There was a recognition within GLDD that the procurement department could and should be something different from what it was. The organization was tactically focused and reactive, bidding individual requests as they came from business partners. Buyers supported individual user groups but did not have the capacity to assess needs strategically. There were no organizational KPIs or management routines in place to help control the function. A new procurement lead was brought in to build a new organization that would address the perceived gaps between where procurement was and where the company needed them to be.
How were things done originally and what was the inspiration to innovate the process?
GLDD’s purchasing department was historically tactically focused on completing POs and making small purchased in response to customer demands. GLDD leadership understood that it was possible for the purchasing department to become something different – a true strategic procurement team. With the onboarding of a new procurement director, there was a unique opportunity to reassess and create a plan to build the organization into a new function supporting the internal customers as a trusted, strategic partner.
What KPIs did you use to measure success for this project? (For example: performance, customer satisfaction, revenue, sales or relevant financial gains?)
One important element of success for this project was sourcing savings. As GLDD built a strategic sourcing organization, we launched the first wave to drive savings and begin to build a new way of interacting with suppliers and internal customers. As processes were being redesigned, appropriate KPIs were introduced. Organizationally, dashboards were built to give senior leaders visibility into the functioning of the department, and the procurement team deep insight into their operational activities.
How do you plan to ensure that the new model remains relevant and adapts to the future needs of the market?
The model was designed to be flexible and adapt to any new needs or considerations that the organization would require to support its ongoing execution. The sourcing team could be reinforced or reduced as needed based on market conditions and service needs.
What advice do you have for those who may want to implement this innovative approach in their own organizations?
We would encourage any organization in need of undergoing a procurement transformation to seek out partners who can help them to accelerate and enhance the program to better ensure its success. A thorough understanding of what the organization needs their procurement team to provide is an essential first step. Understanding the skills and capabilities of the existing team helps to provide the foundation upon which to build the future. Clearly defining the gaps between the current state and the desired future helps to create the roadmap for success as the organization begins to rebuild itself into something new. Having a clear view of where you are, where you want to be, and an outline of how to get there are crucial to success.
What factors do you think are the most important to consider when innovating supplier performance?
It is important to have a clear understanding of the skills that are essential in the future organization to best enable the transformation’s success. Defining the roles, responsibilities, and expectations of the new positions will stand any team transforming their procurement department in good stead.