Gone are the days when it was enough to
deliver incremental savings by forcing suppliers to shave a couple
of percentage points off their prices. Now CEOs are demanding that
their supply chain/strategic sourcing organizations become
competitive competencies for their companies. Creating complex
global supply chains to take advantage of constantly moving cost
arbitrage opportunities and managing the inherent risk involved;
constantly increasing the value from supplier relationships by
relying on them for things like joint product innovation; and having
supply chain strategies drive business strategies – these are
examples of the new realities facing our profession. In fact, in
certain industries the supply market is so constrained that the
sourcing professional’s challenge is to create competitive advantage
for the company by securing capacity at favorable terms over the
competition.
The role that supply chain/strategic sourcing
professionals are expected to play in today’s environment has
shifted dramatically, demanding competencies that reach far beyond
traditional process skills. Savvy supply chain/strategic sourcing
leaders have recognized that “process” skills are not
strategic. Some of the skills and competencies necessary to play a
more strategic role are: consulting and facilitation, change
management, project management, industry expertise and information
technology savvy. In addition, the complex issues that face
world-class supply chain/strategic sourcing organizations require a
brand new way of thinking about skill and competency development.
This article will focus on the complex issue
of talent management within a supply chain/strategic sourcing
environment and how effective people development can be your secret
weapon.
What is “Strategic”?
The definition of “strategic,” according to
Webster’s Dictionary, is: "Of or relating to strategy. Of great
importance within an integrated whole or to a planned effect." The
Mpower Group’s (TMG) sourcing/supply chain Maturity Model highlights
the meaning of “strategic” within a sourcing/supply chain and how it
has shifted over the last five years. This model allows us to look
at the characteristics of a sourcing/supply chain organization at
various levels of maturity:
The Value Creating maturity level is where
truly “strategic” organizations operate. Elements of this maturity
level are:
·
Corporate, business unit and sourcing/supply chain
goals and objectives are tightly aligned and managed.
·
Sourcing/supply chain leads value engineering efforts
to drive out inefficiencies.
·
Technology is appropriately deployed and seamlessly
integrated into process.
·
The strategic sourcing process is well-defined,
articulated and utilized throughout the organization.
·
A robust infrastructure is in place to support the
strategic sourcing process (tools, templates, etc.)
·
Global supply markets are researched for cost
arbitrage opportunities.
·
Performance metrics are closely tied to strategic
goals and objectives.
·
People are clearly your strongest asset and your
source of competitive advantage.
When we look at the role the sourcing/supply
chain professional plays, it is very different from the old approach
of “three bids and a buy.” Today, sourcing/supply chain is strongly
supported by senior management and lead by a C-level executive. The
sourcing/supply chain professional is considered to be among the
best and brightest in the company and helps to define enterprise
strategies. In addition, sourcing/supply chain is involved in or
leading product strategy and development. The role, which is really
a combination of several roles, is more than that of an expeditor:
In order for a strategic sourcing/supply chain
professional to be able to play this emerging role, he or she must
have a unique set of skills and competencies, which are concentrated
in three key areas:
·
Consulting skills
·
Change-management skills
·
Sourcing/supply chain process skills
In a recent meeting of the Best Practices
Xchange, hosted by TMG, top sourcing/supply chain executives
gathered to discuss best practices as they relate to talent
development in strategic sourcing/supply chain. When the group was
asked about the type of competencies required to be “strategic”
today, there was overwhelming agreement on the three areas noted
above. When asked the question “Are you there yet?”, most admitted
that they clearly are not, and the challenge of people development
is a key issue in this regard.
How to Become
“Strategic”
There are four key elements an effective
talent management program that need to be aligned and integrated for
success: recruiting, people development, career development and
compensation. The one common thread that runs through all these
elements is “clearly defined competencies.” In recruiting, define
the role your recruits will play within your organization and the
competencies required to execute that role before you begin
hiring people.
In people development, understand the
competencies required to be successful within your organization,
where your organization is today against those competencies and what
the gap is. That competency gap analysis should then drive your
training and development programs.
In career development, it is necessary for you
and your employee to clearly understand the competencies required to
move to the next level, so you can help them get there.
In compensation, most Human Resource
departments will need to know the competencies required for a
sourcing/supply chain professional, along with the role the new hire
will play in order to fairly assess the salary market. In other
words, the development of a comprehensive competency model is an
absolute necessity in winning the talent management game.
How do you get started in developing a
comprehensive competency model? The first step is to identify those
technical and functional skills and competencies necessary to
function at a world–class level within a strategic sourcing/supply
chain environment within your organization. Step two is to
evaluate your current organization against that world-class model to
identify skill gaps and develop gap closure strategies. The ultimate
goal is to enable your sourcing/supply chain organization to realize
the full benefits of world-class strategic sourcing by determining
the current organizational gaps and developing strategies to close
those gaps.
