Strategic shifts for operational excellence

The structure of your supply chain and commercial terms can make or break genuine long-term transformation. This isn’t a problem that procurement colleagues or operational teams can tackle alone – they need to work together toward a bigger picture.

Examining and improving processes, thoughtfully designing roles, intentionally curating culture, and managing in a data-driven environment are all important and often tricky aspects of achieving operational effectiveness. But often, they can only take you so far. If any part of your delivery model is outsourced, the structure of your supply chain and the terms of your agreements with partners and contractors can make or break an otherwise beautifully designed delivery model. 

The Transformation and Change practice at Altair work with organisations great and small across the UK and Ireland (and occasionally further afield). Despite the diversity of some of our recent projects, (one a customer journey co-design with a national provider; one an operating model project with a local authority; and the other a process review with a regional RP), they all had one massive elephant in the room: that we have to design around legacy supply chains and contractual arrangements. 

In those projects, it is both planned and responsive maintenance services that have been outsourced (something common to around 40% of UK Social Landlords). Whilst we were able to achieve meaningful improvements with each of these clients, elements of the solutions were, to at least some degree, ‘meanwhile’ fixes until the contract term is up and more fundamental changes can be made. In different ways, part of the longer-term solution for each of these clients lies in taking opportunities to thoughtfully design supply chains and contracting terms to support their strategic and/or tactical ambitions. 

The themes at play are all too common: lack of, or variable, contract management skills and practices; perverse incentives for contractors, driven by well-meaning but ultimately ill-thought contract terms; and confusion about responsibilities and accountabilities, resulting in poor service to customers.  

If any of this is familiar, you can probably recite a list of issues that you know need to be addressed. You may have a clear view of how your contractual arrangements changed, or what needs to change operationally to make them work more effectively. The point is, this isn’t a problem that procurement colleagues or operational teams can tackle alone. Your contractual terms or supply chain need to be structured in a way that supports, and is supported by, your processes, skills and competencies. When that contract / framework term is up, is your organisation in the shape it needs to be to get the best out of the new arrangements? 

We have been in a fortunate position with two of these clients to be working with them in a way that enables us to support the planning and execution of new supply chains and partnership frameworks. Working with our procurement colleagues at one client, we have designed improved data analysis and contract management functions (including roles and processes) to appropriately manage the supply chain models that they are procuring over the next 6 months – setting them up for success when the new model gets operational.  

For another client, we are designing future states on a sufficiently long-term horizon, that enables us to co-design services that are built around more genuine partnership working, whilst ensuring effective mechanisms to control cost, quality and customer experience. 

If you would like to find out more about how Altair can support you to address your outsourcing challenges, get in touch with Matt McCormack Evans in the first instance.