Category: Blogs
Procurement Technology

At TKJ Procurement the procurement transformation process starts with our Capability and Maturity Model (CAMM) assessment.

The CAMM assesses the enabling technologies employed in the procurement environment; the sub-capabilities considered includes the assessment of technology in the Source to Contract cycle as well as the Purchasing to Payment value chains.

Our assessment considers how technology solutions are used and the level of automation.

Procurement Technology Solutions in and of itself does not result in procurement maturity, in our experience to achieve procurement maturity technology solutions should be enabling the procurement strategy. The value of procurement technology should not just be to do more with less, rather the full value of procurement technology solutions are when the procurement department is able to do things that it could not or did not do before. This includes achieving objectives such as:

  • Generating Management information to ensure effective oversight and improvement across the value chain.
  • Driving procurement efficiencies
  • Driving a strategic and collaborative business partner
  • Creating value for your client.
  • Designing, developing, and implementing holistic and sustainable solutions which match the organizational objectives

Before embarking on a roll-out of procurement technology solutions we suggest managers answer these questions:

  • How does the procurement technology achieve the objectives of the company’s business strategy?
  • Is a company Data Strategy or Data Governance approach available to support the effective usage of the procurement technology?
  • Is a plan available to acquire or grow the skills that the company will require to support the procurement technology strategy?
  • Is a plan available for training, retraining or re-skilling of employees whose positions become redundant due to automation?
  • Does the technology strategy spell out the infrastructure requirements to support the strategy?
  • Is a plan available to manage and deal with unintended consequences of procurement technology solutions implementation?

Over the next few months, I will unpack how procurement technology solutions can contribute to procurement maturity and what organizations can and must do to make this possible.

janineh@tkjprocurement.com | etienneh@tkjprocurement.com | www.tkjprocurement.com


Beneficiary Management System Part 4

Beneficiary Management System
Part 4

Implementation of the Beneficiary Management System, Lessons Learned

When planning the Implementation of the Beneficiary Management Systems (BMS) it is best to consider this part of the journey as a change management project. Suppose we have done everything correct in the process of developing the BMS: the processes of application, decision and development of beneficiaries are reflected correctly in the system, the data requirements are thoroughly examined and the software provides the necessary capabilities for capturing, accessing, using and reporting important data in a user friendly form. Still the process of implementation of a new software may experience certain difficulties and there are important factors that should be considered in advance to ensure a smooth transition to everyone happily adopting and using the new software. We should separate these factors into three groups: technical, process/data and human related.

Technical Factors

product warrantyIf the system is developed according to the principles of the modern agile approach, all functionalities would be tested not only by the software development company but also by a dedicated team from the client. This process allows for on-time corrections of functionalities to match the expectations and the needs of the users. At the time of implementation of the software there should be no surprises…theoretically. But in reality, depending on the number of users and complexity of the BMS version there is still a chance that something might not work as expected. The reasons may include undiscovered bugs, unexpected difficulties with connectivity and other. Although these situations do not happen often, ensuring a warranty period with the provider can definitely mitigate the negative consequences should something like this occur.

Process / Data Related Factors

In our experience we have noticed that people naturally think of the most typical situations, user actions and data processing when describing their expectations of a system. In reality however processes may not be applied as described or there may be certain exceptions of the user actions or data collection which, although rare, may not be considered during development of the software. If discovered after the software is already operational, this can lead to understandable frustration. However, to resolve the problem either the users need to be creative and find workarounds (which can cause other problems), or additional programming work will be required which adds time and cost to the project of implementation. This challenge is often unpredictable. The best approach to addressing this challenge it prevention, such as talking to as many potential users as possible and taking their view on what could in reality work differently than the prescribed processes, or asking directly what might work differently in practice or where it is possible to have an exception. With time we have found that experienced consultants, or business process analysts can be very helpful in this regard with their developed skill to sniff such possible deviations

“experienced consultants, or business process analysts can be very helpful”

who wants to change The Human Aspects

Human Related Factors

Not everyone will typically be happy to start working with new software. There is always the learning curve that requires extra effort outside the comfort zone of a person. To address this, we have found that clients who exercise a change management approach manage to implement the solution easier, with less effort and with minimum resistance and struggle from users. Some of the lessons learned about this include

  • Create positive expectations by building awareness of what the new software would do and what are the reasons of its introduction to the company. Stress the benefits of the system and WIIFM (what is in it for me) for different target groups. Awareness creates desire which leads to less resistance at implementation

  • Involve representatives from different types of users in the process of defining requirements, testing and providing feedback. One of the benefits of that is that the software functionalities are considered better and on time. But the other aspect is that, when happy with what they experience, these people spread the word across the organization. This could be combined with communication strategy to ensure visibility of the project.

