In the midst of a pandemic, staying on top of an ever-evolving procurement landscape has presented significant challenges. So how do you manage change in MRO procurement?
If change management wasn’t always a priority for MRO procurement professionals before the pandemic, it should be now. COVID-19 created a perfect storm of challenges for the profession.
At the same time as supply chains were ruptured, the financial impact of COVID-19 forced organisations to reduce budgets and even the size of their procurement teams.
It quickly became clear that, in MRO procurement, resilience was key, both for the supply chain and the business itself. “It’s changed business in its entirety,” says Emma Botfield, RS Components’ Managing Director, UK & Ireland.
“MRO procurement has always been a complex category. And it's got even more difficult to manage because the pressures have reduced operational budgets and hit the supply chain. Lots of organisations wanted goods and services ‘just in time’ – but now we're moving to ‘just in case’.”
“MRO procurement has always been a complex category. And it's got even more difficult to manage.”Emma Botfield, Managing Director for UK & Ireland, RS Components
Botfield says the pandemic has led to major changes in the way MRO procurement people do their jobs as they make greater use of new technologies, digital tools and, increasingly, work with suppliers as partners.
So how should those in the category approach managing this change? It all starts with culture, says Richard Wilding, Professor of Supply Chain Strategy, Cranfield University School of Management.
“For some procurement departments, their culture from the word go has been very collaborative with their supply chain partners,” he says. “For them, the pandemic has meant they have been able to transition reasonably well. “For others, their culture is a focus on driving out as much cost as possible. The problem is that, over the past 18 months there has been a shift towards procurement for resilience rather than for cost.
“If you're trying to create resilience, foundational to that is really effective collaboration. You need to be able to work with your supplier and be a preferred customer.”
Central to this collaboration will be a move away from a transactional customer-supplier relationship. Botfield recommends forming a strategic partnership in which suppliers can share best practice.
Of course, making this kind of shift won’t always be easy. For many organisations, navigating change can be a tricky process, according to Wilding. But the right approach can smooth the road ahead.
“If you’re trying to change culture, that is not something that happens overnight,” he says. “It’s a journey that people have to go on – and that’s where effective change management has to come in.”
“If you're trying to create resilience, foundational to that is effective collaboration.”Richard Wilding OBE, Professor of Supply Chain Strategy, Cranfield University School of Management
A big part of the challenge is how people are measured. For example, if an individual’s bonus depends on reducing spend on particular categories, that will drive their behaviour. “All the metrics need to change on the individual level,” says Wilding. “What is the discussion which takes place in your professional development review?”
Successfully managing change
Four things underpin effective change management, according to Wilding. Firstly, processes need to be designed for the “new normal”. Secondly, the infrastructure and equipment must be suitable for the new reality. Next, it’s vital to make sure that the information systems support what you are trying to do. And, lastly, the people and the organisational structure must align.
A recent report by management consultant McKinsey agrees that getting processes and especially technology right is the key to successful change management in MRO procurement. The report shows how the right technology could unlock value for the business.
For Botfield, there is another crucial element in this: communication. And for a complex category such as MRO procurement, this becomes even more important in a crisis such as the pandemic.
“Things can get lost in translation, because what you're portraying is different to what might be received,” she says. “So you need to be really clear around what is the purpose, why are we making the change, what is it we're trying to achieve, and what is the impact on individuals?”
Communication was highlighted as a crucial change management skill by members of the Chartered Institute of Procurement and Supply, surveyed by RS Components for the 2020 Indirect Procurement Report - Evolution of MRO procurement.
“There have been noticeable changes in the way that people are working and adopting new technologies, digital tools and collaborating with their suppliers as partners.”Emma Botfield, Managing Director for UK & Ireland, RS Components
Wilding agrees that ensuring everyone is on the same page is vital. “Supply chain management is about the management of relationships,” he says. “The problem is, if I’m managing something like inventory, I have metrics for that. In managing relationships, people often don’t have any metrics or resources, and they seem to think that relationships just happen by accident.”
He advises organisations to look at ISO 44001, the international standard for collaborative business. “I’m not saying you should get the badge, but having a process for managing relationships is a really powerful way to help people move forward.”
Botfield adds that collaboration extends to internal relationships between procurement and the rest of the organisation, with procurement playing a strategic role as a voice that is listened to as a critical friend to the business.
It’s what Wilding calls the “arc of influence”. Procurement managers often have a limited span of control, but their actions can have a big impact. So they need to increase the level of their influence in the organisation.
A new mindset
If any of this sounds daunting, take heart from this view from Botfield: “I think we've seen a mindset change from efficiency and effectiveness to agility and resilience.”
In recent months, MRO procurement people have certainly demonstrated they can tackle problems in a different way and collaborate with stakeholders to make change happen.
And Wilding has this message for the profession: “To get to the new normal, we as individuals have to change for this new way of working. But if we can get that right, the new normal will be a new better.”