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Focus: Sourcing/Procurement

Feature Article from Our Sourcing and Procurement Subject Area - See All

From SCDigest's On-Target e-Magazine

- Aug. 29, 2012 -

 
Supply Chain News: As Procurement Works to Get More Strategic, Surveying Business "Customers" is Key Step

 

Dow Chemical Among Growing Number of Companies to Use the Technique; Feedback Helps Define Action Plans for Improvement

 

SDigest Editorial Staff 

 

Procurement pundits across the globe continue to press supply management professionals to become more strategic in their thinking and practice, and relatedly to achieve better alignment with the business.

Regular surveys on the satisfaction of different business units with the procurement function can serve as a key step to really drive that strategic thinking and create better alignment. But to date, this is an action relatively few procurement organizations have taken.

SCDigest Says:

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Be patient - the survey and process won't be perfect at first. Dow says its feedback program took 4-5 years to really get right.

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So says Mary Siegfried, a writer for ISM's Inside Supply Management monthly magazine, in an interesting article published this month.

Before moving to this type of formal feedback program, it is necessary to do some spadework, practitioners say.

Siegfried quotes Don Taylor, vice president, purchasing and supply chain for Dow Chemical, as saying that the supply management organization there it first had to engage those partners so they could "understand how our sourcing efforts fit into the business unit to deliver the value they need to compete."
Dow did that done by establishing strategic sourcing councils formed with procurement and line of business managers and executives.

The councils meet or a regular basis (monthly or quarterly), and review ongoing sourcing projects, market analysis, and supply and demand forecasts, etc.

"I strongly believe that as a foundation to measuring satisfaction, you have to first understand the value you bring to the company and how to translate that value into the language of the business," Taylor told ISM.

Moving Forward with a Feedback Program

There are a number of potential mechanisms for gaining feedback and the level of satisfaction with the supply management program, including surveys, focus groups, and interviews. In practice, on-line surveys are by far the most commonly used tool.

However, Dow is among the companies that supplements annual survey data with some one-on-one interviews. For example, Dow has a supply manager sit down with a business unit manager for a deeper examination into how the business-supply management relationship is working and to receive feedback on specific areas of performance.

Dow's Taylor says these executive discussions usually generate three to four action points on which his procurement organization takes action throughout the following year.

Siegfried offers a few common sense suggestions for moving forward with a survey type program. For example, there should be a lot of participation from the procurement team in developing the program so they have a stake in its success and the results are accepted. Companies sometimes forget that there is an art to writing effective survey questions, so there probably should be some training or outside assistance in that skill set for those involved.


(Sourcing and Procurement Article Continues Below)

CATEGORY SPONSOR: SOFTEON

 


Related to the last point, what sort of language is used in questions is also important. What may seem like every day terms to supply management professionals may not well relate to the business users. (SCDigest would suggest having a few business user do a test of the survey as well, gaining feedback about any questions that are confusing or not clear.)

 

Procurement Satisfaction Surveys Often Ask Business Units to Rate Importance of a

Functional Area and then How they View the Related Effectiveness of Supply Managenment

 

 

Source: Inside Supply Management/Boston University

 

Results should also be broadly shared - both the positive and the negative.

Finally, be patient - the survey and process won't be perfect at first. Dow says its feedback program took 4-5 years to really get right.

One technique that appears to be in fairly wide use among companies doing this kind of survey work is to ask business managers to rate the importance of a given function or process within the supply organization (say on a scale of 1 to 5 or 1 to 7) and then ask how well they feel procurement is performing in that area.

This will obviously indicate what line of business "customers" think is most important to their success, and perhaps show disconnects or gaps (e.g., supply management is performing very well in areas business managers think are less important, and vice-versa).

On the other hand, where business importance and supply management effectiveness are both rated high, it can be used to celebrate an area of success and reinforce value.

It is important to remember, the article says, that data is not necessarily information or insight. That takes some effort to really analyze the data that comes back and organize it in a way that is understandable both to the supply management organization and the business. Too often, procurement organizations pay too little attention to this almost last but critical step in the process, diluting the effort’s impact.

The final step is really the development of an action plan based on insights from the survey data. The survey results, in fact, provide a great platform for meeting with line of business executives to review and finalize action plans for the next year or some other time frame.

Taylor says Dows' process "helps us with alignment at the top and is a great reinforcement of our value down through the organization."

And, for a supply chain function that is often challenged to articulate its value, the feedback process itself frequently serves to increase the understanding of procurement's value and the perception of its effectiveness.

"Our customer surveys help us sell the value proposition procurement brings. It shows we recognize their needs, we are listening and we are delivering," Siegfried quotes Richard Stack, director, sourcing and procurement for Boston University, as saying.

The article makes available Boston University’s satisfaction survey here: Boston University’s Procurement Satisfaction Survey.

 

Do you do these types of procurement satisfaction surveys? Do they deliver real value and insight? Keys to success? Let us know your thoughts at the Feedback section below.





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