Managing Approvals

Collecting approvals and signatures is never fun, but in order to implement a large change in any organization, it needs people with authority to "buy in" to the change. In a large organization, that includes signatures and presentations; in a small business it might be pausing between bites of lunch to mention the change and see if the owner objects. Either way, if the people with the power to implement or stop a change aren't in favor, the change won't happen. One of my first tasks in 2023 upon assuming a new role was learning about a key initiative and pushing its approval through many layers of management.

John Trumbull's painting of a long approval process with many stakeholders

Background

At the start of 2023, I had spent three years running the Supply Chain Work Transfers group, which had started with minimal standardization or data-sharing and now had a mature system for absorbing new projects and tracking them to completion. I envisioned spending the year coaching the team through reducing our backlog of projects and finding my next role where I could point to that reduced backlog as evidence that the new processes worked.

Instead, in March my manager AS pulled me into a newly-expanded role for Commodity Management of Raw Material and Embedded Spend. Although raw material had merited its own Commodity Manager before (and still did in the form of the experienced and knowledgeable BM), the incoming Business Unit President had declared an initiative to take control of our "embedded raw material": the steel, titanium, and aluminum bars and ingots (among other materials and forms) that our suppliers purchased and then sold to us as forged or machined parts. The intent was that as a gigantic aerospace conglomerate, we had more opportunities to get volume discounts from the metal mills than our suppliers did when buying individually. Those raw-material savings could then be passed on from our suppliers back to us in the form of reduced finished-goods prices. My manager wanted someone with a strong process-management, project-management, and analytical background to spearhead the project, so he tapped me.

The team had already been working on a big embedded-spend contract with a key supplier for a specific grade of steel. We knew it was a good idea and the contract had been negotiated (with many approval steps along the way with us and the supplier), but we needed to get the final $200M version signed by the highest levels of management. With churn at all levels of the organization, we needed to educate many of the approvers, and with long material lead times we had to get things approved ASAP or we were at risk of slipping into the next pricing year (increased cost) or having upcoming production lots missing out on the lower costs.

Getting the Approvals

At the Business Unit level, I or my direct-report Commodity Manager knew the people involved and those approvers were all-too-familiar with the difficulties involved in this grade of steel. This made communication easier, but we still had to answer questions and tweak the financials to present them exactly as those approvers wanted to see. We struggled in particular with how to show the return-on-investment: the deal was structured in a way which didn't fit neatly into traditional "spend a bunch of money up-front and then get the savings year-over-year until it's paid back" business models. A lot of our internal negotiation were about the best way to show potential liabilities (which might not be realized) on charts that normally showed capital expenditure.

At each level of approval, we saved the models and presentations as-presented so that we had a starting point for the next set of questions and traceability for why we had answered previous questions a certain way. As we rose through the organization, our presentations became more abstract: rather than phone calls or video conferences, we would shoehorn our presentation into standard formats and write up abstracts and wait for the questions to come back. Eventually, we were only briefing the person below the approver we were chasing so that they could brief the approver.

This was a time where my action-tracking systems to ensure follow-up were essential, as was Leader Standard Work for reminding me of the timeline for this contract as committed during annual planning. The combination meant that I was following up with my approvers as often as needed without nagging them, and that I was hitting the various milestones in time to reach the annual goals on savings.

Eventually, we got the contract approved with no further changes and implemented on-time. We had a secure and reduced-cost supply of a key grade of steel that we and our suppliers could purchase to enable on-time delivery on several military aircraft.

Championing the Strategy

Getting the $200M contract approved was a large input to achieving our strategic goals on embedded spend, but it wasn't the only one.

The company had begun work with an outside vendor to capture raw-material data for every purchased part, including raw material specification, input type (ingot, bar, etc.), input dimensions, and input weight. All of this fed the prioritization of which alloys would get the "big company" treatment first for securing low-cost supply. I coordinated between the outside company and all of our various internal functions (Engineering, Supply Chain, etc.) to identify which parts were missing (an oddly difficult task - the outside company had a large backlog of parts where they had the information and just needed to get it into the database) and provide the information for those missing parts. We quickly got to the 80%-90% target of data submitted for our Business Unit.

We needed more approved steel mills in more parts of the world. Although we had made some piecemeal efforts on that front, I started the team reviewing those efforts regularly and cross-functionally so that we could either drop unacceptable mills from the project or get them onto our approved supplier list. We had 1/3 of the mills approved within the first few months and detailed project plans for the rest. It also meant that when travel-budget restrictions starting coming in, I could raise red flags to our management: "if we can't get X people approved to travel to Y supplier, your requirement for localized steel on Z aircraft will slip." Mixed success on getting the travel approved, but at least it was a conscious decision on the part of senior management.

One scary discovery was that we used a grade of steel which was controlled by an industry standard, but the industry standard was not sufficient for our needs. A few knowledgeable people ensured that we only got steel from the "correct" mills, but no systems were in place to control that or "approve" new mills. After I got my heart rate under control, I kicked off amendments to our Quality / Material Engineering processes to fix both of those issues.

After I moved into my next role on Metrics and Tools, I maintained my awareness that we needed more visibility into the raw material that our suppliers purchased. When I revamped the request-for-quote tool, that included the option to ask and then record all of the supplemental data recommended by our central Machining Commodity group to implement the embedded-spend strategy.