Proven Techniques for

Procurement to Increase
Stakeholder Engagement

Stakeholder engagement is Achilles heels for procurement

professionals. I hope you would agree with me that
stakeholder management is an important skill for any
procurement professional.

All of us have struggled with this issue at one or other time

in our career and if you are struggling this with now, don’t
worry.

By the end of this, you would have learned techniques

which successful procurement managers leverage to build a
strong relationship with their internal customers.
Even if you start using one of the techniques mentioned
here, you would see significant improvements in internal
customer satisfaction.

Better stakeholder management leads to proactive

engagement for sourcing and that leads to more overall
savings. Just to be clear, I am using the word procurement
but that covers strategic sourcing and purchasing.

It is a known fact among procurement professionals that

proactive engagement leads to better saving results. So
needless to say, for a procurement department to be
effective, there needs to better engagement and
stakeholder management.

But this is easier said than done and there are different
reasons for that

Some departments don’t want to engage

sourcing/procurement because they feel that it makes
the vendor evaluation process slow and more
bureaucratic.
Some don’t see the value at all.

Whatever the reason, procurement professionals need to

find a way to engage the stakeholders in order to increase
the purchasing efficiencies and reduce overall cost.

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
https://www2.deloitte.com/uk/en/pages/operations/articles/
cpo-survey.html

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.

Stakeholders in the procurement process

Before we get further into how to be effective in managing

your stakeholders, let’s define who these stakeholders are

Procurement stakeholders can be divided into two major

categories

Internal

Internal stakeholders include the following

Department/Budget owners: Budget owners engagement

is the most important and hence they are the most
important stakeholders.
Finance: Engagement with finance is required to
understand budgets as well close coordination to ensure
that negotiated savings are reflected in your income
statement (Reduction in expenses leading to increased
EBITDA).

Legal: Ensure that all contracts adhere to corporate legal

policies and contract risk is mitigated through proactive
review of all key legal terms across various contracts.

Senior Management: Management is always looking for

visibility, procurement job is not just negotiating the savings
but it is CPO’s (Chief Procurement Officer) job to ensure
that the management understands value delivered by
procurement. More important, the value needs to be
presented in financial terms – for example how savings
negotiated leads to better EBITDA margins.

External

External stakeholders include

Suppliers
Other parties

Since the focus of this article is internal stakeholders, we

will keep vendor management for another blog post.

How procurement organizations measure stakeholder

engagement

As you all know, you can only improve what you measure
and same is true with stakeholder engagement. If you ask a
CPO, they would always mention that engaging
stakeholders is a challenge but then some of them don’t
even have a formal way to measure engagement and
internal customer satisfaction. This is pretty evident from a
recent survey

As per Deloitte survey, only 44% of procurement

organizations are measuring internal customer satisfaction –
which is a yardstick for stakeholder engagement. In another
word, 56% of organizations are not measuring satisfaction
with internal customers.

Procurement departments need to baseline procurement

performance and engagement before they take steps to
improve it. Following are some of the ways to measure
stakeholder engagement. If you want a more
comprehensive view, you might want to create a balanced
scorecard for some of these measures

a) Internal customer satisfaction survey

One way to measure stakeholder engagement is a quick

survey. The challenge with surveys is that the quality of
feedback depends on how well or how badly the survey is
created.

When conducting surveys, you would want feedback both

from supporters and critics, so ensure that you are picking a
diverse base of internal customers for your survey.

The other aspect of surveys is that it needs to be done

frequently so that one can track the trend. A quarterly
survey might be an appropriate measure but it depends
from organization to organization.

b) Informal feedback: Another way to gauge stakeholder

engagement, is through informal feedback. You can do this
over coffee, drinks or lunch.

The challenge with this approach though is that takes time

to gather feedback and it could be expensive over a period
of time.

b) Spend under management and savings delivered

In my view, this is the most objective way of measuring

stakeholder engagement.

First of all, the more engaged your stakeholders, the more

spend under management, so this a direct measure of
procurement influence as well engagement.

Second, some departments might be more engaged than

others.Look at the savings delivered in the last few months
and see where the savings are coming from. That should
give you a clear idea of how engaged procurement is across
all departments.

