According to Fredrick Spalcke, Chief Procurement Officer of Philips, the transition to a new procurement structure and to the use of Design for X (DfX) as the standard model for product design involved five key elements:
- Setting up processes with clear roles and responsibilities. It is critical to outline clear roles, job descriptions, and reporting lines. Transformation starts with simplifying and clarifying the organizational structure.
- Having an end-to-end, holistic approach for decision making. Strong communication and leadership between disparate segments of the team is required. At Philips, the DfX process leads up to a "convention" at which binding decisions are taken on every aspect of the product and its lifecycle.
- Setting ambitious individual breakthrough targets. The organization needs to see that the objectives that have been set for it will require all of its brains and creativity to achieve. The targets need to go beyond incremental "squeezing" and improvement activities. Individuals need a clear line of sight between the organization's targets and their personal targets. If they win, the company will win, and vice versa.
- Hiring very good talent. For the organization to change, some of the people in it will have to change. The people you bring in need to have the right skill sets for the roles you've identified, and they need to be top performers in those roles.
- Work to one goal to create a phenomenal "core spirit." Both rational commitment to the organizational goals and emotional commitment to the vision need to be present and in proper balance, creating an ecosystem that supports and sustains change.
DfX took into account whether the supply chain for a product was optimal, whether the design was optimized for manufacturing, and a host of other factors. Ultimately, the aim of a DfX exercise was to arrive at a "total cost of ownership" over the lifecycle of the product, for each element in the product.
Source: Ligthart, P. 2016. Procurement at Philips: Total transformation on a global scale. CSCMP Supply Chain Quarterly, Quarter 1.