targeting your executive team: the importance of …doas.ga.gov/assets/state...

April 26-27, 2017

Targeting your Executive Team: The Importance of

Defining Procurement’s Value and Brand

The Hackett Group

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provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein,

in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group.

Copyright © 2017 The Hackett Group, Inc. All rights reserved. World-Class Defined and Enabled.

Business Advisory Services | 3© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

Kurt Albertson is a Principal with The Hackett Group with program responsibility for North

American Strategic Advisory programs focusing on client relationships, business

development, research and program delivery. Mr. Albertson works with over one hundred

Global 1000 companies leveraging research and thought leadership to provide strategic

direction and best practice business advice within Procurement and Finance.

Prior to joining the Hackett Group Mr. Albertson spent six years as a management

consultant in Sourcing and Procurement during which he worked with executives from

dozens of large corporations on sourcing, business and technical strategies,

organizational and business process design, and cultural change.

Mr. Albertson also has five years of automotive experience working in manufacturing,

quality, and operations. In this role he designed and implemented global manufacturing

processes and supervised production operations.

Mr. Albertson has been quoted in the Wall Street Journal and other major publications,

has been the key note speaker at many national events, and travels globally to support

client objectives.

Kurt Albertson, Principal – Procurement Advisory

Contact Information:

770-225-7570

[email protected]

Business Advisory Services | 4© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

Today’s objectives

Discuss alignment of Procurement’s value proposition with

organizational objectives

Review a model for internal stakeholder engagement (e.g. customer

relationship management)

Discuss the importance of branding the value and services of

Procurement

Defining Procurement’s

Value Proposition

6© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. 2016 Enterprise Key Issues -PR

Defining procurement’s value proposition is essential for driving performance and building capabilities

Procurement

Value: Evolve the Service Value

“What do we aspire to be?” which

becomes “What to execute?”

Procurement

Performance:

Recalibrate the Service Execution

“What is the level of performance for

both efficiency and effectiveness?”

Procurement

Capability:

Redevelop the Service Capability

“What capabilities do we have today or

need to acquire to change?”

What does the organization

need Procurement to deliver

and what does it do?

How well is

Procurement delivering

relative to WC and

Peers? What capabilities are

needed to be built?


What is Procurement's value proposition and role within the organization?

Value Proposition Procurement Role

Right goods / services at the

right time & place

Right goods and

services AND at the

right price

Shift from lowest price to

Total Cost of Ownership

Reduce demand activity,

complexity and variability

Increase business value

derived from spend

Supply Assurance Buyer / Planner

Negotiator

Supply expert (SCM,

SPM, etc.), team leader,

project manager

Spend/ budget

consultant &

relationship manager

Trusted business advisor and

change agent

Price

Total Cost of Ownership

DemandManagement

Value Mgmt.


Top ten priorities for state procurement in 2017 - NASPO

Strategic role of state central procurement

Procurement workforce professionalization

E-procurement/ ERP solutions

Measuring performance

Effective sourcing strategies

Staffing and talent management strategies

Information technology

Contract management

Cooperative purchasing

Procurement reform and state-wide centralization


What are the top ten most important priorities for procurement in 2017?

Critical High

39%

23%

26%

13%

11%

5%

19%

21%

16%

12%

48%

61%

55%

64%

58%

62%

45%

42%

45%

48%

Elevate the role of procurement to a trusted advisor

Improve procurement’s business agility

Reduce and avoid purchase costs

Expand purchasing’s scope / influence

Deepen influence on complex indirect spend

categories

Increase internal stakeholder satisfaction

Obtain more value from purchase-to-pay (P2P)

Support enterprise digital transformation objectives

Reduce supply risk to avoid regulatory non-

compliance

Reduce supply risk to ensure supply continuity


Procurement spend cost savings where generally flat from the previous year (#1 priority)

