Procurement’s 7 Deadly Sins. Part IV: Lack of Stakeholder Centricity

Happy New Year!

For this segment, I want to talk about relationships - not supplier relationship, but business partner relationships.  While we spend most of our time managing external partners, we can easily overlook that our mandate is intrinsically Stakeholder Centric.  But what, you may be asking, is Stakeholder Centricity?

Most simply it means understanding and prioritizing your business partner, aka your internal stakeholders’ objectives and goals.  I believe that there is an opportunity to materially improve how procurement professionals manage these relationships and interact with the most important stakeholder in the business… the one who controls the budget and makes the decisions. 

For your consideration, in Deloitte’s Global Chief Procurement Survey of CPOs in 2018 they reported three top strategic priorities for procurement:

• 78% are focused on Cost Reduction

• 58% are involved with about New Product and Market Development

• 54% are worried about Managing Risk

And yet, only 1 in 4 of us felt they are “excellent business partners contributing significantly to strategic value.”  Said differently, 75% of us have the opportunity for engage business partners in a different and more strategic way.  So, the question is: how can we become more strategic? My answer is Stakeholder Centricity.

How does Stakeholder Centricity make us we more strategic today?

Procurement’s greatest opportunity to impact the business is through the business budget owners.  Our job is to help them get the most bang for their buck.  They are our customers, "help them” is the operative phrase.  Yet very few of us even keep customer service metrics! Why is that? 

Consider this simple question. What percentage of the time did your global procurement team deliver the needed contract in the time that the business said it needed it?  Was it 99%, 52% or do you not even track this KPI, much less know the answer?  How tragic is that!  Even more tragic is that for many of us we do not understand, or at least measure, the metrics that matter to our business.

Spoiler Alert!  Procurement is a Service!!!  The metrics by which you measure your performance should matter to your customers.  And while savings is a big one, it is not the only one.  When I first started measuring on-time performance for sourcing activities it entirely changed the way my business partners engaged with my team because suddenly they saw me as seeking to fulfill their priorities over mine.

Consider this example: If the car service that took me to the airport this morning for a flight didn’t know whether they’d be able to get me there in time for my flight this morning, the viability of their service would most assuredly be in question. If upon missing my flight as a result of their routing they provided me savings metrics on tolls I would not trust them to provide any future services since they did not understand my priorities.  I believe that for Procurement to evolve, we’ve got to embrace the fact and the truth, that at our core we are a service, and we have to deliver on what matters to our customers.   

I also know that some of you are saying that “on-time sourcing” metrics is unfair.  It’s unfair because sometimes our customers call us today with a procurement opportunity that was needed to be contracted yesterday.  And, in fact, this “Blindness” is the first Procurement Deadly Sin I blogged about a few months ago (click here to read now).    

That epiphany, like so many, came from a conversation with a Procurement friend named Ron Wright, who leads the procurement team at KAR Global.  In a call I had with him, he told me about feedback from a Finance leader at his company that helped him realize the link between late procurement engagement and his stakeholder’s satisfaction with his team’s performance.  It turns out, last minute requests frequently resulted in frustrated business partners. 

Tragically, Ron is not unique in having this problem.  I believe the opportunity is in knowing what to do about it these two related sins.  We can fix them both by measuring our performance and providing visibility to our business partners.  We can motivate them to help us mitigate blindness which in turn lets us more satisfactorily meet business partner needs and expectations. In other words, measuring our performance makes us inherently more Stakeholder Centric. 

I started reflecting on how my experience and handling of these exact issues as well as engaging with other to get their insights and solutions.  One source that focused on Stakeholder Engagement, from a company called Procuredesk, includes an eight-part list.

1)      Start with building relationships; savings come later

2)      Be an Enabler vs. Policy Enforcer

3)      Understand Business First

4)      Add value to the conversation

5)      Understand personalities

6)      Empathy – Put yourself in their shoes

7)      Align procurement goals with your stakeholder department

8)      Listen first, prescribe later

While I'm absolutely aligned with what they said and see these as valuable steps towards Stakeholder Centricity, it is something more.  I posit that we must move beyond engagement, which is procurement serving, to centricity which is stakeholder serving. I would boil it down to how robust are your procurement processes and how accountable is your organization’s leadership (second spoiler alert these are recurring themes in all the Deadly Sins). 

In focusing on Stakeholder Centricity, I have developed a mantra of three questions to ask our key stakeholders on every procurement opportunity: 

1)       What are your pain points?

2)       What are your aspirations and dreams for how to buy this product or service better? 

3)       And how do we find the right population suppliers to deliver game-changing outcomes in those two (aspirations & dreams) dimensions?

Taking the time to have this conversation is invaluable in improving your service delivery metrics and even more importantly transforming your role from tactical gatekeep to strategic business partner.

Additionally, Procurement succeeds like any other business: by having satisfied customers. Keep mind that customer service assumes that the conditions of an unspoken contract have been honored.  This one is huge for me and often missed by procurement teams.   How many of us seek feedback from our stakeholders?  The unspoken aspect is that to provide a service to the business, we must know what you want; when you want it; with enough granularity to have multiple suppliers to compete for it; and with enough lead time to put it through a robust competitive process.  If any one of the above-listed things is absent, a sub-optimal outcome is the likely result.  Again tragically, many of us don’t have these data but my three questions, when answered completely, should help us with many of them and a new SaaS tool called EP-Squared can help you manage a more Stakeholder Centric process.

Finally, and extremely important, align procurement goals with your stakeholder department.  If budget and savings is the priority, as it was in 2018, that should be your focus.  If supply continuity and risk mitigation is the business’ primary concern, as has become prevalent in the COVID era, then that should be your priority as well.  In both cases you are working with suppliers on your business stakeholders’ behalf and your outcomes should be as close to their objectives as possible.  This is how procurement becomes Stakeholder Centric.

Where can you get help?

These issues are correctable with the right application of tools, processes, and team capability building.  At issue is that too many of us simply don’t know how.  Bill Gates’ wisdom can be helpful here:  determine “who has done it well and what can we learn from that.”  I believe that among my 30,000 social media followers, the answers are out there. 

We now need to get those solutions to the people that are still struggling with problems that someone knows how to solve.  These Seven Deadly Sins are fixable, we simply need to get the solutions to the folks that are suffering in silence.  When we are done, and when the solutions are deployed, the business world that drives I aspire to be a catalyst for that functional change in industry.   

If you think your team is limited by Blindness, 3-5% Savings Fallacy, Three Bids in a Buy Abuse Lack of Stakeholder Centricity, then here is what I recommend you do:

1.       FOLLOW ME on twitter @waltcharlesIII and FOLLOW ME on Instagram @officialwaltcharles

2.       ADVOCATE THESE NEW APPROACHES at your BUSINESS – email me at waltcharlesiii@gmail.com to get help

3.       Continue to READ and SHARE my blog article with anyone in your network that is struggling with any of the “SEVEN DEADLY SINS” mentioned – I still have three to go.

4.       JOIN my FREE blog at www.waltcharles.com by entering your email address at the “Stay IN The LOOP”

5.       TEXT “TOOLS” to 786-566-1766 if your Company has over $1B in Sales and you need help.

Incase you missed it, catch up on the other Deadly Sins:

Part 1: Blindness

Part 2: 3-5% Savings Fallacy

Part 3: Three Bids in a Buy Abuse