  • Spend enough time and effort to train people using variety of methods: online and/or face-to-face training, mentorship and availability for questions and support during the inevitable difficulties until people feel comfortable with the software. Having a team of “super users”, mentors or peer coaching techniques can have a strong effect on the ability of users to come to grips with the software and to minimize their frustration or resistance.

Contact us directly if you are interested in finding out more about the BMS at info@tkjprocurement.com

janineh@tkjprocurement.com | etienneh@tkjprocurement.com | www.tkjprocurement.com


Beneficiary Management System Part 3

Beneficiary Management System
Part 3

Measuring Impact with the Beneficiary Management System

Baseline Data

The initial information forms the baseline data and the basis for measurements. It is important to accurately capture the initial status of the beneficiary businesses. Typically, collected data are:  number of employees and clients, value of contracts, turn-over/revenue, profitability, value of assets, market penetration, productivity, management effectiveness, etc. The baseline data may also include financial statements and various company registration, shareholding, tax documents etc. By comparing the base data with data captured after various stages of intervention, progress can be determined. Eventually a picture of growth in market share, employee numbers, productivity, service and product offering, profitability etc. unfolds.

TKJ Procurement

How to Report with BMS

TKJ Procurement

By defining the reporting requirements in the planning stage i.e. what do you want to report on and what data to be captured and compared  to achieve certain reporting requirements,  the BMS is able to provide detailed or high-level reports as and when required. The reporting capabilities are further enhanced as information can also be downloaded to generate ad-hoc reports.

TKJ Procurement

Because of this approach the BMS is customizable to meet individual client requirements, can be implemented across various business sectors and development programs. As such, the BMS becomes a multifaceted tool able to optimize impact assessment guided by automated reporting. 

janineh@tkjprocurement.com | etienneh@tkjprocurement.com | www.tkjprocurement.com


Beneficiary Management System- Part 2

What optimization does a Beneficiary Management System enable

The Beneficiary Management System (BMS) is designed to measure the true impact of the investment on the beneficiary. This is achieved by supporting every stage of the beneficiary management processes, which are typically executed through manual operations.

BM Systems

How do we know what the effect is of the developmental activities if we do not measure it?

Donors are often engaged in numerous development activities and employ significant resources with high hopes of achieving results. A Beneficiary Management system is an invaluable asset in capturing data and providing information for analyzing the effectiveness and efficiency of development efforts.

The BMS can be configured to track all important data related to development activities, measuring the spend in rand value and cost of time and resources at every stage, in this way the information captured into the BMS becomes the source information for providing proof of both activities, impact and:

  • Allocating and calculating cost
  • Allocating cost spent per beneficiary or region or sector etc.
  • Summarized data for annual, quarterly, monthly reporting and sustainability reports
  • Case studies / Marketing campaigns/ media reports
  • Data for conference presentations and academic papers
  • The input for regulatory requirement i.e. B-BBEE scorecard reporting etc.
  • Evidence in the event of a query / complaint / issue with a beneficiary
  • Documented evidence of the development route of the beneficiary – from onboarding, through diagnostics and the development plan, to exit 

The BMS also allows for the reporting of  non-monetary values which typically  is more difficult to track and can easily amount to millions but not captured and reported on, and consequently skewing the representation of what is required to effectively develop and grow a beneficiary. Our BMS allows also the following data be captured and reported:

  • Capture management and administrative costs
  • Capture money spent on development of beneficiaries
  • Capture information on the type and value of “in kind” contributions from partners and stakeholders
  • Capture information on time and value spent on development of beneficiary businesses, discounted rates e.g. subsidized premises, use of assets and facilities, etc.
  • Capture the nature of the interventions per beneficiary (to eventually determine which interventions had best impact)
  • Capture details on improvements in a beneficiary, based on pre-determined progress measurements

How do we keep all program stakeholders on the same page?