Source: The Hackett Group, 2016

Total spend cost savings (reduction and avoidance) as a percent of

annual spend

2.73%2.30% 2.29%

2.00%

3.06%3.39%

2.19%

2.93% 2.97% 3.15% 3.29%

5.54%

4.40%

5.25%4.80%

7.04%

7.68% 7.56%

6.46%

5.34%5.62% 5.58%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016


Service Delivery Model 2.0

Intensifying competition

Disruptive innovation

Customer as King

The Insight Imperative

The Digital Imperative

The five forces of change

Make and implement

decisions quickly

Respond rapidly to changes

in business demands and

priorities

Flexible process and

frameworks that align with

stakeholder objectives

Forecast and plan

continuously to identify

future risks and

opportunities

What’s required for agility?

In 2017 a key objective continues to focus on a more agile procurement organization (#2 priority)

Agile enterprises are those that are capable of changing internally at the rate of external change


Hackett introduced a maturity model around procurement agility…The characteristics of an agile procurement culture

Agile procurement organization

Low agility Agility enabler High agility

Change averse culture, preserve status

quo, focus on resource utilization

Embrace change, view change as an

opportunity, focus on business outcomes

Talent tied to specific roles, common talent

management strategies for all roles, limited

learning and development

Flexible talent placement, talent

management tailored to needs of roles,

continuous learning and development

Bureaucratic decision-making, lacks

empowerment, fosters inappropriate risk

taking

Delegated decision-making authority,

change-oriented leadership, calculated risk

taking

Talent

Leadership

Culture

Excerpt from Hackett Agility maturity model


We continue to see a drive to elevating procurement’s role to that of a “trusted advisor” (#3 priority)

81%

Ranked elevating the

role of procurement

to a trusted advisor

as a critical or major

objective in 2017

Source: Key Issues Study, The Hackett Group, 2015

77%

64%

61%

57%

53%

47%

36%

35%

35%

5%

4%

Consistently deliver on the basics

Hire and retain high-caliber staff

Increase agility

Develop category management strategies

Deliver high-quality market insights and research

Build better awareness of procurement’s services

Discover and recommend innovative suppliers

Prove value through small projects

Improve the overall buying experience

Other

N/A

Which capabilities will help the most to achieve trusted

advisor status?


Organizations viewed as the trusted advisor deliver greater value

3.5%

2.6%

2.1%2.2%

1.2%

0.9%

0.7%0.1%

Valued BusinessPartner

Negotiations/SourcingExpert

GatekeeperAdministrator

Cost Reduction Cost Avoidance

Savings and the Current Role of Procurement

Source: 2015 Hackett Procurement Benchmark

“Trusted Advisor”


Spend influence continues to be important both from a “quantity” and “quality” perspective (#4 and #5 priority)

Savings for stage when procurement

is involved (Quality)

4.57%

2.85%1.92%

0.61%

0.60%

0.56%

Design /Specification

(Demand Mgmt.)

SupplierIdentification

Negotiation &Contracting

Cost Reduction Cost Avoidance

3.45%

2.48%

5.18%

Source: The Hackett Group, 2016

85%77%

68%

100%95% 93%

DirectMaterials

IndirectMaterials

IndirectServices

Procurement Spend

Influence (Quantity)

Peer Group World Class


Success requires that we focus on improving customer engagement (#6 priority)

Monitor

and inform

occasionally

Key players

Engage

actively and

keep satisfied

Minimal

effort

Keep

informed

Influ

ence

Importance

Customer segmentationImproving the customer experience

Improving

the customer

experience

Identify

customers

Measure

success

Analyze

results

Take

action

A Stakeholder

Engagement Model

18© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

What does it mean to be customer focused?

