apply outsourcing best practices to increase the performance of your internal procurement team

procurechangeProcurement Performance 2016How to Apply Outsourcing Best Practices to Improve the Performance of your Internal Strategic Procurement Group

Philip IdesonFounder, ProcureChange

Today’s Discussion

2© ProcureChange LLC. Not to be shared or reproduced without permission

www.procurechange.com

HOW TO APPLY PROCUREMENT BEST PRACTICES TO YOUR INTERNAL GROUP WEBINAR

➤ Introduction to Philip Ideson

➤ What do I mean by strategic procurement?

➤ Deep dive on three procurement outsourcing best practices that you can apply today to your internal teams.

➤ Overview of seven other best practices.

➤ Should you consider procurement outsourcing as a tool to increase your procurement ROI?

Philip Ideson – The Road to Today




➤ 15 years of procurement experience across the entire value chain.

➤ Multiple industries and countries

➤ Head of Procurement

➤ Buyer & provider of outsourced procurement services

➤ Founder of niche procurement advisory firm

Identify Need for an

Externally Purchased Product or

Service

Identify, Select and Contract with Chosen

Supplier

Issue Purchase Order & Pay

Supplier

Manage Supplier

Performance & Mitigate Risks

What Do I Mean by “Strategic” Procurement

4

High ROI: Investing in Knowledge & ExperienceRequires Upfront Investment

Significant Long Term Rewards

Enabling Technology

© ProcureChange LLC. Not to be shared or reproduced without permissionwww.procurechange.com


Best Practice #1 – Formal SOW




Have a formal SOW with KPI’s that state the services being provided, roles and responsibilities and minimum expected performance levels.





➤ Shared expectations – combine what the stakeholder needs with what you are able to deliver.

➤ Agree on metrics - promotes the pursuit of shared objectives.

➤ Requires stakeholder buy-in, which increases engagement.

➤ Build roles and responsibilities into the SOW

➤ Promotes active governance and performance management

Manage your relationship with stakeholder groups as if they are an external client. Formal SOW and KPI’s increase stakeholder engagement and promote transparency and the pursuit of shared objectives.





➤ Segment based on geography, spend owner executive, category, areas where engagement previously a challenge, etc

Considerations:Target Specific Stakeholder Groups

Launch Slowly➤ Select a pilot group. Refine before scaling.

Develop in Partnership with Stakeholder Group➤ This HAS to be a shared document. Listen to the needs

of the stakeholder, rather than just trying to formalize adherence with procurement policy.

Assign a “Contract Lead”➤ A single point of contact with Procurement should be

responsible for – and empowered to – deliver against the SOW.





What Should it Look Like?

➤ Purpose of the document➤ Scope of the procurement services being provided➤ Roles and responsibilities of procurement and stakeholder group➤ Performance criteria (metrics) and how they will be measured➤ Any additional deliverables➤ Issue escalation and governance process

Benefits

➤ Strengthen relationships with stakeholder groups.➤ Brings accountability to both stakeholders and

procurement professionals.➤ Increase spend under management.➤ Ensures procurement and stakeholder group remain on

same path should stakeholder objectives change.

Best Practice #2 - Governance




Have a strong governance program that formally involves client executives.





Multi-level governance programs with active participation from cross functional executives help drive change, ensure relevancy, remove roadblocks, increase stakeholder buy-in and increase your program performance.

A Formal Process➤ This is NOT just a regular update meeting with key

stakeholder group executives

Have a Governance Charter➤ Agree a shared stakeholder group / procurement vision

that is the cornerstone of your governance objectives

Measure Performance Metrics➤ Integrate with an SOW (Best Practice #1), and use governance to measure

ongoing performance and adjust R&R, scope etc. as required to retain relevancy.





What Should it Look Like - Levels of Governance

Level 1:Executive Oversight

(e.g. every 6 months)

Level 2:Program Management

(e.g. monthly)

Level 3:Project Management

(e.g. weekly)

➤ CPO / Stakeholder Executive plus “relationship” leads➤ Reviews high level performance, alignment and shared

objectives➤ Sets / adjusts vision of stakeholder group and

procurement partnership to ensure relevancy.

➤ Executive attendance (level dependent upon size of procurement and stakeholder group), with Finance support

➤ Reviews performance metrics and status to targets ➤ Removes roadblocks to ensure stakeholder group and

procurement can execute on vision.

➤ Attended by “relationship” leads➤ Review status of in-progress projects, and project

pipeline➤ Acts as first escalation point on any relationship issues

Note: frequency and level of participation dependent upon scale of procurement and

stakeholder group





Benefits

➤ Brings formality – and accountability – to the relationship between procurement and the stakeholder groups.

➤ Increases engagement of stakeholder executives, and their understanding of the results that procurement can deliver.

➤ Ensures that the services that procurement is providing are in line with the needs of the stakeholder group.

