Why Change Management in Procurement is Vital for Digital Transformation

As part of an enterprise-wide transformation project, you have accelerated digital procurement transformation.

In this endeavor, you have shortlisted advanced procurement software and plan to deploy this technology to digitally transform the function.

But this is only half the job done.

Why?

Because technology cannot do everything on its own.

Does your workforce understand how the new technology works and the associated changes in workflows? What is their view on the changes being made?

Similarly, have you communicated the changes to external suppliers and third-party vendors?

How can you prepare the workforce, suppliers and other stakeholders and ensure a smooth transition from current processes?

This is why you need a procurement change management program.

Without such a program, your digital transformation initiative is not likely to meet the desired outcomes.

Not only can a change management program educate the workforce and act as a learning bridge, but it can also boost user adoption and minimize the impact on existing operations.

Additionally, it can proactively identify potential issues and allow the team to develop strategies to deal with them.

When is Change Management Needed in Procurement?

Increasing impact on internal and cross-functional teams and regular interaction with suppliers enhance the significance of change management in procurement.

Change management is needed when a business implements digital procurement transformation.

Automated processes, digital approvals and real-time collaboration expedite processes and bring end-to-end visibility. Change management helps boost user adoption and successfully integrate new technology and tools within existing systems and workflows.

The rapid evolution and adoption of artificial intelligence in procurement has also accelerated the need for change management.

“We need a workforce which is able to use AI and scale up in terms of productivity, in terms of using the time that is available to them to do more high value-added work,” says Lalith Nambirajan, vice president of consulting at GEP, in this webcast.

There is also a need to build new roles and capabilities in procurement to use and manipulate all the data, information and decision-making processes, he adds.

Likewise, there is a need for change management in procurement when there is organizational restructuring or mergers and acquisitions. In such a case, procurement needs to adjust the supply base across regional networks. Change management can help identify potential synergies while also managing any changes to supply agreements.

Changing regulatory requirements also necessitate change management in procurement to build agile processes and adapt quickly. Automated platforms can detect deviations and suggest solutions or necessary adjustments to safeguard the business and prevent non-compliance.

Let’s now look at the key challenges of change management in procurement.

Key Challenges of Procurement Change Management

1. Legacy Processes:

At the outset, the procurement team, which is used to a traditional style of working and legacy processes, is likely to resist any change. It may be comfortable working with manual tasks, paperwork, emails or legacy software. Not surprisingly, a majority of the team is hesitant to accept the changes. They want to continue working in the same manner despite the proposed changes and their benefits.

2. Impact on Vendor Relationships:

Managing supplier relationships presents another challenge for change management in procurement. How will procurement transformation impact long-standing partnerships with existing suppliers? Failure to assess the impact on vendors can complicate the transformation initiative and derail the project.

3. Sudden Transformation:

Changing all procurement processes in one go also poses challenges. In the absence of a training program, the team is not likely to be prepared for a sudden change and a new style of working. It is therefore a good idea to start by introducing changes in one part of the process, help the team adjust to change and digitize the entire process in phases.

4. Compliance Checks:

Incorporating compliance checks is another key challenge while introducing new processes. Following a major process change, it is a good idea to implement temporary quality checks to check for compliance gaps. Once the new process is fully implemented, these temporary checks can be replaced with a full-time and long-term compliance check.

Also Read: How Close Collaboration Between Finance and Procurement Can Improve the Bottom Line

Communication, Engagement and Training are Vital to Succeed

Clear and effective communication is vital to ensure smooth transition. Functional leaders should set out the objectives of the program and how it can make life easy for procurement. They should also keep all channels of communication open and create a feedback loop to assess what is working and what isn’t working and where changes can be made.

Often, businesses make the mistake of launching a change initiative merely within the bubble of procurement and leadership teams. When the change is announced, it takes many stakeholders by surprise, which leads to resistance.

To avoid this situation, a business must engage with stakeholders who will be impacted by the change at each level of the organization. Understand the pain points of end-users and how these can be eliminated with the proposed solution. Listen to their feedback and explain which part of the feedback can (or cannot) be worked upon.

By communicating and engaging with stakeholders throughout the program, businesses can overcome initial reluctance, gain employee buy-in and provide the much-needed support.

Finally, training is also crucial in procurement change management. The team should understand how digital tools can simplify their routine work as well as collaboration with internal and external partners.

Also keep users informed about where to look for support. Instead of one or two training sessions, conduct ongoing training to allow users to adjust and learn at their own pace.