March 2020 | Point of View

Getting sourcing and procurement teams a seat at the business stakeholder table

To connect with business stakeholders, sourcing and procurement experts should replace references to cost savings with “value”

Getting sourcing and procurement teams a seat at the business stakeholder table

Today’s enterprise sourcing and procurement teams are faced with many challenges in delivering on their annual goals and targets. One perennial challenge comes from within, as sourcing and procurement departments often struggle with convincing business unit counterparts to engage them to support strategic third-party supply-related needs. In fact, at times, sourcing and procurement groups may feel they are speaking a different language when attempting to engage budget-holding stakeholders, making the challenge of aligning and collaborating with business stakeholders on shared goals even more daunting. 

So, what do top-performing sourcing and procurement teams do to consistently obtain a seat at the table with business stakeholders, and receive rave reviews about their performance year after year?

In many cases, these groups approach how they engage with business stakeholders in three key ways: 1) They speak in terms of business value (not just cost savings), 2) they contribute a level of market expertise that goes beyond typical expectations for sourcing and procurement teams and 3) they lay out a path for suppliers to collaborate effectively in delivering a continuous stream of value to the business stakeholders who engage them.

Speak to the business value, not just cost savings

Most sourcing and procurement experts have grown up in the world of “cost savings.” Their individual and group goals and objectives are typically tied to EBITDA-impacting cost improvements (with the occasional acknowledgement of cost avoidance efforts), and as a result, usually think in terms of “less cost.”

Conversely, business leaders typically think in terms of revenue and profit; thus they may bristle when they hear “less cost,” interpreting it to mean lower quality and/or less reliability. To connect with business stakeholders, sourcing and procurement experts should replace references to cost savings with “value.”

Value can mean lower costs as well as higher quality, faster delivery, stronger performance and any number of other benefits, many of which are delivered by sourcing and procurement professionals as a result of their efforts to engage suppliers and secure positive engagements for business unit customers. Sourcing and procurement teams that approach value-driven opportunities should find a much more receptive audience from key stakeholders (and as a result, a more collaborative atmosphere). 

Become market experts

Sourcing and procurement teams that demonstrate an ability to provide a broader, market-driven view of the key goods and services that their business stakeholders rely upon will find stakeholders beginning to ask for their thoughts and advice on a regular basis. 

To achieve this dynamic, sourcing and procurement teams don’t necessarily have to develop internal expertise, as they can utilize third-party market data sources and industry forums that provide data feeds and market news and intelligence – often for a minimal cost. In addition, networking among other purchasing professionals will help them gather a broader array of perspectives and viewpoints, and therefore help open the business stakeholders’ eyes to a wider world of challenges. This will also position the sourcing and procurement team as a strategic partner in helping stakeholders prepare risk-mitigating steps or plan strategies to capitalize on opportunities. Business unit stakeholders will be pleasantly surprised at the added value from their sourcing and procurement teams if they can begin to effectively harness these insights and intelligence. 

Help suppliers become partners, not just vendors

By collaborating with key suppliers to obtain insights and future perspectives, sourcing and procurement leaders can unlock additional value beyond a traditional buyer/seller relationship. Savvy sourcing and procurement teams should strive to identify optimal suppliers for this type of relationship and begin cultivating insights. This will further cast the team as value-added partners.

And, while suppliers are keen to work with their customers in this fashion, they rarely are afforded the opportunity given the common “evaluate, analyze, source, replace” cycle every 3-4 years often overlooks innovative ideas and potential new products or capabilities. While it may take some convincing of their business stakeholders, many sourcing and procurement teams find that those stakeholders are excited by the opportunity to partner more closely with their suppliers and to develop and cultivate a more collaborate relationship. 

While most sourcing and procurement teams will likely need to continue investing in developing synergistic relationships with business stakeholders, those that can deliver on a combination of the previously discussed approaches will likely find the outcome more fruitful for their department as well as the overall business. Remembering that the sourcing and procurement function is a key enabler for the business unit, communicating the business value, cultivating and sharing market intelligence and supporting supplier partners in delivering collaborative and innovative solutions is a recipe for long-term success. 


This article originally appeared in Supply & Demand Chain Executive.

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