Dr Ian George on Procurement Transformation – Keep Improving

Continuing the theme of Procurement Transformation, we’re delighted to feature the next in the series from Dr Ian George, a senior partner and practising consultant at Agile Partners. In this penultimate post he looks at the importance of continuous improvement.

I have spent my life looking at organisations and wondering why they tend to have very clear and fixed budgets for investing in improvement yet, when things go wrong, they are willing to spend “Whatever it takes” to inspect product, check the services they have provided and sink costs into fixing what needn’t have gone wrong in the first place. The foundations of continuous improvement sit around the four cornerstones of understanding the organisation, using data to measure how it is performing, knowing how to bring about improvement and being able to engage people in supporting the true priorities. Because the focus often starts with the need to improve outcomes rapidly, many get quickly dragged down into fire-fight of problem solving never to emerge again. Having a strategy for improvement that recognises the stages of maturity that need to be worked through and linking these to a return on investment is key (and it’s not difficult either).

Improvement starts with the development of competencies within individuals and groups. As this is achieved stakeholders can begin to interact within a cooperative network of interdependent activities. As the resulting performance within the organisation improves, a point will be reached where the impact of suppliers on the organisation becomes significant. When this happens the critical few and strategically important need to be engaged in the programme also. Underpinning all of this is the continual focus on the customer as the primary source of information against which performance can be reviewed and priorities set.

Taking a broad systemic view will have consequences for both customer and supplier organisations. An honest and open interrogation of problematic situations often highlights that approximately half of the root-causes of issues emanate from the customer organisation rather than the supplier. In the early stages of a collaborative approach suppliers often don't know how to deal with this politically sensitive issue. Time needs to be spent reinforcing the concept of all parties being encouraged to challenge bad practices so that the resulting weaknesses can be used to inform improvement priorities rather than reinforce punishment regimes. This can be a hard sell to both organisations.

Whilst the organisation and its leaders may be promoting the concept of mutuality, it is quite common for those lower down the ranks to systematically subvert the process by using the improvements as a reason for enforcing their own agenda and targets on the relevant suppliers. The concept of risk and reward sharing can be difficult to embed given the long history of win-lose strategies. The existence of relative power is a given and well understood by both parties. This negative perception will prevail for a long time and needs to be actively countered. Slap me once and I’ll be shocked, slap me twice and I’ll be angry, go to slap me again and I’ll be ready for you every time.

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