The project managers and staff which are directly involved in development activities are often well informed about all details of what is being done. But is that information available in summarized, comprehensive form for taking managerial decisions? How to keep all stakeholders informed of what is going on and what has been achieved?

The BMS is designed to provide powerful reporting opportunities. Regular and ad-hoc reports can provide detailed or high-level reports as and when required.

Examples of report elements include:

  • Overall strategy implementation costs
    • Cost per programme element
    • Costs per beneficiary (average or actual)
    • In-kind contributions (per stakeholder or per beneficiary)
    • Number of beneficiaries overall and/or per strategy element or program
    • Impact per beneficiary, program, site or nationally (can include growth in the business(es) – jobs, turnover, market share, profitability)

Over a period of time of accurate data input, reports can be  used to determine exactly what it takes to develop a beneficiary from one level to the next, which interventions had the most impact, what had been spent in cash and kind over time to support beneficiaries , the direct and indirect impact that it had on economic growth of the beneficiary  and the reach of a program regionally or beyond.

Look out for the next post on: Measuring Impact with BMS

Contact us directly if you are interested in finding out more about the BMS at info@tkjprocurement.com

Beneficiary Management System


Beneficiary Management System

Why is a Beneficiary Management System a Necessary Tool?


In the contemporary business world, the need for software support is already a norm rather than necessity. The development industry is also catching up. More companies are beginning to realize the need for solutions that have the ability to track and manage the process for development of different types of beneficiaries

TKJ Procurement Consulting and Training together with our partner Addit Software are in a position to provide an end-to-end solution that is designed to address a wide spectrum of needs related to beneficiary development. Our Beneficiary Management System (BMS) is a web-based solution:

  • that can be accessed and used simultaneously from multiple locations
  • has predefined processes and workflows that can be adapted for different purposes
  • allows for monitoring of investment and expenditure related to beneficiary development
  • measures the impact through a number of electable factors such as jobs creation, turnover increase etc. 
overview of main benefits

 Our BMS makes for a very useful Monitoring &Evaluation tool as well. The system can be used for a variety of different purposes ranging from procurement to enterprise development, all types of business process optimization and management reporting.  The BMS can also be applied in working with different segments including corporate businesses, small enterprises, youth, and women entrepreneurs. Look out for our next posts on: What management optimizations can BMS facilitate or contact us directly if you are interested in finding out more about the BMS!

Beneficiary Management System


Supplier Relationship Management and Third-Party Risk Management Model

In this issue
12 March 2020:

Supplier Relationship Management and Third-Party Risk Management Model

Introduction

In our interactions with clients we find that organisations have a very one-dimensional approach to Supplier Relationship Management (SRM). We find the value of SRM is focused only on cost reduction and SLA management.

This blog is focused on the implementation approach that was followed in Project Ignite to introduce and embed the principles of SRM.

“Procurement without supplier management is like sales without account management. It does not work.”
(Lars Kuch Pedersen, LeanLinking)

Current State of SRM

  • One dimensional approach addressing one function, such as performance with small sets of suppliers.
  • Heavily focused on transactional stage of vendor life cycle
  • Value of SRM is only tied to cost reduction and SLA management
  • Viewed and executed as set of tactical activities
  • SRM and Vendor Management activities are dispersed through the organization with limited control.

Future State of SRM

  • Suppliers Relationship Management intrinsic to the success of the organization through the use of strategy and advanced vendor management framework.
  • Holistic view of suppliers across the various business functions
  • Advanced skills in data analytics, financial review and risk management
  • ROI measurement in terms of strategic business outcomes.
  • Define strategic vendor management intent, goal and relationship outcome
  • Governance expanded and extended across internal teams and strategic vendors.

Migration

  • Assess current maturity against desired state
  • Implement Strategic Vendor Management Framework
  • Clarify, standardize and streamline Vendor Management Process

Value can be derived through strategic and performance-based collaboration

strategic sourcing

Without rigorous contract management 75% of sourcing savings can disappear withing 18 months.

