17 January 2013 | Adviser Q&A
We are a new organisation in the oil and gas industry and need help to implement a regular compliance-review programme across contracting and procurement to tackle issues usually addressed during audits.
Supply chain co-ordinator, Gabon
Mark Lewis, procurement director, EMEA, global commercial, AstraZeneca
Compliance can often induce a roll of the eyes as people see it getting in the way of business as usual. So, it is important to sell your review as value-adding. Focus on the benefits rather than the mechanics, such as it helping to create a high-performance organisation through adherence to processes and reducing the risk of problems in future corporate audits.
Also ensure that the policies and procedures you will be reviewing are clearly documented with defined roles and responsibilities. It’s worth setting up refresher seminars – completed via ‘drop-in’ or webinar sessions – to remind people of what is expected of them.
To minimise any impact on business as usual, get your team to do as much leg-work as possible – interrogating databases for signed contracts and sign-offs; shared servers or workspaces for category strategies; samples of purchase orders and invoices – rather than asking people to send them to you. Then, work with line managers to agree timescales to address any shortcomings that are identified.
Steve Johnson, head of global procurement and supply chain management, Prosafe
This will test your patience and tenacity. Success will depend on a number of factors. You will need the support of all department heads – critical for dealing with those who may be resistant to change. Also, ensure that your processes have clear segregation of duties. Separate the activities of requisitioner, buyer (quote, order issue and expediting), receipt of goods and services, and invoice approval. Always keep procedures simple to avoid long, drawn-out documentation.
It may also help to arrange formal training qualifications for supply chain management (SCM) personnel. The CIPS oil and gas industry qualification would be ideal.
If supplier management is to be a key performance indicator for SCM, categorise your strategies with suppliers based on the supplier’s profile – from the spend and supply risk of what you buy from them. Also, from your profile as a client – your revenue profile and ease of doing business in the eyes of your suppliers. The use of ‘supplier profiling’ apps may help here.
Hamish Gilder, director of advisory services, Ernst & Young
My advice would be to develop simple key performance indicators including proactive and reactive measures as well as soft and hard indicators. Start with a long list of elements then cut it down to ‘measures that matter’, taking into account underlying objectives and strategy – perhaps three to four measures for each facet of the supply chain (for plan, procurement, logistics and for IT as an enabler).
If you are looking for a starting point for categorisation, try using SCOR or APQC for standard value chain taxonomy. Second, develop and assign accountability for collecting and reporting this information on a simple one-page management dashboard with traffic-light status indicators and historical performance for the leading and lagging indicators.
Finally, nothing focuses the mind more than adjustment of individual performance targets. Once you have a good track record of data on each element of your dashboard, build improvements into your management teams’ personal performance goals.
1. Sell the benefits: you are helping to create a ‘high-performance organisation’
2. Keep it simple: ensure processes and checks are focused on ‘measures that matter’
3. Get help Get buy-in from managers, get CIPS training and use measures or apps as required