Wherever possible, use more than one measure to get a

complete assessment of how engaged procurement is with
stakeholders.

How to Improve Procurement Stakeholders Engagement

Now let’s look at some of the ways to improve engagement

with internal stakeholders

1) Start with relationship, savings come later

It is very clear that Procurement role in the organization is to

reduce cost and deliver savings, but is this the only thing
you want your internal customers to remember? It is a sure
shot way to create a purely transactional engagement.

Most of the new procurement professionals focus a lot on

savings and that makes the relationship very transactional.
Rather, focus on building the relationship first with your
internal customers.

Before you meet with your stakeholders, Do your homework

on what the department’s function is, how it sits in the
overall hierarchy etc.

You should do this irrespective of whether you are starting

with a new category or starting a new job.

Focus on understanding their function and how they impact

the business. Some questions to ask.

Note that your questions might change based on whom you

are meeting but following is a basic guideline

How is the department organized, essentially who is

who in the department?
 What are 2-3 achievements which the department is
most proud of (assuming you are meeting the head of
the department)?
What are their operational paint points and how are
they addressing it today?
What is one or two area where you can be of more
help? Hint: Savings is not always on top of mind of your
stakeholders.

Once you have established the relationship and your

stakeholders see value in what you do, they will start
engaging you and savings follow.

2) Be an Enabler vs Policy Enforcer

Procurement policy or corporate spend policy is an

important aspect of the corporate procurement function.
However, policy enforcement should not be the core
function of the department.

Don’t get me wrong, ensuring purchasing compliance is

important but procurement shouldn’t lead with policy
enforcement.

In other words, don’t start a conversation with “as per our

procurement policy you should…”

Rather start with asking probing questions about the

current business challenges and how procurement can help
enable better decision making.

Let’s take an example: Your policy requires that every

purchase order must be reviewed and approved by
purchasing before it can be sent to the supplier. Your
stakeholder complains is that it takes too long to process
orders.

If you focus is strictly on being a policy enforcer, then you

would focus on how to get the approvals done faster.

If you have an enabler mindset, then you would think about

why the need for frequent orders and what can be done to
consolidate that or if it is the case that you need frequent
orders, find a way to avoid approvals while keeping
purchasing compliance intact.

3) Understand Business First

This is the most obvious way to build trust with your

stakeholders. If you don’t understand the business you are
supporting, there is little hope that your stakeholders would
consider you a trusted advisor.

Procurement professionals who understand business very

well are great at understanding their stakeholder needs as
well as adding value to the conversation.

But if you don’t fully yet understand the business, here are
some tips

Engage Sales: Talk to your sales colleagues, they can

provide you with details about the company’s products,
competition as well as how your customers view your
company.

Engage Marketing: Marketing should be able to give you

an overview of the competition, brand, and positioning of
the company. The work they do is primarily dependent upon
the positioning of the company.

Engage Operations: Once you are done talking to sales

and marketing, talk to different operation teams. These are
different departments which support the operations. For
example, if you are a software company, then the various
operations departments are engineering, customer support,
infrastructure management etc.

Take them out for coffee or lunch and let them help you
better understand the business.

Once the procurement teams understand the business,

there are different approaches a CPO(Chief procurement
officer) can take to ensure that procurement is working
closely with business to gather requirements.

As per a survey conducted by Deloitte, the following are

some of the techniques
 76% of procurement teams are embedded in cross-
functional teams to better understand the
requirements. There are pros and cons for this
approach, we will cover this in a separate blog post.
It is interesting finding that 62% of teams jointly own
the savings targets with the departments they support.

Both of these are very good approaches for procurement to

better understand business.

Approaches to increase stakeholder engagement

Source:
https://www2.deloitte.com/uk/en/pages/operations/articles/
cpo-survey.html

4) Add value to the conversation

Procurement always complains that they don’t have a seat

on the table and things would be so much better if they did.
I don’t disagree but procurement needs to earn that seat.

If procurement can find a way to add value to the

conversation, it would significantly elevate the role
procurement plays in supporting the business.

There are multiple ways you can do this in your day to day
interaction

Tell them something valuable: Not every budget owner is

reviewing their spend every day to understand whether they
are over their budget or are there are anomalies in the
spend.

