One issue that I have encountered at many companies are the problems faced in both successfully establishing working relationships with new suppliers and in implementing new projects at existing suppliers. Considerable energy is often expended in a thorough review of potential suppliers and in a lengthy tendering process. The final decision is made, the budgets altered to reflect the new supply options and the procurement person or project leader is immediately tasked with realising cost savings elsewhere.
However, it is at this key stage of a project that things are most likely to go wrong. Working relationships are not yet established, confusion can arise over working practises and all-important cost savings that have been promised in a budget fail to materialise!
So what has gone wrong? The procurement person will insist that they covered everything in the contract. The operational staff will claim that they were never consulted in key areas. The supplier firmly believes that what is actually happening bears no relation to the services that they initially discussed – and often they are absolutely right! The result is a relationship damaged by mistrust and accusations and the creation of inefficient or inappropriate workflows by staff who do not have the correct skills. This all leads to rising costs being added irreversibly to a new project. Worse, there are often times when alternative suppliers are used, with all the extra costs of rogue purchasing.
Four key areas that are often omitted from projects are internal research, internal communication, operational documentation and management of expectations. This may be understandable when consultancy or procurement teams are parachuted in to work with existing staff. However, sadly, I have also seen these issues occurring between operational teams and their immediate management.
1. Internal research
Successful implementation should begin early on in the process. How many people have found themselves landed with a new contract from elsewhere in the company which bears no relation to their needs or their everyday activities?! The main feeling at this stage is, “if only someone had talked to me first!” Or, even worse, “if only someone had listened to me when I spoke to them!” Equally, how many project leaders have put in new systems only to be told, “that’s not what I wanted”, or, “I thought you were doing something different!”
Obviously, much of the research round a project will revolve around confirming stakeholder requirements and expectations, supply options and potential improvements in workflow and specifications. However, when considering changing suppliers or starting a new process, it is vital that the project leader also understands what is actually happening at the moment, in practice rather than in theory. The key areas to cover should include:
* What are the current workflows and practices? It is important to speak to staff who are actually involved with the work, rather than their manager who may not always be familiar with what the staff actually have to do in order to achieve current results. It may be felt that some current practices are misguided, but this is not a time for blame: rather for open and constructive dialogue.
* What are the difficulties that are currently encountered? Operational staff can highlight current difficulties that no-one else is aware of, frequently because they have worked round these issues but may not have been confident in raising them. Examples include supposedly automated reporting being handled manually, or other suppliers in the chain failing to adhere to their agreed performance levels. It may also be a point for first management of expectations of operational staff, as some of the problems that they face may not be practically surmountable.
* What do staff want? They may have good ideas that will reduce costs or improve workflow. Or they may have wishes that cost nothing to implement but help gain their buy-in to a new solution, such as different ways of managing communications. Alternatively, it may be necessary to manage expectations again.
* What do they expect? This is an opportunity to exceed expectations for the project and help gain team buy-in.
* How will they react to potential workflow changes? Operational staff are often best placed to make practical constructive criticism of proposed new practices. However, this stage may not always be practical if new workflows involve restructuring of roles or reduction of headcount.
Apart from valuable operational information, one key area that will also be uncovered in the research phase is what staff expect. Their wish list may be wildly optimistic, or their experience of previous projects may require work to overcome deep pessimism! This information will be useful, especially in the management of expectations phase.
2. Internal communication
Operational staff have the ability to make or break a relationship with a supplier. I therefore find it surprising that they are often kept in the dark about the progress of projects and potential changes in suppliers. Procurement staff and project leaders should not just concentrate on updating management on the progress of projects but should also consider some or all of the following actions:
* A regular update to relevant staff of what is going on can ensure they are not surprised by changes at the end and are aware of when they may need to be ready to make changes. This need be no more than a five minute presentation or a quick email. However, where possible I prefer updates to be face-to-face so that team members feel involved and have an opportunity to ask questions. If decisions are likely to be unpopular it can be useful for senior management to be present to reinforce a message.