In 2003, FMC Technologies (FMC), working
closely with The Mpower Group, started on a multi-year journey to
transform its global procurement organization. Randy Ellis, chief
information officer and chief procurement officer of FMC, had this
to say about developing a world-class organizational competency
model for his staff of over 180 procurement professionals: “It
raises the bar. It’s a big change for us as we continue to transform
procurement from tactical to strategic. I’m looking to set a
standard for a higher level of performance.”
Here is the process TMG utilized when working
with FMC:
A competency model is developed from a number
of inputs, including the executive’s vision, employee job analysis
interviews, interviews of key strategic sourcing customers, current
job profiles and extensive research of world-class sourcing
competency models. The model is very detailed, generally
covering seven to 10 competencies, like change management, supply
chain management and IT, across four different proficiency levels
(foundation, intermediate, advanced and mastery). The model should
be defined by behaviors to make it practical and usable.
The single biggest challenge is ensuring that
your competency model reflects the evolving and more strategic role
of your organization. Process skills are no longer enough for
sourcing/supply chain professionals to be successful.
Once your competency model is complete, it is
critical to assess where your current organization is against the
model. If your competency model is effective, there will certainly
be a gap, which is okay because building a sustainable, strategic,
world-class organization cannot and will not happen overnight. The
point is to have stretch goals for each individual and the
organization to work toward and to have a well-defined model to
drive every aspect of your talent management program.
Next, a customized assessment instrument
should be used in performing the gap analysis. Each employee (or a
representative sample for very large groups) completes the
assessment instrument and validates it with his or her supervisor
through an open and positive face-to-face meeting to develop
consensus on the individual’s current competency levels, identify
true needs and build ownership of those needs in the individual. The
assessment instrument can also be used for ongoing review and
alignment activities.
Gaps for each competency area are compared
across individuals to identify overall department trends and closure
strategies. Training may not be the appropriate closure technique
for all gaps; in those cases, alternative strategies may be chosen.
These may include coaching/mentoring, on-the-job learning or self
study. For those gaps where training is the appropriate
intervention, a customized training curriculum should be developed
by job family.
FMC used its competency model to develop a
global training program for its sourcing/supply chain leadership
team and professionals, buyers and other FMC employees involved in
the supply chain, such as project and product managers. The training
program was developed and customized by The Mpower Group through
its’ Strategic Sourcing University.
Building Individual
and Organizational Competency
For a sourcing/supply chain organization,
paying attention to individual competency is simply not enough. You
also need to be concerned about organizational competency, which
requires that each individual is given the training, infrastructure,
organizational support and on-the-job learning experience to be able
to raise the level of competency for the organization as a whole. If
you think of the sourcing/supply chain organization as a consulting
firm, there are a number of things that such companies do to ensure
“organizational” competency, such as:
·
Developing a deep understanding of the “consulting
process,” which can be applied to any business process (i.e.
strategic sourcing)
·
Developing standard processes, tools and templates
·
Developing a common language/lexicon
·
Providing an environment to share experience among
consultants
·
Developing deep project management skills
·
Providing a robust knowledge management system
While working on developing individual
competency through the deployment of TMG’s Strategic Sourcing
University, FMC is also working on developing organizational
competency. TMG is currently working with them on developing a
standard sourcing process manual along with a standard toolkit. In
addition, FMC is in the early stages of developing an online
knowledge management system.
Milton Young, FMC Global Subsea Supply Chain
director, rearked, “In Supply Chain, we see our people as our
greatest competitive advantage. We are investing heavily in
developing a world-class sourcing/supply chain organization, and we
are beginning to realize huge benefits.”
Truly “strategic” sourcing/supply chain
organizations have concluded that their people are their most
valuable asset. Effective talent management, particularly in the
area of people development can be your secret weapon in reaching the
strategic maturity level. But beware: Once your sourcing/supply
chain professionals become strong internal consultants, it will be
difficult to hold on to them.
About the Author:
Anne M. Kohler is executive vice president, chief operating officer
and a founding partner of The Mpower Group (TMG), a certified
minority supplier that services Fortune 500 organizations globally,
solving complex issues related to their supply chain and strategic
sourcing operations including outsourcing and off shoring. TMG
emphasizes world-class business practices related to strategy,
process and technology that truly drive superior financial results
for their clients. Anne has been leading consulting and financial
management organizations for over 20 years and has extensive
expertise in strategic sourcing, change management, organizational
design, and supply chain management.
Resources
The Mpower Group www.thempowergroup.com
Best Practices Xchange
www.bestpracticesxchange.com