SRM Process – Detailed Approach

supplier phases

Cross Functional Team Driving SRM

internal CFT

SRM and Risk Segmentation Model

strategic vendor segmentation model
3rd party risk assessment tool

Initiate Supplier Relationship Management Plan

supplier chart

Supplier Management Reviews

agenda for interactions with suppliers

Supplier Management Review Results

performance review dashboard

Summary

To secure the suppliers commitment to the relationship and continuous high service delivery, reward programs such as Supplier Compliance Certificate or Supplier Recognition can be implemented within the SRM Plan.

There are Several benefits associated with supplier relationship management, and they all culminate in a healthier bottom line as we saw in Project Ignite.

  • Reduced costs
  • Increased efficiency
  • Consolidation of the supply chain
  • Management of supplier performance
  • Continual improvement of operations
  • Improved risk and compliance profile

janineh@tkjprocurement.com | etienneh@tkjprocurement.com | www.tkjprocurement.com


Project Ignite – Strategic Sourcing Case Study

In this issue 18 February 2020:

Project Ignite – Strategic Sourcing Case Study

Introduction

In my last blog Procurement Capability and Maturity Model dated 30 January 2020, one of the improvements focussed on was the introduction of strategic sourcing. The practical approach adopted is discussed below.

Project Objectives

  1. Identify sourcing opportunities and build category plans.
  2. Identify sourcing opportunities and sourcing approaches to effectively deliver sourcing benefits.
  3. Establish the sourcing governance for effective procurement decision making.
  4. Obtain approval from the relevant governance committees to move into the sourcing phase of this project.

Determine Market Competition

Barriers to entry include high capital outlays and high operating costs, the market remains very competitive in the battle for market share

project ignite

External Market Forces

The company should focus on identifying suppliers with good local content credentials. Appointed vendors must however be compliant with legislation and should be able to meet environmental requirements.

project ignite

Conclusion

  • Although there is a trend away from cash, most countries on the continent are still very cash dependent. Suppliers are shifting their focus from risks to managing costs in a better way. Technology plays a key role in reducing costs and will be critical from reducing the dependence on humans as well through the advent of ATM’s, note sorters and Cash in Transit companies
  • Barriers to entry include high capital outlays and high operating costs, the market remains very competitive in the battle for market share
  • The countries should focus on identifying suppliers with good local content credentials. Appointed vendors must however be compliant with legislation and should be able to meet environmental requirements

Category and Supplier Positioning

Suppliers are not aligned to how the company views the commodity. The company must align the profile of this commodity with suppliers and treat them as strategic if they wish to negotiate better deals, service improvements and get sustained value from vendors.

supply market challenge risk

Sourcing Maturity

The commodity is relatively immature in the selected countries. By adopting procurement best practices and focusing on closing the gaps ROA will benefit financially and operationally from improved vendor relationships.

cash commodity maturity

Sourcing Opportunities – levers

Workshops held with the team identified and prioritised spend consolidation, best cost evaluation, specification improvement and total cost management the primary sourcing levers to focus on in the initial phases.

opportunity grid

 

What this means in practise is that procurement focussed on negotiating and implementing the following…….

procurement models

Suggested Sourcing Approach

  • Option A: Sourcing is done centrally by ROA team
  • Option B: Sourcing is facilitated by ROA team in conjunction with the in-Country teams
  • Option C: Sourcing is done by the in-country teams

Pros and cons for the 3 possible options

sourcing projects

High level sourcing strategy

opportunity analysis

Summary

Based on the introduction of category management and other strategic sourcing principles the savings improved as follows:

Year 1: R7m
Year 2: R61m
Introduction of strategic sourcing with emphasis on category management happened after year 2. This included improved demand planning, market analysis and benchmarking, improvement in the sourcing approach based on a 3-pronged approach (group, regional, in-country), contracting and the introduction of supplier performance and relationship management.

Year 3: R 169.3m
Year 4: R 205. 0m

janineh@tkjprocurement.com | etienneh@tkjprocurement.com | www.tkjprocurement.com


Procurement Capability and Maturity Model

In this issue 30 January 2020:

Procurement Procurement Capability and Maturity Model

Introduction

At TKJ we start the procurement transformation process with a Procurement Capability and Maturity Assessment (CAMM). Our CAMM has been devised to enable development across the end-to-end procurement value chain, addressing people, process, systems and structure in line with industry best practices. Our assessments highlight strengths as well as development needs, and the resulting action plans are integrated into everyday operations for continuous improvement.

