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Lean Sourcing - Verify

In the last newsletter, we covered the fourth step of Lean Sourcing, "Design", as based on the Lean Six Sigma methodology. This month, we will review the final step, "Verify", in our DMADV approach. As in previous steps, we will address several risk mitigants to avoid common project failures.

Click the following links to read the Define, Measure, Analyse, And Design articles.

And finally, the question, "What exactly did I just do?", becomes clear. In a perfect world, your pilot delivered better than expected results, and you are fully confident in "flipping the switch", and immediately rolling out new sourcing processes and systems throughout the business. In reality, "Verify" is generally an ongoing, iterative process of continual improvement, tweaking and expansion of your programme.

The likely best case scenario is that you will begin to see actual cost savings, or the clear path towards savings as a result of your pilot - There is often an "unwinding" period whilst existing contracts are closed out, or service providers switched, and these expected 'investments' will start paying for themselves in the near term. In these cases, the Verify stage is used to validate the measurement system in place, to develop a full-term rollout plan, and to execute.

In a more middle-of-the-road scenario, you will find that your pilot provides the foundations for success, but that certain aspects are either more difficult or costlier than anticipated. Possibly the most common issue faced is finding that a sourcing strategy that looked great on paper, didn't work out as expected once the actual consumers in your company started using the resultant products or services. This generally happens when a far stronger emphasis is given to renegotiations and rate reductions than is given to supporting and preparing the consumers (generally IT and operations managers) to be successful. While this is by no means a show-stopper, it should certainly be addressed in subsequent rollout plans through training, stakeholder management, and even compromise.

In unfortunate cases where the expected benefits are not delivered, it may be time to rethink the fundamental aspects of your Lean Sourcing strategy. In addition to the lack of consumer readiness, the issues uncovered during a pilot can include:
- Supplier capability challenges. Reducing supplier count can save a great deal of time cost, but it may create gaps across the product and service set.
- Product or service failure. Switching or consolidating suppliers runs the inherent risk of a process or product in the company failing.
- Slow adoption or no adoption. Unless you have a CEO-mandate behind you, there needs to be something in it for the consumers. If there is no perceived benefit, you may get little more than polite lip service.

Even in these cases, it is critical to quickly identify and address the "misses" before your stakeholders become disillusioned. Almost by definition, any sourcing organisation can become leaner and more effective, yet the steps each must take can be very different. Remind your stakeholders frequently that a "pilot" is intended to uncover these very challenges, and that it has been decidedly successful in doing so! The pilot should also uncover short-term opportunities that can be used to maintain momentum for the programme whilst the larger strategic component is reviewed.

Unlike the other stages, there is hardly a discrete "end" to the Verify stage. As a sourcing leader you should have time-bound targets based on savings, efficiency and/or simplification. However, a commitment to continual review and improvement should not only keep your organisation lean, it will deny your successor an opportunity to look like a hero!!  

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