Increasing responsiveness/agility

Honing client facing skills

Aligning PR scorecards to stakeholder success metrics

Streamlining the buying experience

Balancing the organization to best support stakeholders


But being viewed as a true “partner” doesn’t just happen by accident and isn't easy

44%

25%

53%

50%

17%

4% 8%

World Class Non-World Class

Current Role of Procurement in Supporting Stakeholders

Valued Business Partner Negotiations / Sourcing Expert Gatekeeper Administrator

Even World class

organization have

ample

improvement

opportunity

Valued

Business

Partner


UBER is a good example of changing the game when it comes to customer engagement

How can you apply this to procurement?

Expectations are clearly set – ex. 10 minutes ETA.

Self-service options to answer the most frequent

questions.

What makes it great?

Request a ride at the push of a button, on your

own device with real-time status updates.

Ease of use, 24/7 availability

Real-time visibility

No typing -- all information is saved

ONE TAP TO RIDEUber uses your phone's GPS to detect your location and connects

you with the nearest available driver. Get picked up anywhere -

even if you don't know the exact address

Ease of use

Visibility to status

Self-service technology

Clear and agreed

upon SLAs

No need to input a

lot of info

Flexibility to prioritize

needs and level of service


Three capabilities stand out for having a measurable impact on internal customer satisfaction

3.1

3.3

3.4

1.8

1.7

1.6

Have a consistent voice of the customerprogram for your services

Segment customer base with adifferentiated approach for each group

Embed customer experience skills in a yourtalent management

Customer Experience Capability Maturity

Peer World-class

1

2

3

Not

defined

Defined,

inconsistent

Defined,

consistent

Defined,

consistent,

effective

Source: GBS Performance Study, 2015


69%

66%

63%

62%

62%

Relationship management andinterpersonal skills

Strategic sourcing processexpertise

Problem solving skills

Strategic thinking and analysis

Specific supply market /commodity expertise

Is your talent ready to rise to the challenge of increasing stakeholder service and alignment?

General Business Skill Procurement Specific Skill

Source: Skills and Talent Outlook, The Hackett Group, 2014

% of roles in procurement where this skill is considered critical


We need a structured approach to improving the customer experience and engaging stakeholders

Identify key stakeholder groups and

individuals, their interactions and

general attitude

Develop measurement approaches

tailored to key stakeholder groups

Analyze customer feedback, plan for

action by leadership to own and

deliver

Provide feedback to key stakeholder

groups on customer satisfaction and

action plans to address identified

improvement needs

Identify

Customers

Improving the

Customer

Experience

Measure

Success

Analyze

Results

Take

Action


The first step is to begin mapping out the influence and importance of key stakeholders

Monitor and

Inform

Occasionally

Importance

Influence

Who is your customer?

Which are most approachable?

Who will be a good champion?

Who are your greatest consumers?

Key Players

Engage

Actively and

Keep

Satisfied

Minimal

Effort

Keep

Informed

Identify

Customers

Improving the

Customer

Experience

Measure

Success

Analyze

Results

Take

Action

Customer Segmentation

Platinum desk?

Silver-service?


Then, take an honest inventory of today’s customer experience and engagement strategy

Channel Management – What’s the most effective

path to access your internal customers?

Demand Management – Do you understand the

demand your customers have for your services?

Customer Account Management – Have you defined

account management roles and aligned them with you

customers?

Brand Management – Do you have a brand for

Procurement? Is it understood by your customers?

Customer support – What level of support do you

provide?

Key areas to explore:

Identify

Customers

Improving the

Customer

Experience

Measure

Success

Analyze

Results

Take

Action


A differentiated approach to soliciting feedback by stakeholder is key

Identify

Customers

Improving the

Customer

Experience

Measure

Success

Analyze

Results

Take

Action

Method: In person, structured

interview (open questions,

predetermined format)

Duration:45 minutes

Sample:10

Frequency: Annually

Method: On-line survey (closed questions,

and few open questions by service-line,

overall)

Duration: 5 minutes per level (max 20 mins)

Sample: 100

Frequency: Annually

Method: On-line survey (closed

questions, by service-line)

Duration: 30 seconds per event

Sample: 1,000

Frequency: Monthly

Executive-level Management-level Individuals (Project based surveys)

Executive

Executive

Executive

Stakeholder groups

Managers

Individuals

sourcing or

buying


How do you really measure success? Is using a Net Promoter Score the answer?

