Oct 7th, 2008 |
Some recent procurement news items, courtesy of Google Alerts, caught my attention with respect to the implementation of shared service models for procurement. For starters, I was surprised that it was even news. After all, isn’t this the accepted best practice now? It seems that might not be the case in Australia and Japan.
So, I thought this might be a good time to review what makes a successful shared service model. For reference, see a whitepaper produced by A.T. Kearney on the subject. I have picked which ones I believe are most relevant for the readers.
1. Define the scope, set realistic targets. Typically, shared service models are best applied to more transactional activities. For procurement, this might include: RFP development, marketing, and process management.
2. Create an effective governance structure. How will the executive reporting structure work? How can service levels be improved for internal customers? These are effected through the governance structure.
3. Take your time. A.T. Kearney suggests that full implementation, depending on scale and scope, takes approximately 2 years. Even small organizations must recognize that it will take time to define and implement an effective shared services program.
4. Choose your management tools. Should it be Service Level Agreements (SLAs) or Chargebacks? The management and administration of SLAs can be quite cumbersome. Yet it many organizations it is unclear whether chargebacks are resulting in the desired service levels. A trade-off between effectiveness and administrative headache is inevitable.
5. Measure your performance. As the old adage goes, “you tell me what you’ll measure, and I’ll tell you what I’ll manage”. Thus, to get the desired service levels, you need to create effective performance metrics.
6. Focus on internal customers. Treat your internal customers like you would if you were running a program focusing on external customers. That means adopting a “customer is always right” philosophy and an “outside-in” approach to organizational improvement.
