Linda Tuck Chapman, Chief Procurement Officer, BMO Financial GroupPrint This Page
After more than 15 successful years as part of a combined function with
Corporate Real Estate, in November 2012 BMO Financial Group ("BMO") recruited me
to become their first Chief Procurement Officer, leading a stand alone function.
I took the helm of a 175 person team delivering strong financial results, with
exceptional support from executive management, plenty of investment in
technology and processes and a wealth of capabilities. I spent the first two
months learning about our operations, meeting individually with many team
members and interviewing 45 executives across the bank to answer the question
"why am I here?" The answer is truly motivating for our whole team, and that
includes me. The bank has a genuine desire to create the right set of
circumstances for us to add even more value to the businesses and the bottom
line. The team is ready and willing, and together we crafted an exciting
strategy and execution plan, without losing sight of significant multi-year
How Organizational Design Maximizes Value
A couple of years ago, BMO embarked on a journey to develop strong centers of
competence and specialization, transforming to an effective matrixed
organization structure. This is particularly true for corporate functions. For
example, all communication roles and functions were consolidated into Corporate
Communications, all HR functions into HR and so on. No more shadow
BMO procurement organization is center-led with decentralized
buying, a common structure for a services company like a bank. Following the
corporate model, when we reorganized the department, roles and services for each
team in the department were purified. With little or no overlap in
responsibilities, services, or business partner relationship management, each
team leader has well defined authority and accountability for service quality,
decision-making and value creation.
During my initial interviews, I found that few executives understood what we
do. As part of the reorganization in March 2013 we changed our name, which was
Procurement & Strategic Sourcing. We are now called Sourcing, Payables and
Supplier Governance (SPSG), which better describes the services we deliver. Our
structure enables "vertical specialization" with "horizontal integration".
One of the quandaries faced in
organizational design is the choice between a Category-specific or
Relationship-based structure for Sourcing teams. Each model drives
different behavior and service delivery.
During the executive interviews it was clear that few business leaders knew
who was designated to support their businesses sourcing needs. One of the
quandaries faced in organizational design is the choice between a
Category-specific or Relationship-based structure for Sourcing teams. Each model
drives different behavior and service delivery. We chose a hybrid approach where
each Director in the Sourcing team support specific lines of business or
corporate functions, and is aligned to specific senior executives. The intent is
that each line of business and business partner knows whom to contact and their
expectation of a "single point of contact" in the organization is fulfilled.
Internally, each leader knows who does what and who each Sourcing Director
supports. This enables clarity and simplicity for internal business partners and
helps leaders form relationships with specific lines of business. In turn, the
Sourcing Directors get to know their business partners and their business well,
creating a strong foundation for advisory services.
This organizational design increases the effectiveness of Sourcing leaders by
letting them focus on specific lines of business and leaders. Knowing their
business partners' business, expectations, needs and challenges and then
delivering informed advice is another great way to build trust.
The same alignment is in place for the Enterprise Supplier Governance team,
who support supplier managers post-contract in their responsibilities to manage
supplier risk and performance. This team provides advice and support, and works
closely with Operational Risk Officers in the businesses. Their governance role
is fulfilled by the Policy, Standards and Reporting they have developed for the
enterprise, and their service delivery is intended to help internal business
partners comply with the Standards while creating a workable supplier governance
process for key suppliers. Supplier Governance folks are conceptually aligned
with specific Sourcing leaders and lines of business. This is not quite as pure
for Sourcing folks, due to fluctuating demand and a smaller team in relative
The Productivity Strategies team supports both of these teams with a
centralized financial modeling, analytics and reporting team, supplier diversity
and customer-as-supplier team, market intelligence and demand management team
and our quality assurance team. The Infrastructure and Process team are
responsible for SPSG and enterprise technology and process for all sourcing,
procurement, payables, contract management, supplier governance and payables and
fixed assets accounting. And lastly, our Accounts Payable and Fixed Assets
Accounting team supports the enterprise and provides governance to our internal
I'm a firm believer that Accounts Payable ("AP") should be part of the
department. In the past, AP has been a bit of an after-thought in the Sourcing
process. With clear authority and accountability, AP can develop and manage a
payables strategy that maximizes cash management and process efficiency. They
define the payment methodology for suppliers, the required level of detail on
invoices, and enable dynamic and early pay discounts. Now AP has a voice
throughout the sourcing process, and is more able to provide expert advisory
services to the lines of business and their Sourcing colleagues. This is another
great way to build trust and foster better cross-functional collaboration.