You might say, that is the role of finance and you are
absolutely correct.

I am not saying that you go out of your way to review

budgets and spend every day on this, but this could be an
observation. For example, you are conducting spend
analysis and you realize that vendor monthly spend is
trending up, this could be that the vendor is overcharging or
the department is doing more business with that vendor.
Your stakeholders would appreciate the heads up.

Educate them about the market: Procurement teams

could be structured very differently, some are category
based and some are department based.

If your team is structured around categories, then

procurement managers are in a better position to educate
their stakeholders about the category.

Let say you are about to run an RFP for marketing

automation software, so rather than asking your
stakeholders if they have identified the vendors, add value
by providing the following information

What other marketing organizations are doing in your

space.
Who are some innovative players in the market?
Probably some case studies around market automation
and learnings from them.

5) Understand personalities
All of us are wired very differently and the same is true for
procurement stakeholders. So to be effective, procurement
needs to learn how to work with different personalities and
adapt based on different situations. Following are some
examples of what different personalities your stakeholders
might have

a) Introvert vs Extrovert – Some stakeholders are

introverts and some are extroverts, and understanding
individuals can help a lot in day to day conversations. I am
not asking you to be a psychologist, but when you meet
your stakeholders for the first time, spend time in knowing
them. Your first question should not be “What Can I help
you with”! But get you to know them first.

Understanding this trait itself can help build a strong

relationship with your stakeholders.
Now you must be saying, all this makes sense but I am an
introvert myself, so then how do I approach this?

It is pretty simple, ask a very open-ended question. For

example – “Are you born and brought up in “City Name” “?
Once you ask this question, observe how your stakeholders
respond to that question

Here is a simple traits comparison between introverts and

extroverts

Introvert vs. extrovert

b) Understanding stakeholders Learning style: “Learning

style is an individual’s unique approach to learning based on
strengths, weaknesses, and preferences.”

Why should you care about learning styles?

A lot of the work involved in a sourcing event is either

gathering data or presenting information obtained from
suppliers. If you are working with a stakeholder and they
have one primary learning style (say listening) then it
doesn’t help if you go prepared with an elaborate slide
deck.

I am not saying you customize your presentation style

based on each stakeholder but be aware of the learning
preferences and try to accommodate wherever possible.

A good framework to understand individual learning

preferences is VARK. As per VARK framework, an individual
learning style can be categorized in one or more of the
following models

V– Visual

A – Auditory

R – Read/Write

K – Kinesthetics
VARK Framework

If you are interested to know your own learning style, you

can take a quick test here.

6) Empathy – Put yourself in their shoes

I am sure you are not hearing this for the first time!

Having empathy towards your internal and external

stakeholders is key to procurement success. But how do
you go about having Empathy towards your stakeholders?
Following is a good map which will guide you to be more
empathetic towards your internal customers. This map is
designed mostly for understanding your customer’s user
persons for product development, but I feel this can be
used by procurement teams too

Source: https://www.solutionsiq.com/resource/blog-
post/what-is-an-empathy-map/Understand their job

The reason I like this map is that it is self-explanatory, but

here are some the way this empathy map can be used by
procurement professionals
a)Understanding what your customers say and do would
help you understand the business better.

b) Gain: What they can gain by leveraging procurement.

If you think about what they are going to gain, then you are
in a better position to quantify and present procurement
value proposition to your stakeholders.

c) Pain: What are their pain points

I am not sure what other pains procurement can alleviate

but you can certainly understand stakeholder challenges in
terms of dealing with vendors.

Procurement involvement generally ends with vendor

selection. Procurement should help stakeholders manage
the vendor relationship through the vendor life cycle.

d) Hear: This is more from the head of the department

perspective.

What they hear about procurement engagement from their

teams and co-workers. If you have a strong relationship
with your internal customers, that would help elevate
procurement value add in the eyes of senior management.

7) Align procurement goals with your stakeholder

department
Procurement always looks at cost savings as their primary
goal and that is true. As per Deloitte survey, 79% of CPO’s
consider this as their top priority.

