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Lean Sourcing: Analyse

Lean Sourcing: Analyse
 
In the last newsletter, we covered the second step of Lean Sourcing, "Measure", as based on the Lean Six Sigma methodology. This month, we will review the third step, "Analyse", as part of the DMADV approach. Additionally, we will address several risk mitigants to avoid common project failures.

The methodology is based on the application of DMADV, one of the tools in Lean Six Sigma. DMADV allows companies to obtain drastic improvements in their business processes. The name DMADV derives from the initials of the phases in the application of the methodology: Define, Measure, Analysis, Develop and Verify.

The most important prerequisite to kicking off the analyse phase is to have clearly demonstrated a meaningful potential benefit, and to understand very specifically how you will judge (i.e. measure) the effectiveness of any subsequent solution. However, there are scenarios where you may consider moving into the analyse phase without this:
- There wasn't enough time or resource to collect conclusive information and data on the current sourcing programme
- A key stakeholder (leadership, board member, etc) insists on moving forward for qualitative strategic reasons
- The measure phase proved inconclusive, and only by analysing and even piloting solutions can you understand the true cost benefit analysis.

If any of these scenarios apply, there may still be good reason to begin the analyse phase, but it should be done with the full understanding and approval of key stakeholders. Most importantly, stakeholders should accept the very real possibility that the result of the analyse phase may be to do little or nothing.

The key objectives of the "Analyse" phase include the following:
- The solution. During the analyse phase, you will have looked at various solutions that may be part of any lean sourcing initiative, such as: reducing vendor counts, implementing SLA tracking systems, renegotiation programmes, multi-sourcing, process improvements and IT systems for vendor and purchasing management. After reviewing the cost/timeline/benefit of these options, a future state solution should be identified.
- Multi-Generational Project Plan. While very simple solutions may only need one 'generation', most solutions will need to be implemented in phases over time to maximize benefit while minimizing disruption to the business, additional cost and other forms of stakeholder fallout.
- Pilot Preparation. A carefully chosen target area (perhaps a single business unit, a single element of the plan, etc) should be chosen. The goal of the pilot (conducted in the next phase) is to prove the efficacy of the solution, build support for the greater program, and to refine the plan for the overall programme. Ideally, steps can be taken during the Analyse phase to prepare the pilot group/process for a quick ramp-up given approval.
- Updated Stakeholder Review & Management Plan. The end of the analyse phase is perhaps the most critical time to have a detailed, updated stakeholder management plan. Many projects do not make it to this point, and so people may not be truly engaged or aware of what's happening. Once this tollgate is passed, real change will begin to happen, and it is imperative to have the people who will make that happen fully on board.
- Approval (or agreement not to move forward) to implement the solution.

The analyse phase takes a step back out of the detail, and asks you to look again at the broader programme. In addition to the specific solution, special attention must be paid to the stakeholder plan. In sourcing, there are often long-standing and deep relationships between key people inside your organisation and the suppliers you will be working with. These relationships must be identified, classified, and ideally leveraged for the success of the programme. In some cases, mitigation plans may be necessary to avoid unhappy stakeholders jeopardizing the success of your programme.

A few things to keep in mind when conducting the "Analyse" phase of a Lean Sourcing initiative:
- Avoid the pressure "to deliver". In an ideal world (at least from the shareholder's perspective), everyone in a business is focused solely on the growth and success of the business. In real life, people are focused on the growth and success of their careers. Therefore, you may be under pressure, both personally and from leadership, to "get something done". It's very hard to demonstrate the value of not doing something, but it will be much harder to demonstrate the value of something that shouldn't have been done.
- Enable yourself to have frequent and regular "wins". This holds true with any project... The best way to keep momentum, funding and support for a programme is to show results. Further, solutions that have several benefit-yielding milestones are easier to manage, and the risk of failure is significantly reduced. Even if an element of your plan consists of implementing complicated new systems, try to include changes and improvements that can be completed in the near term.
- Be very wary of "visionaries". Oftentimes, stakeholders may push you towards certain solutions because of a their "vision" about how things should be. Unless those visions align with what you've concluded during the analyse phase, avoid these ideas (diplomatically, of course) at all costs. In cases where you cannot, make every effort to document their expectations discretely so that you can measure your own success as a product of achieving their 'vision', not as the possibly negative result of their idea. I doubt that there is any one factor contributing more to high-profile project failures.
- Know the full stakeholder impact of your decisions. Let's say one of the decisions made is to reduce the number of IT development service providers by 50%. There are clear winners and losers both inside and outside the organisation - the suppliers being downsized or eliminated, and the IT leaders who champion them, may push back very strongly. Those suppliers getting a bump should be very happy with the plan. Remember to address both. If you are expending effort to manage the "losing" stakeholders, you should also reap some benefit for the "winners".

As with any framework, it is important to keep the big picture in sight. Detractors state that methodologies such as these merely add an inordinate amount of bureaucracy and work to a process that should be "common sense". And in some ways, they are correct. It is easy to look at a process or programme from the outside and have a good idea about how it should be run and managed. However, as a project or programme manager working in the detail, with pressure coming from all over the organisation, it is very, very easy to lose sight of the big picture. The key is to use the frameworks as the means to remain on the right path - not as a series of ends which must be satisfied. 

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