- Change is hard. When you go to a gym for a few years consistently weekly, you see those who come and go, and those who stay true. It’s clear those who are “newbs”. They come in, sometimes work half-heartedly, and then either stick around and wonder they’re not seeing the gains they want or they just disappear as quickly as they arrived. In consulting, similarly, companies who are looking to change make a difficult decision to embark on change. However, it’s so easy for companies to lose sight of the goal and milestones to bring about sustainable change.
- Even if you’re seasoned in the gym, you need to change to keep improving. Companies who don’t embrace the necessity to change as the world evolves are likely to see growth become stagnant, and is most often the case, fade away. It’s so easy for companies to keep going about their business managing the day-to-day without thinking larger and more strategically. However, without change, it’s even easier to then let competition come in and take everything away (think Blackberry, Kodak, etc.). In the gym, if you’re doing the same routine over and over again, your body adjusts and you no longer see gains in your strength. It only takes six weeks before your body adapts.
- Bringing an outside perspective can help. As a consultant, this is almost the very reason we exist. Similar to the point above, it’s so easy for companies to be complacent and continue to operate just as they have over the last 40 years. However, bringing in fresh eyes from consultants, an outside hire, or otherwise, can easily give perspective from potentially competition, other industries, etc. In the gym, bringing a friend who is knowledgeable about working out can easily bring new routines, or even help spot when you’ve actually got poor form.
- Establishing goals helps you achieve greater. One of the first things you do as a trainer with a client is to run an assessment. This includes understanding a baseline or where a client is, and where the client wants to go (i.e. lose weight, add 25 lbs to her squat, drop your 40 time by a half-second). Without knowing where you want to go, it’s hard to really push yourself and make it timely. In the consulting world, if you don’t establish a baseline of “current state” and plan for a “future state” (Shangri-la), how do you know what to do, who to employ, how your customers will react (if any)?
- Post-workout is just as important as in-workout. In working out, it’s important to take care of your body after a workout. That may include a post-workout protein shake to ensure you have the nutrients for recovery, or just daily nutrition in meals. If you aren’t eating right and stretching and the like, it’s hard to sustain any gains you may have from a workout. In consulting, implementing post-transformation catches is key to sustaining the change. Tracking efforts via metrics is one way of ensuring change has sustainability; while establishing a culture embracing change is another sure-fire way of keeping the momentum going.
Jon Stegner’s famous article “Gloves on the Boardroom Table” is a classic example of not just leaders in denial (for my business school friends) but also the opportunity in procurement – specifically, strategic sourcing. The article can be found here. I’ll downplay the leaders in denial aspect in favor of the Supply Chain benefits in the article – Jon describes the opportunity in cost savings opportunities within his organization. Convinced of significant savings opportunities, Jon tasked his summer intern to gather various gloves (yes, something so simple) across the factories in his organization, and what he found was staggering… FOUR HUNDRED TWENTY-FOUR different gloves were being used across the factories. Many of the gloves were similar but their costs could vary greatly. In one case, two gloves which were nearly identical were marked one for $3.22 and the other $10.55. Jon Stegner proceeded to lay out all 424 gloves on the boardroom table for his peers to witness the opportunity at hand. Jon didn’t share the cost savings his company was able to reap, instead citing a general “a great deal” but as you can imagine, strategic sourcing in this example can yield significant results.
And so this brings to light the very simple, yet impactful opportunity in strategic sourcing to your bottom line. Synchronizing procurement efforts across an organization can have immediate effects to costs. This should come as no surprise as you think about companies who do this extremely well including Wal-Mart (the epitome of operational excellence), UPS, The Home Depot, etc. Strategic sourcing empowers your procurement organization reap the benefits of supplier competition. And today, there are many ways to empower your company’s procurement strategy…
- As a Consultant, I was part of a small team leading the transformation of the Procurement organization of a major IT outsourcing company with spend across global business units. Over the next several years, the organization looked to reign overall Procurement spend with immediate savings through an e-Sourcing solution.
- The implementation of an e-Sourcing system enabled the company to leverage RFx templates and run auction events to drive down costs and enable supplier competition for its more than 1,000 vendors and more than a 100 internal procurement categories.
- I spent a few years as a Procurement Analyst within a major third-party logistics company’s Procurement group within its Transportation organization. Third-party logistics companies are the very shining examples of strategic sourcing. I supported the management of largely truckload and less-than-truckload carriers on behalf of our customers analyzing transportation costs, rate changes, and provided lane-carrier recommendations. At the end of the day, upper-tier carriers are very similar. Yet, when you review RFP bids, some carriers bid with 30% premiums over their competitors.
- Further benefits of strategic sourcing (and 3PLs) include “soft” benefits which at first are hard to quantify until service failures arise (in this example). Aside from numbers, Procurement empowerment meant also assessing suppliers’ qualitative bid as well. For example, being a low cost provider counts for naught should a carrier’s on-time performance be well below top-tier standards (99.8% oftentimes).
- Other activities included the analysis of rate increase requests. Our strategic goal here was mitigate costs as much as possible reducing rate increases, fuel surcharge increases, accessorials, etc.
It’s a no wonder during the Great Recession, opportunities in Procurement were (and are still) the fad. Not many strategies can be implemented so quickly with such significant impact straight to your bottom dollar. Strategic sourcing, e-Sourcing solutions, and intelligent deployment of 3PLs can be a powerful advantage against your competitors. So the question is: how many gloves are on your table?