This model allowed us to create strong teams with deeper specialization, and
to work more closely as a team because of cross-functional dependencies to
deliver results. Organizational design can and should support your objectives,
increase accessibility and focus on business partners' goals, enable your folks
to become trusted advisors to their business partners, and foster better
cross-functional collaboration within your department.
Our organization structure is simple and clear, which is well-received by
internal business partners and our employees.
Defining Our Customer
Marketing gurus agree that developing a strong brand is essential for
creating competitive advantage. The same is true when transforming an
organization to become trusted advisors. One of the things that sourcing
professionals often struggle with is determining "who is the customer?" Most
have heeded and subscribe to the notion that, "The customer is always right."
Serving the customer can get in the way of becoming a trusted advisor. To better
define the role in serving the customer, it is best to clearly define the
internal customer. This will help to construct a brand promise that resonates
with the customer.
In a corporate setting, it is easiest to define the customer by outlining the
roles of key stakeholder groups in sourcing events. One important stakeholder
group is senior executive management. They have two roles, and may have two
agendas. Their primary role is to lead the company as a whole, delivering
shareholder value by being in the right markets with the right products, all
delivered by the right people, processes and technology. Where it can get a
little confusing is that they are also a "customer" for services rendered.
The next question pertains to the role of the line of business leaders and
how they fit into the "customer" model. This question continues all the way down
the hierarchy. The easiest way I know how to do this is to define your most
senior executive management team - we call them Management Committee - as the
only real "customer". This means that other executives are business partners,
not the "customer." As Business partners you are jointly charged with the
responsibility of developing the best solution for the company and the business.
Seeing the accountability through this lens makes it is easier to balance the
role of trusted advisor with corporate governance. Together the two serve the
needs of the business and the corporation as defined by senior executive
Defining our "Product"
An important aspect of creating a strong brand is to define your "product".
This means which services will be delivered and how, and the role of business
partners. Think of this as your Operating Model. It is important to acknowledge
that everyone has more work than they can handle, there is a need for speed and
managed risk, and each stakeholder group has a specialized area of expertise.
For Sourcing organizations with a center-led or decentralized model, a big
challenge is early notification of sourcing activity and sometimes even any
awareness. In other cases, business partners may identify a need for Sourcing
support, or Sourcing may raise their business partners' awareness of a need or
One of the things we are designing is an "intake" process,
where all new and renewing contracts will be subject to the sourcing
process. In a few short months, this will be mandatory. A short
Preliminary Assessment Questionnaire will determine spend and create a
high level operational risk profile, making it easy to determine
resource requirements and the sourcing methodology to be used. Low spend
and low risk engagements will be "DIY" projects, led by the business.
We are also upgrading our contracts database so we can create an 18-month
rolling forecast of contract expiry or notification dates. The Sourcing
Directors and their business partners will be able to forward-plan the workload,
creating an opportunity for Sourcing professionals to come to the table prepared
with market research to changes in business practices, market opportunities, an
assessment of the level of satisfaction with the incumbent, Minority and Women
Business Enterprises (MWBE) suppliers and customers who are or could become
suppliers, and so on.
For renewing engagements, Sourcing can be prepared with base case spend and
performance data. For new and renewing engagements they can bring new ideas to
the table or help business partners react quickly. This rolling forecast will
help business leaders balance their time and resources between the new
initiatives and existing workload requirements. Either way, by delivering
actionable information and useful market insight means we can be a good business
partner, creating another opportunity to add value.
Defining our "Brand Promise"
We developed a simple "brand promise" that resonates with senior executive
management, business partners and the team. It is universally applicable across
the teams - Sourcing, Accounts Payable and Financial Reporting, Supplier
Governance, Infrastructure and Processes, and Productivity Strategies - and
serves as a beacon to guide our actions every day.
