1. Designing future processes and solutions
GPOs must be strategic visionaries — defining a clear vision for the E2E process they’re managing that is tied to company strategy and imagining how the process could be more strongly aligned with trends and demands.
GPOs must also consider their organization’s ability to adapt to those process changes and gauge when to take a small step vs. a leap. For example, the global retailer client referenced earlier defined an incremental-step change framework for improving supply and operations planning (S&OP). Instead of a fully centralized planning organization, the project team established a center-led S&OP process supported by the ERP’s planning module. The GPO thought it was wiser to absorb bite-size change until the process had been tested and the organization was ready to move to a fully centralized process run by corporate.
This example shows how effective GPOs help their organization avoid wasting time, money and managerial attention on solutions that won’t work for the transformation program underway.
Finally, to arrive at the right design for the E2E processes they’re overseeing, GPOs coordinate design decisions across multiple players and teams in different parts of the company.
2. Leading others
Great GPOs aren’t just visionaries; they’re also a unique brand of leaders. As organizations shift from stabilizing their enterprises to dealing with disruption, and from industrial to digital production, they require leaders who embody an evolved set of knowledge, skills and abilities. For instance, rather than cultivating individual relationships with a few key players, GPOs build networks and groups with common interests and goals. And instead of focusing only on managing change, they concentrate on embracing disruption.
Effective GPOs provide this form of leadership by embracing the new competencies themselves and by coaching and guiding others. Equally important, they model newly emerging digital-leadership capabilities essential in today’s technology-driven business world, such as empathy, resilience and inspiration.
3. Realizing benefits from the change program
As with any transformation program requiring hefty investment, a company must make a strong business case for committing resources to a large-scale, tech-enabled change effort, specifying the value that each E2E process should ultimately generate.
For example, outcomes that the global retail client wanted to get from its transformation program included better planning and forecasting capabilities. Therefore, the GPO in charge of the forecast-to-produce process considered the impact of the proposed redesign on excess inventory and inventory turns — important benefit metrics for the business case.
A GPO won’t necessarily be directly accountable or responsible for capturing every benefit on offer from reconfiguring the process. That’s because some functions within the process might not sit within that GPO’s control. Given this inherent tension between functional and process ownership of benefits realization, a GPO will have to make “handshake” agreements with other leaders. For instance, at the global retailer, the GPO for procure-to-pay is the CFO, who works closely with the vice president of procurement to document design requirements and check that the procurement organization ultimately realizes the procurement-related benefits documented in the business case. Ideally these agreements would then be backed by shared goals and even individual performance metrics designed to optimize the end-to-end process rather than the performance of a single function.