Procurement organizations are failing to adequately turn their relationships with internal stakeholders into a strategic advantage, according to a recent study of Asian and European procurement executives cited in Harvard Business Review. The survey also found that:
- Only 28% of procurement executives collect and act on internal customer satisfaction data
- 27% have targets for stakeholder engagement
- Just 22% use different messages with different stakeholder segments.
Communication with internal stakeholders is crucial in developing and executing transformative procurement projects, as we’ve learned through discussions of our members’ best practices. To develop effective category strategies aligned to business objectives, identify stakeholders’ business needs and determine how to make trade-offs when confronted with conflicting priorities.
Defining key priorities
At one insurance company, category managers hold brainstorming sessions with stakeholders to establish common definitions of business priorities such as innovation, cost and speed. Then, they present stakeholders with pairs of business needs, and stakeholders vote on which one is the higher priority. When all business needs have been compared with each other, category managers are left with a clearer picture of what’s most important to stakeholders.
Category managers use these weighted priorities to evaluate options with stakeholders and hold discussions with them about the trade-offs to consider competing priorities.
From “order processor” to partner
The company increased its spend coverage by 40% over one year by using this tool and achieved 10% savings on the spend to which it was applied. “We’re no longer seen as ‘order processors,’ but as consultative and analytical partners,” a procurement executive from the company said.
Since in many companies, stakeholder perceptions of procurement are negative, this type of communication is vital to boost procurement’s influence. And as we’ve recently discussed at Corporate United’s 2013 SYNERGY events, improving internal influence can ultimately enable procurement to pursue more transformative projects with a higher ROI.