Effective Stakeholder Management in
Sourcing & Procurement
Whitney Taylor | April 2009
Advanced Micro Devices, Inc.
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Learning Objectives
– Introductions
– Understand sourcing industry changes & impact
on stakeholders
– Learn business development approach to growing
relationships
– Understand how focusing on their issues & goals
facilitates trust and enables sourcing opportunities
– Create a communication plan that helps maintain
the relationship and ongoing evolution
– Q&A
2
Learning Objective #1
• Understand sourcing industry changes & impact on
stakeholders
3
Industry trends & challenges
– Tightening economy = increased focus on cost reduction
– More mergers and acquisitions; integration is critical
– Un-owned spend categories have been sourced (office
supplies, temporary labor, corporate travel, etc.)
– Shared services functions service internal customers
– IT Sourcing continues to be in high demand
– Professional Services (consulting, HR, marketing,
corporate real estate, legal) are gaining momentum
– Relationship-based buying = substantial spend/savings
– Corporate leaders hesitate to let procurement in
4
Historical Disconnects
Procurement
Internal Stakeholder
Fails to recognize uniqueness Lack of understanding value of
of business, cultures, etc.
sourcing or role of procurement
History of dictating
standardized process and
policy
Focus on savings, rather than
customer needs
Integrating procurement
technology globally and in
non-technology areas
Not required to comply w/ policy
or process; want to control
decision making authority
Focused on THEIR KPI’s not
savings
Not accustomed to considering
buying process or thinking
globally
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Learning Objective #2
• Learn business development approach to growing
stakeholder relationships
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Internal & External Research
– Research internal scenario-org structure, executive goals
– Research their challenges (general & w/ you)
– Research marketplace, best practices, buying process,
industry language
– Develop business case for working together
– Spend data, budgets
– Number of suppliers, PO’s, check requests, transactions
– Number of contracts, contract gaps
– Prioritize opportunities based on THEIR interests; quick wins
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Define Roles
Sourcing/Procurement
Internal Stakeholder
 Drive sourcing strategy
 Develop business strategy
 Provide sourcing expertise
 Provide functional & market
expertise
 Develop internal profile; research
marketplace
 Develop/Execute RFx & factbased process
 Lead negotiations & contracting
 Drive supplier performance
management
 Manage continuous improvement
 Develop business requirements
 Score RFx
 Support negotiations
 Own supplier relationships,
budgets, implementation
 Participate in supplier
performance management
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Business Development
Target SVP Level to grow executive buy-in
30 Minute First Meeting = Business Development
• Brief introduction
• State function, value, role; have initial plan if needed
• Ask questions; let them speak; take notes; restate
• Goals of first meeting
1.
2.
3.
4.
LISTEN!
Understand their goals & pain points
Understand how you can help
Identify who else you should meet
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Business Development (Continued)
– E2E scheduling may be required
– Focus on their needs initially, not yours
– Offer “free” consulting, process improvements, PM
– Help them think strategically about suppliers
– Persuade through influence
– You are in SALES now! Understand the value of
rejection!
– Obtain executive buy-in
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Collaborative Approach
– Together develop annual sourcing plan, combined
KPI’s with process and savings targets
• Collaborate in developing sourcing plan
• Start with smaller, low complexity projects to
gain familiarity with process and early success
• Build to larger, more complex projects
– Revise and update sourcing plan each quarter
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Develop Relationship Scorecard
What do you and your customer need to measure?
– Combined Key Performance Indicators (KPI’s)?
FINANCIAL
$__M Cost savings captured
through sourcing/ value
engineering/ process
improvement
CUSTOMER
G
Customer Satisfaction Survey
Results 3.5 out of 5
SUPPLIER PERFORMANCE
PROCESS & TECHNOLOGY
_% Spend managed within
process
_% Use of Preferred Suppliers
G
__% Suppliers achieving 90%
or better on scorecards
G
G
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Learning Objective #3
• Understand how focusing on their issues & goals
facilitates trust and enables sourcing opportunities
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Fix the Process
•
•
•
•
•
•
•
•
Simplify process and document clearly
“User Friendly Process” VS “Process of Misery”
Train customers on process, documentation (SOW)
Train suppliers on invoice/payment process
Complete contract audit
Clean up contracts to manage risk
Put rate cards/financial structure in place
Consolidate supply base – Preferred Supplier List
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$
Procurement Process
$
$
Requester/
Procurement
End User
Need identified; if >$100K contact
Procurement for support
Preferred
Supplier
NO
Contact
Procurement
Strategic
Sourcing
Project
Pricing
Negotiations
Yes
Amount
$100K
Less Then
Supplier
Quote/QQS
-SAP
-PR created
-PO placed
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Supplier A
Supplier C
Supplier B
Greater
Then
Statement of Work/
Supplier Proposal
-SAP
-PR created
-PO placed
Team Meetings
Develop Strategy
Issue
Request for
Proposal
(RFP)
Team FactBased Decision
Requester/
End User
Creates SOW
-SAP
-PR created
-PO placed
Procurement
Negotiates
Contract
Law Dept
Department
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Customize Sourcing Process
Strategy,
Int/External
Profile
Research &
Assessment
·
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Historical
Spend
Suppliers
Locations
·
·
·
Forecast
Cost Drivers
Risk
Assessment
·
·
·
·
Form
Functional
Teams
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·
Gather User
Req’mts
Draft Work
Plan
Review
Market
Benchmark
Cost Mgt.