* Explain supplier choice and changes in workflow when final decisions have been made. Operational staff are sometimes delighted at the opportunity to change supplier! However, they have usually created good working relationships with current suppliers and may be sorry to lose them. Therefore change is often difficult or potentially unpopular. It is important to try and achieve buy-in, and this is more easily achieved if the reasoning behind change is explained to staff, eg reduction in costs, a change in product styling or new company strategies. They may also need to know why existing relationships could not continue, and understand that current suppliers were either given the opportunity to participate in the project or why they were deemed as unsuitable.
* Create suitable documentation (see below). All processes and responsibilities need to be clearly documented in detail for all operational parties.
* Consider tours of suppliers for your staff and tours of your premises for suppliers’ operational staff to encourage relationship building and also so that they understand the issues that both sides face. For instance, production staff at publishers may not always understand the full scope of the role of a customer services executive at a printer, or how many jobs they are expected to handle.
Accurate, detailed and clear documentation is an essential part of any project implementation. A contract may form a legal agreement between two companies, but it often does not cover the operational processes, is written in legal terms, is not circulated to operational staff and is left to gather dust in a file!
Therefore it is important to create a process document that outlines the workflow and operational responsibilities for each party. This document should be aimed at operational staff and should therefore be kept short and written in plain English. The aim is that everyone should actually read it and understand their own responsibilities and obligations as well as those of other parties.
Issues that I have come across with such documentation include:
* One sided documentation that details a supplier’s responsibilities without outlining what the other party needs to do to allow the supplier to carry out its responsibilities.
* Subjective phrasing. KPIs and responsibilities need to be clearly defined and measurable. “Suitable quality” needs to be defined, for instance with a printer by defining how colour will be measured, and what folding and cutting tolerances are acceptable.
The most important aspect of any operational documentation is to ensure that it is distributed to all relevant staff. All too frequently, I have seen staff at both suppliers and clients unaware of their responsibilities, or the responsibilities of the other party, because no-one had told them of the details of the agreement!
4. Management of expectations
I have often come across projects that have been thought to be unsuccessful. In these cases, project leaders have often implemented what was required in terms of cost savings or efficiency requirements. What has been lacking has been the management of expectation: people throughout the organisation have not realised what the trade-off may be in order to achieve targets. The following actions are important:
* Appropriate communication with stakeholders in the project. There is a need to balance their wishes against what is achievable within a certain budget. A good example of this might be the response times in the updating of a website or the paper quality on products. A good project leader will see challenging their managers where appropriate as part of their role.
* Communicate throughout your organisation. Ensure that if there are going to be issues with reduced quality or longer turn round, everybody is aware of this, from senior management to operational staff.
* Manage the expectations of the operational team as outlined in the research section of this article.
* Be open. If you need help achieving something, ensure that the supplier realises this. Equally, encourage the supplier to be open about busy times, implementation of new processes etc.
* Ensure that nothing has been missed from the work flow. Consider a process flow diagram. There should be no instances where both sides think that the other is doing something! Running through this document in detail both with internal teams and supplier personnel can be very useful.
The first few weeks
The first few weeks in any new project are vital and thought should be given as to how these will be approached.
* Allocate someone to be managing a new supplier or project. If a procurement person or consultant is immediately moving away from a project because it is perceived that their work is done, ensure that a senior member of the operational team is tasked with creating updates on implementation progress.
* This person should proactively monitor progress on a daily basis. What work is being carried out by the supplier at any single point? Is the work on schedule? Are the correct workflows being adhered to by both sides? Is suitable communication being maintained? How are your staff finding the new supplier? Are the quality levels as expected?
* Ensure that your supplier nominates a similar person to carry out a similar role within their organisation.
* Set up regular review meetings, both internally and externally. In the event that everything goes according to plan, they can always be cancelled! Feedback from both sides is important (a supplier who is eager to please a new client may need some persuasion to be fully open). It is easier to solve minor non-compliances before they turn into major issues. Equally, it is nice (and, sadly, unusual) to send positive feedback to both the supplier and internal teams if everything is going according to plan.
With careful planning and the involvement of the right people, the implementation of a new supplier should be a smooth and painless process. Most importantly, the time and resource spent on the implementation phase should ensure that results are delivered efficiently and to budget. Good luck with your project!