Identify

Customers

Improving the

Customer

Experience

Measure

Success

Analyze

Results

Take

Action

DETRACTORS PASSIVES PROMOTERS

0 1 2 3 4 5 6 7 8 9 10

Net Promoters

Score

= %

Promoters

%

Detractors


Taking action: A practical procurement example -- guided buying

Providing a user experience that balances simplicity, risk and control

Identify

Customers

Improving the

Customer

Experience

Measure

Success

Analyze

Results

Take

Action

Source Buy

Source

User- defined source

Tactical sourcing desk

Non- sourced

Requisition

Automated inventory/

MRP

Pull from stock

No system required

Buy

Automated (no touch)

SRM sourcing cockpit

P-card or travel card

No PO (invoice only)

E-catalog

Strategic sourcing

29

IMAGINE THE DAY WHEN…

• Our business partners meet

with us regularly to discuss

operations strategy, as we are

an extension of their team

• Our metrics tell us how we are

performing and also show our

business partners that we are

efficient and effective

• Our business partners seek us

for advice on how to operate

more efficiently

• Our services positively impact

our external customers and

result in improved customer

satisfaction metrics

REUTERS

30

CORE BUSINESS PARTNERSHIP TENETS

1. We approach our partner relationships with the same care as if we

were an external service provider or customer.

2. Our services are delivered through personal effort, creativity, and

expert problem solving.

3. We strive to standardize business processes across Thomson

Reuters where appropriate, but we customize our approach based on

understanding our partners’ differences.

4. We value and ask for our partners’ feedback, even when it hurts.

Feedback helps us continuously improve.

5. We respectfully challenge our partners to try new ways.

6. We are accountable for achieving results and building engagement.

7. We are transparent; we share what and how we do things.

Tenets guide team members as they go about their daily activities


Five steps for getting started with a customer centric model in Procurement

1. Define a mission for the procurement organization that focuses on high

value/high return activities; gain team buy-in to this mission statement and

associated initiatives

2. Identify key stakeholders for each high-value activity and ensure a team

member is assigned to each one. Determine the best cadence for interaction

with each stakeholder. Consider utilizing a stakeholder assessment tool to

measure the level of support and level of influence to assign action steps to

improve buy-in.

3. Schedule/Plan check-in meetings with stakeholders for high-value

categories. Integrate procurement into planning and budgeting processes and

early involvement in specification management

4. Assess the broader organization’s view of procurement through interviews

or tools like a stakeholder survey.

5. Take steps to “market” procurement’s new mission and value proposition

through internal communication channels. The message should clearly

articulate business value of the team and how to access support.

Branding Procurement


UPS launched a successful rebranding campaign to show customers that they can be a trusted partner

They educated customers on their

strengths, such as speed and

network size…

…and then created a simple, memorable

logo and color palette


54% of organizations admit procurement brand is not recognizable despite increase spend influence by 11-20%

7%13%

58%

13%7%

No impact Increaseby 5-10%

Increaseby 11-20%

Increaseby 21-30%

Increaseby more

than 30%

42%

54%

YesNo

Are procurement brands recognizable

with stakeholders today?

How much do you estimate increased brand

awareness would change spend influenced?


Creating a procurement brand that resonates with stakeholders

Strategic focus areas:

Create an identity that resonates with stakeholders

Establish a unified global procurement culture

Build sustaining enablers

Translate scale into agility

Pfizer consolidated over 100 legacy procurement teams to create a centralized global

procurement. By driving out complexity and translating scale into agility,

procurement has become a highly integrated, nimble organization while being

recognized for its “Buy Smart” brand and culture.