Our department's "brand promise" to internal business partners is to:
Drive best value for money.
Improve the customer experience.
Protect the bank.
Regardless of the reason we're engaged, defining our services, how they are
accessed and delivered, and the role of its business partners creates clarity
and allows us to manage and deliver against expectations.
Creating Brand Awareness
With a simple "brand promise", the team can more easily communicate the value
proposition in a "30-second elevator speech." Everyone on the team has a role in
creating "brand awareness". They are able to quickly communicate what the
department does, the brand promise and how that is translated into value. One
way to reach all of our business partners is with a communication plan which
identifies each stakeholder group, what type of information is most relevant to
them, how they prefer to receive that information and the frequency. We have had
a lot of help from Corporate Communications, so this evolved quickly. We plan to
upgrade our intranet site over the next two quarters, another good place to
promote brand, define services, create awareness and present the organization.
Designing our Operating Model
The way the team, processes and technology work together to deliver services
is another avenue to creating a strong foundation for success. Another important
factor is how the business partners engage with your department, and how process
and technology are used to enable and accelerate results. Expectations of
business partners typically include speed, risk mitigation and value, and a
well-defined, technology-enabled process supports delivery. With a clear
operating model, we can demonstrate when and how activities flow across the
organization, and it helps define team accountabilities and authority. No one
can be effective without an appropriate level of authority.
Once the project touches the mandatory sourcing intake process, we worked
very hard to streamline and enhance our operating model from concept to
Developing our Three-Year Strategic Plan
I love the expression, "Any road will take you there if you don't know where
you're going?" We developed a vision of the future and defined actions and
activities to achieve that vision. The first step in developing a strategic plan
was an assessment of the current state. This meant assessing business partner
and team member expectations, knowledge and skills, expertise and proficiencies,
disappointments, and future desires.
One particularly effective tool for developing a strategic plan is a 1996
Harvard Business Review article by Michael E. Porter called, "What is Strategy?"
In this article, Michael defines two types of strategic initiatives: 1)
Operational Excellence or doing the same things better and 2) Strategic
Positioning - doing the same things differently or trying new things. These
approaches can be particularly helpful as a filter for strategies. It's
important to incorporate both types of strategic initiatives in an operating
plan. Using this filter, team leaders can develop strategies that are within
their control to deliver, providing granularity, resource requirements,
constraints and dependencies. This information can be used as a background to
plot strategic initiatives in a three-year, month-by-month, and
quarter-by-quarter plan. This last step ensures you have a good idea what you
are signing up for in terms of the scope and commitment.
It's been an exciting and rewarding seven months. The time has flown by and
we're working very hard to take Sourcing, Payables and Supplier Governance to
the next level at BMO Financial Group. Thanks to my great team and enviable
support from executive management, we're adding value and being valued. We have
promising future ahead of us, stay tuned.....
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group (TSX, NYSE: BMO)
is a highly diversified financial services organization. With total assets of
$555 billion as of April 30, 2013, and more than 46,500 employees, BMO provides
a broad range of retail banking, wealth management and investment banking
products and solutions.
We serve Canadian clients through BMO Bank of MontrealÂ®, our personal and
commercial banking business, BMO Nesbitt BurnsÂ®*, one of Canada's leading wealth
management firms, and BMO Capital MarketsTM, our North American investment and
corporate banking division.
In the United States, clients are served through BMO Harris Bank, a major
U.S. Midwest personal and commercial bank, and BMO Private Bank, with wealth
management offices across the United States, as well as BMO Capital MarketsTM,
our North American investment and corporate banking division.
On July 5, 2011, BMO announced that it had completed the acquisition of
Milwaukee-based Marshall & Ilsley Corporation (M&I). M&I merged with Harris Bank
to form BMO Harris Bank N.A., part of BMO Financial Group. This integration was
completed on October 8, 2012, and all branches now operate under the name BMO
We help our customers make money make sense by delivering the broadest range
of financial services through a single point of contact. Our financial service
professionals provide access to any services our customers require across the