“Being a strategic business partner means so much more than negotiating a discount” — (Remko van Hoek, 2013).

Capability and Maturity Model

Project Ignite

Case Study – Project Ignite

Approach

  • Used CAMM for rapid establishment of procurement excellence across 16 African countries at a blue-chip bank utilising a brand-new style of work with a fast-moving, outputs-driven, all-hands-on-deck, consultancy-style approach

  • Utilised organisation-wide consultation, thought leadership training, talent management and practical implementation approaches

  • Leveraged business objectives and best practices

CAMM Best Practices

  • Strategic Sourcing:
    Define, formalise and embed Sourcing best practices in Rest of Africa Procurement to enable reduction in TCO of goods and services based on the consideration of Centre-Led, Regional and In-Country Procurement

  • Supplier Relationship Management:
    Define, formalise and embed a Supplier Relationship Management Framework in RoA Procurement to drive reduction in TCO of goods and services

  • Business Intelligence:
    Define, formalise and embed the Procurement Management Information Framework for RoA across the Source to Pay Lifecycle to provide visibility of compliance

  • Procurement Governance and Risk Management:
    Define, formalise and embed the Governance, Risk, Control, Compliance and Audit framework in RoA

  • Procurement Operational Processes, People and Capability and Enabling Technology:
    Define, formalise and embed the RoA Capability Plan to drive improved service delivery and execution across the Source to Pay Lifecycle. The consideration extended to: Processes, Systems and People and will be continually leveraged to help professionalise the procurement industry in Africa

  • Organizational Interfaces:
    Define, formalise and embed the Stakeholder Engagement Framework in order to bolster relationships and the strategic extraction of value

Summary of Achievements

  • Savings improved by 177% due to the implementation of Category Management

  • Implementation of SRM and Contract Management Framework to improve 3rd Party Risk Management

  • Integrated Risk and Governance Framework implemented which led to 83% improvement in audit results

  • Implementation of Capability Improvement plan that improved the people, process and technology capability.

  • MI Reporting

  • Risk and Compliance Reporting

  • Contract Management Reporting

  • Customer Satisfaction Surveys

  • SRM

  • Benefits Reporting

  • Performance Management Scorecard

janineh@tkjprocurement.com | etienneh@tkjprocurement.com | www.tkjprocurement.com


Transforming the Procurement Department

In this issue
10 January 2020:

Transforming the Procurement Department

Introduction

TKJ Procurement Consulting and Training (Pty) Ltd was formed in September 2017 with the purpose to elevate procurement departments to become an integral partner in driving business strategy, make impactful contribution to the bottom line and drive effective risk management of the organisation.

Based on our procurement capability and maturity assessments conducted over the past two years, we observe that procurement continues to be seen as a buying function and as a result most companies do not harness the strategic value of their procurement departments. Another observation is that procurement often is seen as a stumbling block to achieving business strategy instead of an enabler to achieving the business strategy.

Transforming the Procurement Department

  • Position the procurement department as a  strategic and collaborative business partner through sustainable value creation.

  • Create value for your client through transformation projects that enable improvement in the maturity and capability of the supply and procurement value chain.

  • Build agile business processes and systems to drive procurement efficiencies

  • Design, develop and implement holistic solutions which are sustainable and match the organizational objectives

  • Use management information to ensure effective oversight and improvement across the value chain;

  • Develop skilled resources to deliver the Procurement strategy.

Procurement transformation refers to a specific type of organizational change management which focuses on strategies to enable major and long-term improvements to procurement and supply management processes, activities and relationships”

(Day and Atkinson, 2004).

A transformed procurement department provide the organization with a competitive advantage in that the entire Source to Pay process is efficient and highly collaborative. The TKJ Procurement Capability and Maturity Model (CAMM) has been devised to enable development across the end-to-end procurement value chain, addressing people, process, systems and structure in line with industry best practices. Our assessment highlights strengths as well as development needs, and the resulting action plans for implementation into everyday operations for continuous improvement. Over the next few months I will unpack each step in the transformation process.

janineh@tkjprocurement.com | etienneh@tkjprocurement.com | www.tkjprocurement.com