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| Organisational Inspiration - Key for Cost Management Inititaives |
You as a Procurement professional are always thinking of new radical ways of contributing value or cost reduction to the corporation. The ideas come to you sometimes when you are driving up to your office or while you are having your morning shower. As soon as these ideas start convincing you, one wants to kick it off.
When one is considering where to commence, or on the initial few steps a vital query constantly comes up - What is the likely level of organisational inspiration in respect of cost reduction initiative? In many corporations there are some middle and senior management who will try to impede cost reduction efforts – overtly or covertly, sometimes both. Such actualities could be attributed as “corporate hypocrisy”.
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If you dig deep into the reasons of such behaviour one understands that from their point of view the cost reduction exercise compromises some of the their short term business goals or in many cases they don’t want to take the brunt of their teams who may be already under several business pressures. In some cases, it jeopardises the commitments they would have already made to their customers without involving procurement at an earlier stage on issues which warranted inputs from procurement.
In some enterprises the senior executives assign very aggressive cost reduction objectives, but would do nothing to encourage or motivate middle or senior managers to collaborate with procurement. This happens when they themselves have not fully bought into the actual idea of the cost savings or they are just going with the motion of doing something which is expected from executives of that level.
Several times we come across managers who want to select “their” vendors as they are responsible for the delivery to their end customer and they claim to know the vendor’s capability better than the procurement function. This may be partly true in some corporations but that does not undermine the criticality of supplier selection process and the value which the procurement group can add.
Some organisations are not simply motivated to make the changes required to deliver the cost savings as the morale of the front line field manager’s is considered more important than the benefits of the cost savings initiatives. And in some cases senior executives resolve dissolves at the first indication of opposition arising from the peers or the teams below. The bulk of time one apportions managing stakeholders would be contingent to the magnitude and complexity of the initiative, the time you have available for communication and the extent of support you need to accomplish the outcomes one desires.
A vital step in the change management process is obtaining executive support and agreement. The ideal way to continue the level of sponsorship is to stay engaged with the key executives through the project life cycle by having them sit as steering team. However placing a steering team in charge is worth a word of caution because we all know there is a tendency for the steering team to micromanage and second guess the project team, in ways that are not always the best for the project itself.
A key to finding equilibrium between sponsorship and domination is usually reliant on the personality and abilities of the program managers. He/She will eventually need the political thoughtfulness, the technical competence and the admiration of the leadership. Corporations are often their own adversaries – their organisation structure, processes and policies all build in ‘costs. This is just one of the reasons why ‘lean’ small organisations can often not only take on their larger players but trounce them.
Within a given market place even enterprises of a smaller scale can be different with respect to how seriously they take procurement. If the procurement team is seen as a miscellaneous collection of low level paper shufflers that’s what they will remain until the organisation decides to move forward.It is quite unfortunate to see the most effective cost reduction programs often takes place within corporations that realises that they have no choice but to undertake them – “if we don’t do this now, we won’t be around for short or long term”
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The Author: Ramesh Krishnamoorthy
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A highly accomplished, performance driven thought leader, with in-depth procurement and supply chain expertise. Decisive with strong analytical, financial and problem solving skills, supporting strategic, big-picture thinking to drive operational effectiveness. Possessing vision, passion, creativity, and influencing skills to motivate an organization to high levels of execution and quickly establish credibility with senior executives at all levels, both internally and externally.
Specialities: Leadership, Management of Large Global Organizations/Large teams, Accelerating change Fiscal Planning and Accountability, Global Operations, Balanced Scorecard, Strategy Development and Strategic Sourcing. Building Strategic Alliances, Supplier Relationship Management, Influencing and Relationship-Building.
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