This October, the Future of Sourcing Awards will celebrate organizations and individuals that have shown innovation, leadership and transformation in categories that are critical to the sourcing industry. Interviews with the finalists provide helpful insight about their projects, the problem they sought to solve and the impact to their organizations. Below, read about how IBM re-organized their Global Procurement team to become aligned by business unit, with a smaller supplier-focused category organization and also implemented agile practices as a standard way of doing business.
Can you outline why your team embarked on this project and the problem that needed to be solved?
IBM Global Procurement recognized the need to transform its organization to meet the evolving demands of its stakeholders. In general, clients viewed the procurement process as complex, having too many approvals and taking too much time to execute. As a result of this project, Global Procurement re-organized to become aligned by business unit, with a smaller supplier-focused category organization. In addition, agile practices were implemented as a standard way of doing business.
How were things done originally and what was the inspiration to innovate the process?
IBM’s Global Procurement was organized primarily by category with some centralization for key processes (e.g. supplier onboarding). For example, each category leader owned entire processes from strategic sourcing to purchase order processing. There was no direct stakeholder (business unit) alignment and all activities pushed to teams based on category. In addition, procurement had very traditional methods of pushing work and had built up numerous metrics and management systems that did not always align and slowed the business.
What KPIs did you use to measure success for this project? (For example: performance, customer satisfaction, revenue, sales or relevant financial gains?)
As part of this project Global Procurement redefined its KPIs around five “metrics that matter.” After piloting and rolling out the new accelerate organization and structure, Procurement realized significant improvements in NPS (+4) expense reduction (13%), and cost savings (11%). Global Procurement also established stronger speed metrics that are still evolving.
How you plan to ensure that the new model remains relevant and adapts to the future needs of the market?
Agile is one of the key principles of the Global Procurement transformation. A central change management team was established to get constant feedback from the new organization. Retrospectives are held regularly to assess the new alignment and processes, and the organization continually corrects its course as environment changes necessitate.
What advice do you have for those who may want to implement this innovative approach in their own organizations?
Agile organizations iterate work and create an environment that encourages speed to achieve outcomes, while acknowledging that failing fast is acceptable and an enabler to improvement. To make such a transition, strong and positive leadership is required to change ways of working and challenge traditional approaches to doing business. Focus on the outcome, and if processes or measurements don’t improve outcomes, eliminate them! In addition, while it remains important to maintain strong category-focused expertise, moving to a client-centric organization can increase the speed of the organization and keep priorities better aligned.
How much time did this specific innovation take to implement into your organization?/em>
The design, pilot and implementation of this project took approximately one year.