Develop a

trusted

partnership with

the business

lines

“Competitive advantage thru leading Procurement capabilities”

“Buy smart so they can focus on therapies to reach more patients”


Hackett’s four steps to procurement rebranding

Plan

Define

Create

Engage

Plan the key areas of importance for internal customers

Define details of processes and the new role of procurement

Create marketing materials and release initial communications

Engage and communicate with stakeholders on an ongoing basis

Plan

Define

Create

Engage


Plan out a strategy by determining the key areas of importance for your internal customers and stakeholders

Highlight procurement’s desire to support its stakeholders by focusing on

what matters to them.

Plan

Define

Create

Engage

Supplier

identification

ReportingSpot buying

Negotiations

support

Business

partner

Market

intelligence


Develop reporting capabilities around the needs of stakeholders

Plan

Define

Create

Engage

STAKEHOLDER

METRICS

STAFF CUSTOMERSSUPPLIERSCEO/BOARD,

SHAREHOLDERS

PO processing cycle time

Internal customer satisfaction rating

Spend with approved suppliers

Percent of suppliers comprising top 80% of spend

Supplier performance

Percent of total spend under procurement influence

Turnover

Percent of transactions with rework

Receipts per FTE

ROI, EVA, risk

ratings

Procurement

function cost as a

percentage of spend

Total spend

reduction as a

percent of spend

Alignment is fundamental to supporting business strategies


Define the details of procurement’s brand management strategy, including processes and guiding principles

Be specific about what the role of procurement is and what it is not. Typical

activities should include: Plan

Define

Create

Engage

Develop a simple, direct vision and guiding principles for procurement

Define the support services to be provided and ensure alignment with internal

customers.

Provide clear definitions of the activities performed for each support service along with

the service levels.

Clearly define the business segments/departments that procurement can support.

Align existing staff to procurement's services and ensure skill sets are matched

appropriately.


Develop a vision for the organization

Plan

Define

Create

Engage


Create marketing materials and release initial communications

This stage is critical – it will dictate the stakeholder experience translate into their

future behaviors. Procurement should consider that people will respond

differently to each method of communication and, in anticipation of that, provide

multiple channels to interact with stakeholders. Common approaches include:

Plan

Define

Create

Engage

Develop a new

identity including a

name, logo,

mission, and

defining a set of

values and goals.

Determine

communication

methods with

stakeholders (i.e.,

email, phone, in-

person support).

Deploy an internal

intranet site for

stakeholders to

communicate and

conduct self-

service activities.

Clearly define and

document any

other changes to

the organization

(e.g., new

employee titles).

Develop marketing

materials for

various audiences

that are consistent

with overall

messaging.


Get a logo and tagline that help create a voice that reflects your brand

ESPN uses a

masculine font, bold

colors, and sharp

lines represent

customer

personalities

Baskin Robbins uses

bright, fun colors and

goofy lettering to appeal

to its younger customer

base

McDonald’s simple,

memorable tagline

enables global

recognition

Unilever’s logo

includes a variety of

graphics to represent

their variety of

products

Plan

Define

Create

Engage


Engage and communicate with all stakeholders on a long-term basis

Multiple channels of communication should always be open for both internal

customers and suppliers to reach out, get questions answered, or further

develop the relationship. There are various ways to engage with stakeholders,

not all of which make sense for every company. Some of these activities include:Plan

Define

Create

Engage

Face-to-face road show to

business executives, ongoing

conference calls or one-on-one

calls

Face-to-face road show to

middle management/

operations, and then ongoing

regular calls

Email distributions containing,

procurement policy updates,

employee spotlights and other

relevant information

Make data and metrics

available to stakeholders in real

time or at regular intervals


Stay top of mind and true to message

Plan

Define

Create

Engage

• Consolidated resources

• Communication channels

• Knowledge sharing

Conclusion and Q&A

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