➤ Promotes the agreement and tracking of shared objectives

➤ Particularly useful when change management is needed to increase performance (for example as part of a procurement transformation program or with a stakeholder group that are new to using procurement).

Best Practice #3 – Stakeholder Level Planning




Plan marketing, communications and onboarding at the stakeholder level.





Treat each major stakeholder as a sales prospect and build individual strategies that bring them into the procurement funnel.

It Starts With a Stakeholder Map➤ Map the suppliers that represent the top 80% of your

spend against a stakeholder / spend owner.

Consolidate➤ Get a “spend by stakeholder” view to understand the key

stakeholders that you need to address.

Prioritize➤ Target specific stakeholders based on their importance to

executing procurement / stakeholder group strategy, and procurement bandwidth.





Build a strategy to bring each stakeholder into the procurement funnel, converting them from prospect to advocate

Stage 4: Advocate

Stage 3: Strategic

Relationship

Stage 2: Tactical

Relationship

Stage 1: Engaged

Stage 0: Prospect

ProspectOn the procurement radar but not yet engaged

EngagedBuilding a relationship with procurement but no active projects

Tactical RelationshipWorking (or completed) specific projects with procurement but on a one-off basis

Strategic RelationshipPartnering to build and execute long term category and supplier strategies

AdvocateActively influences other stakeholders to engage with procurement





➤ What is the spend profile of the suppliers that the stakeholder is responsible for?

➤ Is this spend that procurement needs to influence as part of broader strategy?

➤ How does the stakeholder perceive the procurement function? Do they understand the value that procurement can bring?

➤ What are the needs and interests of the stakeholder?➤ How engaged has the stakeholder been with procurement

in the past?➤ What level of engagement with the stakeholder do we

need?➤ Are there any peers that are advocates of procurement

that can influence the stakeholder?➤ What is the stakeholders’ preferred method of

communication?

Questions to Ask About Each Stakeholder when Determining Strategy





Tactics for Stakeholder EngagementEducate➤ Internal communications sharing the procurement value

propositionUnderstand➤ Take time to understand a stakeholders point of view,

challenges and objectives. Tailor your solutions to meet their needsInform

➤ How do their peers across other groups or companies buy similar services

➤ Provide proactive intelligence at the market and supplier level to demonstrate expertise

Engage➤ Simplify the engagement process to emphasize speed,

particularly for low-risk, low-spend sourcing activities





Examples of Mediums that You Can Use➤ Internal “white papers”➤ Internal webinars, partnering with influential advocates to

share success stories➤ Procurement knowledge base on your corporate intranet site➤ Stakeholder focus groups➤ 1:1 meetings➤ Online “procurement university”

Tracking Stakeholder Engagement➤ Measure and track stakeholder engagement on an ongoing basis➤ Low tech: track stakeholders using spreadsheets.

➤ Take it to the next level: use a CRM tool:➤ Identify stakeholders➤ Track actions taken by - and communications with –

targeted stakeholders.➤ Plan the actions that are needed to drive stakeholder into

the next stage in the funnel

Best Practices #4-10




4. Lever strategic roadmaps to elevate the role of procurement.

5. Continuously evolve the scope and capabilities of the services being delivered.

6. Talk the language of your executives and stakeholders, not of procurement.

7. Deliver significant value through access to market intelligence.

8. Partner with Finance and the CFO to “Follow the Money”.

9. Recognize that spend under management is the single most important metric measured.

10. Realize that while procurement is built on the foundation of strong processes you must be flexible based on project or stakeholder requirements.

Should You Consider Procurement Outsourcing?




Procurement Outsourcing can help companies achieve significant incremental value from the non-core spend.

However, it is not for everyone.

Benefits Are You Ready?

➤ Do you have a burning platform?

➤ Do you have executive buy-in?➤ Do you have spend owner

support?➤ Does your company have

experience managing outsourced relationships?

➤ Do you have the scale needed?

➤ Do you have governance culture?

➤ Can the people in your company adhere to policies?

➤ Transform your procurement team or plug hard to hire gaps.

➤ Access to subject matter experts with upto the minute market intelligence.

➤ Build strong stakeholder relationships, increasing spend under management

➤ Increase the value of your supplier relationships, with significant ROI

➤ Flexible and delivery model that can scale based on demand

How Can I Help?




➤ Should you be considering procurement-as-a-service delivery models to elevate your procurement ROI (it isn’t for everyone).

➤ How can you execute procurement outsourcing best practices to elevate the performance of your team?

Philip [email protected]+1 888 380 1140

➤ Learn more about Procurement Outsourcing with PO Basics.

➤ Go to www.pobasics.com and use promo code “PROCURECHANGE” to access this 12 module, 2 hour course for free.

mailto:[email protected]

http://www.pobasics.com/

procurechange

For More Information:

Philip Ideson

[email protected]@pideson

+1 888 380 1140

© ProcureChange LLC. Not to be shared or reproduced without permission

apply outsourcing best practices to increase the performance of your internal procurement team

Business