4 Perspectives Stakeholders Wish Procurement Knew

Stakeholder relationships may be the most important procurement topic in my opinion. But then again, I have a unique perspective having sat on both sides of the table – as a stakeholder, owning a large Business Unit P&L - and as the leader of procurement. After many years of experience, I know the relationship between stakeholder and procurement must be one of partnership. A partnership must be a win-win-win proposition; win between the parties and a win for the bottom-line of the company. In order to achieve this level of partnership, there absolutely must be an alignment between the objectives of the business and the objectives of procurement. Whether it be cost savings, technology innovation, or opening new markets, if stakeholders and procurement are not aligned, then results will always fall short – for everyone.

Procurement professionals strive to add real value to their stakeholders. Procurement yearns to be viewed as partners to the stakeholders in the organization. Too often, stakeholders either avoid procurement at all costs or fail to consider them as a go-to for assistance. 

Why does procurement keep getting overlooked? 
And, what can procurement do to change stakeholder perceptions? 

As with most situations, the problem boils down to the alignment of objectives. If objectives are not aligned, then the language and communication between stakeholders and procurement will surely break down. Before we can change stakeholder perceptions, we need to understand our stakeholders and their objectives, holistically. Let’s explore four perspectives stakeholders wish procurement knew: (These viewpoints provide actionable tips to adjust our language and build stronger partnerships with stakeholders.)

#1: It’s not all about savings

Procurement’s success is often measured on cost savings, though stakeholders typically have different objectives.  For example, marketing could be against the clock to find a new supplier. Or, HR could be looking for ways to stretch budgets. Perhaps the Product Management team is focused on innovation vs. ongoing cost reduction. Maybe the company is striving to open new markets quickly. It’s important to understand what matters the most to your stakeholders. Then, you can demonstrate how procurement can help achieve those objectives without the perception that all that matters to procurement is savings.

How to build new perspectives:  

• Ask stakeholders what is important to them in a supplier. With this information, you can better understand how they define value and what you can bring to the table during the RFP process.
• Be careful using words such as cost savings, cost reductions, and budget cuts. These terms often lead to closed ears and fear that engaging procurement will lead to future reductions in their overall budget. This language also creates worry that cost will be the only factor in determining suppliers and purchases.
• Instead, share how procurement can bring value to stakeholders. Focus on the idea of “getting more for your money,” so they can free up resources to fund other priorities.

#2: Stakeholders can negotiate well

Some stakeholders are experts at managing tight budgets. They know how to negotiate with suppliers to get good deals. When procurement comes in and tries to take over, stakeholders get territorial and a bit skeptical of the value procurement can bring. Since stakeholders and procurement have different roles in supplier relationships, stakeholders tend to focus more on the performance aspects (e.g., scope, timeline, quality, deliverables). Procurement focuses on the commercial and legal aspects (e.g., pricing, risk mitigation, terms and conditions).  With the right approach, there is room for both to co-exist.

How to build new perspectives:  

• When talking with stakeholders about suppliers, discuss the different types of supplier relationships. Discuss the roles stakeholders and procurement can play. Even though procurement isn’t always a technical expert, they play a critical role in constructing commercial agreements that will enable success.
• Emphasize that procurement is here to enable the success of their objectives and to partner with them, not to take over. Ask the right questions to define requirements and provide options to deliver on those requirements.  Procurement professionals are experts at data collection and analysis, so let procurement help with that aspect. Highlight how procurement can act as the “bad cop” during supplier negotiations to allow stakeholders to maintain a positive working relationship with their key suppliers.
• Avoid talking about replacing suppliers right out of the gate. Recognize that incumbent suppliers often have won the right to the business. Be open to that view and concentrate on how procurement can extract better terms from incumbent suppliers.

#3: To be trusted partners, know your stakeholders and their business

In procurement’s work, it’s tempting to take a “one process fits all” mentality, which can leave stakeholders convinced you don’t understand their business. As a result, stakeholders resist partnering with procurement.

How to build new perspectives: 

• Spend time with your stakeholders. Personal relationships are paramount. Stakeholders are people and all relationships need nurturing.
• Do some research on your stakeholder and their business before reaching out to them. If you’re meeting someone new for the first time, look up their LinkedIn profiles to see where they went to school, their interests outside of work, and if you have common connections outside the company. This way, you can make natural connections throughout the conversation.
• Research their current suppliers and gather a few insights to take to your initial meeting (e.g., the supplier is about to be acquired or entering into a new partnership).
• Review their current spend and prepare some ideas on how procurement could add value to their buying needs. Consider asking questions such, as are all the suppliers doing the same thing? How long have they been doing business with the supplier? Are other business units using the same suppliers?
• Pay attention to the words your stakeholder uses to describe their suppliers and customers (e.g., vendors vs. partners). Adopt and incorporate that terminology in your discussions. You don’t need to be a subject matter expert in everything, but you should know some of the buzzwords and trends in their business area. This way, you can better communicate that you’re invested in knowing what’s important to them.
• Be proactive and prepared for every meeting. Show what value you can bring by giving concrete examples or case studies of how procurement has demonstrated value in similar use cases. Without the context and “story” of the impact, you are likely to be ignored.

#4: Stakeholders want to help

Procurement often assumes that stakeholders don’t want to work with them. In reality, most stakeholders do want to work with procurement and help the company achieve its budget and compliance targets. it may just be that the process is too cumbersome and takes too long.

How to build new perspectives:  

• Enable an easy to engage mindset through a service desk or a concierge approach to give stakeholders a consistent way to contact procurement. By making the process quicker, stakeholders are more apt to seek assistance from procurement.
• In cases where procurement was not engaged or engaged too late to add value, create an “after the fact” business case to demonstrate how to work together in the future and how procurement can help stakeholders achieve their objectives. This presentation and approach will require some up-front work, but it usually pays off with a higher engagement.
• Procurement professionals must be business people first. Be responsive, anticipate questions, and proactively provide answers. Keep stakeholders informed and involved at every step of the process. Build trust and confidence by eliminating the “black holes” that are easy targets for stakeholder complaints.
• If you are contemplating a no PO / no pay process or instituting limits on what can be bought without a PO, make sure it’s easier for stakeholders to comply rather than to go around procurement. Establish and maintain extensive supplier catalogs for regular purchases, implement emergency ordering processes for critical business areas, and consider increasing the use of P-cards for routine purchases.  If your stakeholders get what they need when they need it, they will begin seeing procurement as a valuable business partner.

A common theme through all of the above approaches to building better relationships with stakeholders is: sometimes simply adjusting language and keeping stakeholder perspectives in mind can open the door to effective stakeholder relationships. With any successful relationship, effective stakeholder relationships are based on mutual understanding, shared goals, and mutual respect for what each party brings to the table.

About the Author

Tina Yoder
Vice President, Procurement Services

Tina Yoder is Vice President of Procurement Services with a focus on Business Development at WNS-Denali. Tina comes with more than two decades of experience across multiple leadership roles in both procurement and business development at companies such as Aon Hewitt, TeleTech, CenturyLink Technology Solutions and IntelliSource. Tina is passionate about partnership and achieving business outcomes together. She holds a Juris Doctorate from the University of Denver and a Bachelor of Arts in Political Science and German from the University of Illinois at Urbana-Champaign. Tina resides in Colorado and enjoys spending time outdoors.