The following article is excerpted from the book Managing Indirect Spend, by Joe Payne and William R. Dorn, Jr. Published by John Wiley & Sons, Inc. Release date: 19 October 2011. Click here to order from Amazon.com.
Too often, a procurement team undertakes a sourcing initiative for an indirect spend category and neglects to include all of the stakeholders for that category. The usual assumption of the team members is that the category is not a material contributor to the organization’s final product or service, and therefore is not critical to the successful conduct of business. Unfortunately, they then neglect to include the many stakeholders in the team that do actually have interest in that spend category.
A stakeholder can be defined as any person, group, or department that has influence in a spend category or is influenced directly or indirectly by that spend category. On the simplest level, the stakeholders are, of course, the end users and the category owners who are responsible for sourcing the spend. However, stakeholders can range further afield, including finance departments, management, shareholders, customers, and even marketing teams that may have joint marketing and branding arrangements with the suppliers.
Stakeholders can play a variety of roles in the sourcing process, and their participation can ultimately swing the results of a project, either to a positive or negative outcome. It is absolutely critical to engage all of the stakeholders in a spend category early in the sourcing process, and to keep them constructively involved throughout the process, so they feel that their concerns are understood, and they don’t intentionally or inadvertently derail the project later on.
Not only can stakeholders provide valuable insight into the existing supplier relationships, quality levels, and specifications, but many of them can also play a key role in the negotiation process. This is especially true in cases where the preference is to maximize savings with the incumbent supplier. Regardless of the project and the goals associated with it, having proper stakeholder engagement can turn what would normally be lackluster results into spectacular ones.