developing the case for action
Setting target performance measures
Exploring the supplier side
Examining critical areas of concern and earmarking resources
Completing a project readiness assessment and developing a plan of work
Strategic Direction, Guiding Principles, and Project Goals
To begin the session, a review of the results of the executive strategic alignment workshop will help the operational-level managers to understand the nature, scope, and need for the project—at least as seen by the executive team. One of the most important aspects of project success is for everyone involved from the start to know precisely what they are hoping to achieve, and it is well worth the time to debate and agree on what the overall goals of the project are, how success will be measured, what functional areas are included or excluded, and when the project needs to be completed. As the operational managers begin to bring detail to the project, it will be immediately obvious why the executive alignment workshop was necessary. Nothing can be more frustrating for the planning team or the executives if key guiding principles and scoping intentions are not clearly defined first by the executives, and then spelled out in their “constitution.”
The Case for Action
In order to get to the next level of clarity and agreement, the group will want to examine their views of the compelling issues that gave rise to the e-procurement project, and to develop a consensus as to why the organization must change the current way of procuring goods and why those changes need to occur at this time. A fair level of skepticism is good, but if not everyone agrees on the need for change and the goals and scope of the project, it is important that those points are made and resolved before the initiative is taken any further. Again, clarity and consensus at the beginning of these projects helps to eliminate many of the risks associated with cross-functional, enterprise-wide initiatives that overlap managerial territories and personal domains.
The level of exchange and discussion will be much more detailed than the sweeping assertions usually made at the executive level, and as each key area of improvement—process efficiencies, leverage, and compliance—is examined, the team should quickly be able to develop a plan for verifying the business case.
Target Performance Measures
In order to avoid anecdotal-level discussions and disagreements, the planning group will need to identify some meaningful indicators of performance, which will bring as much objectivity as possible to the project. These might include
Lost discount costs
Overall labor costs
Time spent in routine ORM requisitioning
Time and labor dedicated to working with suppliers
Numbers of suppliers
Time spent rekeying data
Average approval wait-time
Amount and cost of maverick buying
Using these indicators, the next step is to set target performance measures for the procurement process that will help to actually measure the success of the initiative. The group will need to think carefully about these measurements. The measurements must be true indicators of performance, and the group will want to be certain that attaining these target levels will actually result in meaningful improvements in the overall effectiveness of both the procurement function and the organization as a whole. Most likely, the executive team has endorsed the project based on a combination of partially understood statistics, anecdotal information on inefficiencies, or just on intuition. Putting some objective numbers to the business case will help gain clarity and cement support, and is in itself a revealing exercise in exploring the pros and cons of changing the current process and gauging the value of a shift toward electronic procurement.
The Supplier Side
Many companies have found that an e-procurement initiative provides a unique opportunity to review their entire relationship with suppliers. During the planning phase, the group should decide if their purchasing activities fall naturally into categories—strategic or tactical, mission-critical or support, vendor-dependent or widely available, and so on. This sort of criteria can be used to help categorize the usually disparate supplier base, providing an opportunity to begin the high-level strategic sourcing exercises that most companies wish to do but never find the time to complete.
It also provides an opportunity to start tentative discussions with key suppliers, and to assess their level of willingness to support a shift toward e-procurement. Chances are that many of your suppliers are only too willing to support your organization in that change, but may have no clear idea what is expected of them—how to participate, what changes they will need to make, or how much it will cost them. If your project is limited to ORM and desktop requisitioning, most large wholesale suppliers will already be well prepared to provide electronic catalogs, either directly to you or to your chosen ASP. Many will already have at least rudimentary portal and e-purchasing capabilities. MRO goods often involve specialist and smaller suppliers, and these companies may eventually need to participate actively in your design workshops. It is important to first make certain that key suppliers have the information and assistance necessary to ramp up their efforts on the same timescale as your own, and then make certain that you don’t begin to develop a software solution that excludes key suppliers because it is incompatible with their IT competency levels or their ability to restructure themselves in line with your plans.
Resources and Critical Areas of Concern
During this early planning phase, the group will want to review the major activities within the full procurement process—indirect or direct—at a very high level and agree on what resources will be needed to accurately understand these key activity areas—supplier management, order taking, requisitioning, reconciliation, accounts payable, receiving, inventory management, MIS—and how they will be affected by a shift to e-procurement. This means enlisting the help of some of the most knowledgeable people in the organization to form a “core team” and earmarking a number of experts to help on specific issues. Unfortunately, these are normally the same people who keep the organization running on a daily basis, so it is important to begin to plan early for their participation. That means specifically contacting the specialists, their managers, and directors, and getting their consent and assistance in planning and coordinating schedules.
Even at this early stage of the project, you are likely to encounter the first hints of project change management issues, as managers resist handing over resources, and rivals of the specialists being sought contend that they should be consulted also—or instead of—those chosen for the core team. In fact, selection of core team or workshop participants sometimes requires significant political finesse. It is the first test of the sponsoring executive’s dedication to the project, and he or she may need to be asked to intercede in order to guarantee the necessary resources. Often, it is necessary to create secondary workshops to inform and include colleagues, and in order to demonstrate that there is nothing “secret” or exclusive about the e-procurement design process, and that their opinions, too, are valued.
In fact, many companies at this point will also begin planning for a broad series of employee “input workshops” that, conducted in the first few weeks of the analysis phase, have a twofold effect. First, these workshops are a good forum for soliciting valuable suggestions on how to improve the process from the employees who are closest to, and most knowledgeable about, the work on a day-to-day basis. Second, these workshops serve as a forum for discussion and communication of the business case and project goals, and help employees to understand why the project is necessary and why their support is so valuable. Employee input workshops require a good deal of time and effort, but have been shown time and time again on enterprise-wide change projects to be extremely effective in helping to consolidate employee buy-in. During the planning phase, these resources need to be identified and secured, and a full project plan, including calendars, needs to be produced.
If the program manager has not yet been selected, she or he should be appointed (ideally, this should be someone who participated in the executive alignment workshop). It is important not only that the program manager is involved in these early formative discussions, but also that she or he now take the lead as the project “champion,” with all the sponsorship and communication responsibilities that that role entails. The importance of having a project champion can hardly be overstressed. There is nothing more critical to the success of the initiative than a well-respected and fully engaged project champion (discussed further in Chapter 14).
Moreover, it is important that, under the direction of the overall program manager, department-level process champions be identified as “ambassadors” for communicating and supporting the goals of the project. A detailed, full-project plan should be developed with clear and consistent messages for the employees generally, and the champions should work with the nontechnical project manager (see Chapter 14) to create an effective communication plan. It seems a bit corny, but in fact, enthusiasm is still (next to good project planning and management) the most important tool that a company can use in affecting change in an organization.
Project Readiness Assessment and a Plan of Work
As a final step to the workshops, and as a result of the entire planning phase, a detailed plan of work needs to be agreed on with all the relevant stakeholders, which includes the project plan, timelines, milestones, resource needs, cost estimates, and expected deliverables. It is a lot of work, but necessary in order to clearly understand and gain broad agreement on project scope, and to identify and confirm participation and support from those involved with or affected by the project.