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Stakeholder engagement in procurement and 5 steps to successful implementation

Bottom-line savings go hand-in-hand with top-line profits—and more and more enterprises are realizing that the best way to get a firm grasp on both of these is through sourcing. While the function has long been regarded as a vital internal resource to increase savings, many companies view procurement through a tactical lens, as something that exists primarily to manage negotiations at the end of a deal, rather than strategic experts that can make a positive impact on the entire sourcing process. This means that the team with arguably the most valuable insights into procurement needs and strategy are not being involved in the early-stage decisions.

Need for engaging procurement stakeholders

Procurement is mainly measured on savings delivered, There are other performance measurement yardsticks for procurement but the main drive still remains cost savings.

Need factual data?

As per a CPO(Chief procurement officer) survey done by Deloitte, 76% of the CPO’s mentioned cost savings as the primary driver for performance measurement, following by 57% at risk management.

Source: Deloitte

For procurement to deliver savings, there are three main prerequisites

  1. Have a well-defined process which leads to an objective evaluation of suppliers.

  2. Engage key stakeholders and ensure that you increase spend under management.

  3. Consistently deliver value to your stakeholders.

And all three need a dedicated focus on engaging stakeholders.

Data confirms that this approach is a mistake; findings from the Institute of Supply Management note that early-stage procurement involvement results in an average of 9 percent in sourcing savings—2 percent higher than getting them involved later in the game.

Getting stakeholders to involve procurement teams as strategic partners in the sourcing process might take some convincing. To shift the mindset of your procurement team as transaction managers, try out these key strategies to turn sourcing project stakeholders into procurement power advocates:

Five key principles to adhere to in stakeholder engagement

We work under a mantra that there are five vital principles for procurement professionals wanting positive stakeholder engagement.

1) Identification of stakeholders

Stakeholder communication shouldn’t end when the event closes. Reporting out after a contract is awarded reassures stakeholders of the benefit of working with procurement and gives buyers a chance to tout their successes. Sourcing tools with automated report generators can save valuable time and effort when it comes to presenting event data that is clear and visually appealing. Nevertheless, it is up to procurement to translate this information in a way that is meaningful to executives and non-procurement stakeholders.

It is critical that in procurement, individuals can identify who the key stakeholders are within the business. By getting to know them, you can get a clear understanding of what they want, care for and influence across the organisation.

2) Active and early engagement

Essentially, the earlier you can engage with the relevant stakeholders the better the outcome. As part of a strategic procurement plan, you naturally gain their participation in negotiations.

Senior board members will have a higher level of influence than someone at the junior end. So by getting the more experienced individual on board at an early stage, you can utilise their ideas quicker and with more efficiency. In the procurement environment, this is particularly true in driving change management and transformation.

Also remember that stakeholder working styles and the way they communicate can be vastly different as well. Marketing might prefer calls or in person communication, IT might prefer emails, and executives may just need simple summaries of milestones in the process. Sourcing technology with built-in collaboration tools can help centralize stakeholder communication with email updates, or event progress summaries.

3) Listening to stakeholders

Procurement sometimes gets the title of the “silent participant” in a business. Break that stereotype by keeping lines of communication open at all times. Make sure you are communicating timelines, deadlines, vendor responses and any roadblocks that may arise. That way, no one will feel out of the loop during the sourcing process. Strategic sourcing technology can come in handy when communicating with large groups—especially for projects that involve cross-functional collaboration—by streamlining communications through a single, centralized platform that gives everyone a clear view of what’s going on.

We believe it's critical that procurement teams listen to their stakeholders in order to manage their expectations.

From a procurement perspective, acknowledging and then being able to act on stakeholder input is key to driving success. If the project is on brief, then there is every chance that the client or customer will be pleased with the result.

4) Communication

Surprises are usually a great thing, but when the surprise involves extra work, tensions ensue. Avoid these unwelcome curveballs by planning for every eventuality, providing regular updates and assigning clear responsibilities. One way to do this is by utilizing a strategic sourcing solution to designate specific roles and tasks to individuals involved in the project. That way, each person has a clear outline of every single task and deadline that falls under their management.

For many years, we've worked with the thought that communication with stakeholders needs to be concise and clear.

Having a positive working relationship with stakeholder’s means the output will be of higher value and their interest in the project more significant. When there are changes in a project, stakeholders must feel like they're a part of the decision making process and are adding value.

5) Creating value and ensuring success

Procurement is a fairly foreign concept to many; don’t assume that everyone understands the function or the role you play in it. You may have to turn yourself into a salesperson to truly highlight the full effect of your expertise—and that is all right. To help your stakeholders truly understand the opportunity in front of them, share real life examples of the benefits that procurement has brought to various stakeholder-vendor relationships and sourcing projects within the business.

For example, if one marketing branch is sourcing printing services, searching for similar historical events run in a centralized tool could reveal that three marketing branches each have individual contracts with the same vendor. Rather than negotiating an individual deal for $250,000 worth of services, procurement might re-negotiate a contract encompassing the needs of all three branches, now with the buying power of a $1M deal.

A procurement function that educates and works with stakeholders is able to create value for both parties, and best practice is a natural way to this type of success.



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