Delivering a Successful Procurement Transformation
When building a procurement function from scratch, balancing the needs of the organisation and the stakeholders can be challenging.
We spoke to Klaids Lafon de Ribeyrolles, Director of EU Ops Procurement at Amazon, about his experience in engaging technology, stakeholders and talent to build a successful procurement function.
When planning a new procurement function, how can a procurement leader use available data and technology to build and corroborate their strategy?
“When you arrive at a new company or department to begin a transformation, typically there is little or no data or technology available to you. Without an existing procurement function, the organisation will have been operating on a tactical or transactional basis, with little use of information.
At the same time, there is often an expectation for procurement to instantly improve the business; whilst no data exists, the CEO or COO will still anticipate quick wins. These quick wins will be based on your understanding of the spend landscape and how fast you can enable key initiatives. The relationship between data and technology is critical and you need to be savvy from a technological standpoint, and be quick to establish the right tools to use for the desired result.
Ensure you understand the technological landscape: what exists outside the company? What kind of technology can you use that will give you an edge, but also align with your long-term strategy? If you plan to introduce new technology, is it compatible with the current systems?
In most cases, problems that arise are based on the integrity of the data, so it is essential that you know not only how to collect data, but analyse, cleanse and manage it.
For example in a previous role, the organisation had been using the procurement system for non-purchasing transactions. When we started to extract and analyse data, we discovered data coming in that we did not recognise; it did not match any of the items. It took us a long time to identify the issue and in order for us to extract the procurement data, we would have had to pull the entire records, shutting down the ERP for several days. This was not acceptable from an operational standpoint so we had to find an alternative.
The development of big data and computer learning is quite phenomenal; I have seen a big shift in technology in a matter of months, so you always need to keep an eye on the market for new tools or companies that will make something you thought impossible a reality.”
How can stakeholder relationships be developed to support transformation?
“One of the key elements to remember in any transformation, but particularly in procurement where the scope is so broad, is that you cannot do it on your own, within your own function. In procurement, we are the middle-man, building the relations between internal and external: we connect the other departments. Everybody is affected by what we do, therefore we must have a clear understanding of how we are impacting other departments, and ensure we are working with them.
One of the most basic mistakes when developing stakeholder relationships is to assume that your plan will be well received. The reality is that you will frequently be pushed back for various reasons, for example cost, or required changes. A thorough understanding beforehand of who is impacted internally and externally should be your first consideration.
Whenever I am beginning a transformation, one of my key messages to my teams relating to procurement stakeholders, is this: DO NOT assume you know the problem, and DO NOT assume you know the answer. Before you do anything, listen, listen, and listen again. Then develop a solution that will resolve the problem of your stakeholder, and validate with them that this is the right answer. All too often I have witnessed people presenting a solution to a problem that does not exist.
It’s essential to remember that in procurement, we are marrying the internal world of the company with the external world of the suppliers. It is easy to consider the needs of the internal stakeholder, and overlook the external stakeholder. You may have developed a strong transformation plan, but only realise when you come to implement it that you have not considered the needs of the suppliers.
In these early stages, you also need to start categorising your stakeholders: are they internal or external? Are they a potential advocate or resistant to change?
Once you have categorised your stakeholders, you must have a specific engagement plan for each category. Spend time with the stakeholders; understanding their challenges and linking this to your transformation is essential. If your plan addresses the problems they face, the conversation will move from ‘we are making these changes’ to ‘we are resolving your issues’, meaning they will be more likely to support you.
The key is always to communicate. Communicate specifically on how you are addressing the issue; how the transformation is benefiting the stakeholders, and always communicate the quick wins. Building that stakeholder relationship is a powerful tool, to the point where people will draw the transformation into the conversation, rather than you having to push your agenda.”
It is inevitable that a business will have its own expectations of transformation; how can these expectations be incorporated into the new function?
“This leads on from the last discussion point: again, you need to listen. Although there is an understanding within the company of the long-term plan, there will always be the desire for quick wins. You need to ensure that whatever design you have for the medium and long term, there is something at the very beginning that will engage the stakeholders and commit them to your journey.
Over my career I have learnt that every company, industry, and job is different, and as such every transformation is unique. Don’t assume you know what each company needs. You can start with a broad template, which in most cases will consist of addressing the people, organisation, processes and technology. But this will never be a completely accurate picture. You need to truly understand the company: what do they want from their transformation? What are the company’s objectives? Are they a long-term business or a short-term, cyclical business? Do they value long-term relationships with their suppliers, treating them as partners? Or are they in a business where suppliers are plentiful and they do not need that long-term relationship?
Once a complete picture has been established, you then need to tailor your transformation for the market, the business and the structure of the company; it cannot be one size fits all. You may have worked previously in a similar company, but perhaps within a different culture. Understanding technological, strategic and transactional elements are important, but being fully aligned with the business goal and culture should be your number one priority. If you do not recognise this, you risk using teams, structures and tools that will be entirely inadequate for the job at hand.
This is where the quick wins are important. They demonstrate that you are on the right path and that you have aligned your transformation to the company’s objectives and strategies. They build the trust you need to carry on your transformation journey.”
How can a procurement leader ensure they have the right talent to support the transformation and continue this journey?
“Transformation drives change, and as human beings we are disinclined to change. Identify the people in the company who can support and embrace the changes you are implementing. It may be that they have experienced a similar transformation before or they have been anticipating such changes. These “change agents” will guide you, and help you understand what is working and what isn’t, they will be your greatest advocates.
Sometimes when you introduce changes, you will need to have access to new skillsets. A good approach is to cross-pollinate; using the skills and experience of people from other departments of the business, who have an external view of how procurement could support their function. In this way, you can develop further insight into what impacts stakeholders. At the same time, having access to external resources who have a holistic view of what is possible or available outside of the company is highly valuable.
People from different departments within the company will bring you a valuable range of skills, but they will also be a great advocate of your procurement efforts when they return to their function. On many occasions, I have seen staff from other departments come to support the procurement function during transformation, and then choose to stay, which of course brings new skills and experience to your team.
When nurturing talent to support your transformation, you need to make your value proposition very clear, and ensure the goal depicts an appealing picture.
Imagine you are training your team to free-jump from a plane. Initially they need to understand that no one is expected to jump on their own straight away: “We need to learn the techniques as a team, and move one step at a time. Next year we will start to jump in tandem, and then in the following year we jump alone.” You need a clear roadmap and timeline: this is where we are going, but before we do, we need to follow these steps. Communicate the challenges, but also the successes that will arise: when you step out of your comfort zone and successfully overcome challenges, you are growing and getting better at what you do. By having a clear vision of what you, as a team, are going to do, the challenges you will face, and what you will achieve, you are creating an attractive value proposition, both personally and professionally.
With this clear vision and plan, you’ll find that you will begin to attract talent. Other professionals will recognise the development and success of their friends or associates, and they will view your company as a positive place to work and grow. You create a circle from both importing and exporting talent.
During a transformation programme, communication is critical to your success. Regular and transparent communication to your team and stakeholders should be a major priority in your plan. Even when you cannot give the full picture (consultation process, engagement with work councils preventing you to share sensitive information), communicate and explain to people the situation. They will appreciate your openness.
If your communication doesn’t have a level of transparency, people will start to feel that there is a hidden agenda; and you risk losing their trust and engagement. Communicating what I can, but also being clear about what I cannot, has always helped me to develop honest, positive relationships."
Klaids Lafon de Ribeyrolles is Director of EU Ops Procurement at Amazon.