As we close in on the end of January, most resolutions have already fallen by the wayside – freeing us up with more time.
Now is the accepted time to make your regular annual good resolutions. Next week you can begin paving hell with them as usual. – Mark Twain
The beginning of the year is a good opportunity to examine the alignment of your purchasing organization and objectives.
High performing purchasing organizations combine breakthrough strategies with a clearly defined, aligned organization that applies the appropriate resources to deliver its objectives. Additionally, these high performing organizations apply the right resources in the right amount to deliver the strategic, tactical, and transactional activities.
Starting with the strategy side of the equation, the new year provides the opportunity to start fresh. Obviously, some of the deliverables are already defined – savings, quality, and supply base reduction; however, these are not strategies. Use these deliverables as the What. Using a strategy focuses on the How. In many cases, strategies are implemented over years while still delivering annual objectives but striving to change the baseline once fully implemented. In other cases, a strategy may be used to just keep up with the industry trends.
I have used two approaches to support the development of a strategy: to research future trends and as a strategy map. Go to YouTube and search future trends. You will see amazing videos and projects that describe the future world. Many are subtle advertisements but you can glean elements out of the presentations about baby boomers, working styles, cell phones, technology, economics, and population growth. I find these videos provide some excitement as well as some ideas. A good start to developing a strategy.
I am also a proponent of the balance scorecard. The balanced scorecard can be used to support and drive execution of a strategy. The balanced scorecard aligns with the strategy and helps articulate the strategy for execution. Using the elements of the balance scorecard, it enables a more holistic view of an organization. A balanced score card is comprised of four dimensions:
- Internal business process
- Learning and growth
Using these dimensions, all aspects of an organization are clear when the scorecard measures support of the four dimensions. The next step is starting to explore how an organization delivers the goals of each dimension. Finally, examining each dimension and how the dimensions can work together to develop strategic approaches. For example, most employees interact with internal customers and suppliers. Focusing training (learning and growth) on developing delivery and service skills develops employees and subsequently, improves customer service.
Turning to alignment of an organization, it is important to look at the perception of purchasing. The dichotomy of purchasing is that many executives view it as clerical and others view it as strategic. The true answer is it is both clerical and strategic.
The next question is how to balance the employees to support all aspects of the business: strategic, tactical, and administrative. One approach is to map the employees to the roles and responsibilities, then determine the complexity of each activity. Another approach is to do a work load analysis for each employee. Ultimately, the objective is to define where employees are focused and if the focus of the work is strategic, tactical, or administrative.
Then, the organization can start work on defining the strategy and figuring out how it can deploy its people to deliver results.