However, cost reduction is not the only goal for your internal
customers. For example, procurement can reduce the cost
of a widget by sourcing it from a low-cost country. But, your
stakeholder has no experience with the international supply
chain and how to mitigate the risks with logistics and
planning. This is an example of a clear misalignment of
goals.

Another example, assume that you have a supplier deeply

integrated into the business, so even though you can RFP it
and get better pricing from other vendors, it is a high-risk
item. So if your approach is that we are going to RFP this,
then your stakeholder might be apprehensive about it and
might not be willing to take the risk.

The first and foremost goal of a department is to deliver on

their key metrics and not cost savings! Cost savings may
help them to get this done in the allocated budget and
that’s where procurement helps.

So obviously you have misalignment on what you want to

achieve. Hence, for procurement to be successful, there
has to be a goal alignment between procurement and
stakeholders.
Your procurement/sourcing strategy should align with the
goals of your internal customers. So how do you go about
aligning it?

The key aspect of goal alignment is to understand that not

every vendor relationship is equal and hence you need a
different strategy for each category or vendor you are
supporting for your stakeholders.

Following is a good framework to think about procurement

strategy alignment with your stakeholders.
Source:
http://sourcinginnovation.com/wordpress/2016/05/31/aligni
ng-procurement-strategies-to-business-goals-part-ii/

You divide your suppliers into 4 buckets and each bucket

has a different sourcing strategy.

How to use this framework?

a) Create a slide deck with analysis of key vendors for a

department, which includes total spend, categories
purchased, vendor capability, contracts, and vendor
performance information if available.

b) Discuss this information with your internal customers and

preferably along with senior management for that
department. The goal is to identify supplier criticality into
the following buckets

Strategic: Highly critical to your business but there are

limited sources of supply. For example, a supplier of
the critical component of the final product.
Non-Critical: Important for day to day operations but
there is a high availability of alternate suppliers.
Bottleneck: Not critical to business but there are very
limited sources of supply

Leverage: Highly critical but the higher availability

of alternate suppliers.
The focus of this exercise to ensure that your stakeholders
are aligned with the vendor classification.

The next step is to discuss the sourcing strategy for each of

the buckets and align it with your internal
customers/stakeholders.

You should do this exercise at least once a year to get

better alignment with your stakeholders. Do this preferably
towards the end of the year or beginning of the new fiscal
year when operations activity is low.

8) Listen first, prescribe later

Let’s say you are meeting a marketing manager, and she is

describing the issues with the current supplier and looking
for recommendations on how to solve this.

If the first response in your mind is let’s put it out for bid –
then you might be failing to listen effectively. When a
supplier doesn’t work, it is not always the supplier’s fault
and this could be happening due to different reasons. For
example, the contract is not structured properly or the
stakeholders are not fully engaged.

There could be multiple reasons why the engagement is not

working and effective listening can help you identify this.

As per Julian Treasure, We spent 60% of the time listening

but we only retain 25 % of the information.

Here are a couple of ways, procurement can listen better

and better engage with stakeholders

a) Suspend Judgement: It’s hard not to immediately jump to

conclusions, so try to suspend judgment on the correct
strategy or decision until your stakeholders are done
explaining the situation.

b) Keep an open mind: You might have a preconceived

solution to a problem but develop the attitude to understand
others point of view too. I am not saying you drop the
solution you have a mind, but you need to temporarily put in
the memory cache so that you can fully evaluate an
alternate solution proposed by your stakeholder.

c) Ask questions at right time: When you are listening to

someone, ask questions when they take a natural pause.
That way you are not interrupting them while they are
speaking.

If you can’t keep your questions in your mind, write them

down as they come up.

Just let the speaker know that you are taking notes.

Conclusion
Successful procurement teams understand the need for
stakeholder engagement and they are continuously finding
ways to better engage the stakeholders.

The more engaged the stakeholders, the easier it is for

procurement to meet its organizational objectives.

We have covered a lot of content in the above sections,

don’t get overwhelmed – at the least find a way to measure
the current stakeholder engagement level. Once you have
done that, you can pick one of these techniques and start
incorporating in your interactions and start measuring if
there is an improvement.

We would love to hear your favorite techniques for building

stakeholder engagement, so feel free to drop a line in the
comments section.