Managing stakeholders is not easy at the best of times, and these certainly aren’t the best of times. In the 2021 Indirect Procurement Report the percentage of people saying it’s a daily challenge rose to almost half. So how can you improve relationships with stakeholders?
Almost half of those surveyed (49%) in the 2021 Indirect Procurement Report − conducted by RS Components in partnership with the Chartered Institute of Procurement & Supply (CIPS) − said that managing stakeholders over multiple sites was a day-to-day challenge.
Partly it’s a question of scale. Although 45% had between one and five operational sites, one in 10 of the procurement professionals in the survey were managing stakeholders at more than 100 locations.
In order to maintain spend visibility and budgetary control, over half (53%) were using eProcurement systems and more than a quarter (26%) had issued end users with procurement cards. But one in 10 simply reimburse end users through expenses.
“Often KPIs for procurement teams feature cost quite heavily. But is that cost for a part or for the whole business process? When you look at the wider context you can link together KPIs across the business.”Kate Davies, Head of Global Commercial Services, Electrocomponents
Almost a third (28%) said they had increased the use of digital tools in the purchase to pay process and a quarter (26%) are spending time training stakeholders to use new purchasing systems.
But even if you can maintain day-to-day control, what about managing change over such a large group of stakeholders? It will probably come as no surprise to learn that a third (36%) said it was either very, or quite difficult, to get stakeholders on board with changes they need to implement.
“People just hate change,” said one respondent. Another was slightly more optimistic, saying: “Whenever there is change in an organisation it faces some sort of resistance, but eventually everyone will get on board.”
All on the same side
Making sure that everyone is onboard is critical, says Kate Davies, Head of Global Commercial Services at RS Components’ parent company, Electrocomponents. She says a starting point is to ensure that KPIs are aligned across the business.
It’s no good to have procurement targeted only on cost if engineers are targeted on uptime, for instance. “Often KPIs for procurement teams feature cost quite heavily. But is that cost for a part or for the whole business process? When you look at the wider context you can link together KPIs across the business,” she says.
In the survey, only two-fifths of procurement professionals (41%) said their KPIs were aligned with those of the engineers. Once they are aligned, Davies says the next step is for procurement people to “roll up their sleeves” and sit down with the engineers, build a rapport and understand the end-to-end process.
Deloitte’s 2021 survey of chief procurement officers (CPO) said a key KPI for procurement leaders should be the extent to which they were involved in decision making by other teams and departments.
The survey found that getting stakeholders on board was a global problem. But it said the solution was more communication and adopting an agile mindset to understand the end users’ perspective.
The most successful procurement leaders focus on developing their people skills and building relationships across the business. “Many leading CPOs are rising to the challenge by expanding their ‘circle of influence’,” says the report.
“CPOs understand that to address these layers of complexity and volatility, while simultaneously managing input costs, they must build new and deeper alliances with the business and suppliers.”Deloitte: Agility: The antidote to complexity
As respondents to the RS Components/CIPS survey pointed out, that can be very time-consuming in an organisation with a flat management structure, where a large number of stakeholders have to be consulted about any change.
“Communication is key and technology has a vital role to play in improving visibility and allowing people to have those all-important open and honest conversations, particularly when many colleagues continue to work remotely.”Emma Botfield, Managing Director, UK & Ireland, RS Components
And however hard procurement people strive to understand other teams’ viewpoints, not all stakeholders understand what procurement is trying to achieve for the wider business.
“People who do not know about MRO think that they do know, so when you try explaining to them, they don’t want to listen to you at all, because they think what they know is the right thing,” said one respondent.
Others said stakeholders were too busy to evaluate the rationale for change and even when they did get people to sit down and talk, they found it hard to agree. “People don’t like change or see any issue with the way things currently are. They also like to retain personal/departmental control of spend rather than asking procurement to help,” said one.
Richard Jeffers, Director of Maintenance Solutions at RS Components, agrees about the need to bridge the gap, especially between engineering and procurement. He says each side must understand the other’s priorities.
Digital tools can provide hard data on which to base honest conversations with colleagues – what he calls the “cold pound note” argument for change. The more data you have, the easier it is to persuade stakeholders of the need for change, he says.
But it’s also important to understand the stakeholder’s priorities and have “fact-based conversations” which address issues that concern them, says Jeffers, like the risk of equipment failure and the cost to the business of breakdowns.
“Communication is key,” says Emma Botfield, RS Components’ UK & Ireland Managing Director, who notes that, in order to deal with the challenges posed by the pandemic and sudden lockdowns, people have been brought together across organisations. When many colleagues continue to work remotely, she says, “technology has a vital role to play in improving visibility and allowing people to have those all-important open and honest conversations.”
As our survey shows, finding time in busy schedules to sit down with stakeholders can be hard. It’s a perennial problem, but with digital tools making data more transparent, procurement people can share hard information.
At the same time, it’s crucial to understand the whole process and avoid becoming focused solely on the priorities of the procurement team. If you can see the other person’s point of view, you are halfway to bridging the gap.
As the Deloitte CPO survey discovered, people skills are the vital component that makes the whole thing work. Procurement teams have become used to being agile in repairing supply chains. They now need to become agile in engaging with the rest of the business.