Rationalize
Supply Base
Devise
multi-year
TCO
Stakeholder
Alignment
Supplier
Qualification
·
·
·
·
·
Supplier
Analysis
Financial
Review
Supplier
Qualification
SWOT
Analysis
Build Score
Card
Source
Selection
·
·
·
·
RFx Submit
Review
Evaluate
Short List
Suppliers
·
Conduct
Auction (if
applicable)
·
·
Alignment
on Strategy
·
Team
Consensus
Select
Supplier(s)
P.O. /
Contract /Perf
Mgt
Negotiation
·
·
·
Develop
Fact Based
Negotiation
Plan
Involve
Legal and
Users
·
·
·
·
Prepare
contract for
Signatures
Proces PO
Placement
Sign
Contracts
Evaluate &
manage
supplier
performance
Manage
Contract
Explore “Council” Concept
–
–
–
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–
–
–
–
–
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Cross functional team
Facilitate enterprise decisions
Sponsor enterprise change initiatives
Create standards (designs/templates/processes) &
manage compliance/exceptions
Determine business/service requirements
Lead consolidation
Participate in supplier performance management
Determine savings and related allocations
Communicate enterprise changes
Facilitate buy-in
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“Preferred Suppliers” have:
• Preferred Suppliers
– Determined by category by procurement with collaborative input
from category owner
– High spend and high transaction volume or a niche offering
• GSA with rate card/structured pricing tied to GSA
• Trained on sourcing process & requirements
• Relationship that includes formal supplier reviews
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Preferred Supplier Value
Supplier Benefits:
Requester Benefits:
•
Additional opportunities
•
User friendly buying process
•
Name on Preferred Supplier List
•
Best value to company
•
Increased knowledge through
company and procurement training
•
Enhanced ability to budget/forecast
•
No procurement review if <$500K
•
Limited or no Legal involvement
Procurement Benefits:
•
Reduced transaction volume
•
Higher quality documentation
•
Systematic savings
•
Contractual coverage/risk management
•
Focus on sourcing
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Learning Objective #4
– Create a plan for proactive communication that
helps maintain the relationship and ongoing
evolution
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Communication Plan
– Define communications needed, audiences, content
•
•
•
•
Category Plan
Supplier Reviews
Audits
Customer Satisfaction
Sourcing Plan
Process Enhancements
Key Contractual Issues
– Encourage executive stakeholder communication to team
members as projects are successfully completed
– Partner with customers to develop processes and
determine effective approaches to training
– Work with customers to develop communications and
distribution process – use their channels
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Sample Communication Plan
AUDIENCE
OBJECTIVE
TIMING/
FREQUENCY
VENUE/
MEDIA
RESPONSIBILITY
STAKEHOLDERS
/CUSTOMERS
Awareness, new
process, value,
educate
Second
priority, weekly
In-person mtg,
Email
Sourcing Executive,
Relationship Manager
COMPANY MGT
Awareness, new
process, value,
support,
minimize fear
Quarterly
Staff Mtg,
Town Hall,
Emails
Sourcing Executive,
Relationship Mgr,
Corporate Comm
DEPARTMENT
EMPLOYEES
Awareness,
support, value,
minimize fear,
educate
First priority,
bi-weekly
Staff Mtgs,
Town Hall,
Emails
Sourcing Executive,
Relationship Mgr or
Team
COMPANY
EMPLOYEES
Awareness,
support, value,
minimize fear
Quarterly
Email,
Company
newsletter
Sourcing Executive,
Corporate Comm
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Establish Reporting Process
– Identify stakeholders to receive reports & timing
– Develop reporting template (KPI’s) and obtain
approval
– Keep stakeholders aware of project progress
include accomplishments, savings to date,
challenges and support needed
– Schedule in-person meetings to discuss category
& sourcing strategy, quarterly reports, action
items, and next steps
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Career Opportunity
• Tight economy, retiring workforce = increased demand on
sourcing
• AVG Salary
– NCMA $85,800
– ISM $92,165
• 40% Master’s Degree = 25% higher salary
• Professional certification = 7.4% higher salary
• 121 US Jobs on NCMA
• 115 US Jobs on ISM
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Learning Objectives
– Understand sourcing industry changes & impact
on stakeholder relationships
– Learn business development approach to growing
relationships
– Understand how focusing on their issues & goals
facilitates trust and enables sourcing opportunities
– Create a communication plan that helps maintain
the relationship and ongoing evolution
– Q&A
25
Key Learnings
 Compelling career opportunity
 Develop your business development/soft skills in
addition to procurement/sourcing expertise
 Fix their pain points first, then yours
 Obtain executive buy-in
 Develop combined goals
 Focus on growing a long-term relationship
 Celebrate successes together
QUESTIONS????
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Whitney Taylor
Global Supply Management
Advanced Micro Devices, Inc.
[email protected]
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