Apply Outsourcing Best Practices to Increase the Performance of your Internal Procurement Team

procurechange
Procurement Performance 2016
How to Apply Outsourcing Best Practices to
Improve the Performance of your Internal
Strategic Procurement Group
Philip Ideson
Founder, 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
3
➤ 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 & Experience
Requires Upfront Investment
Significant Long Term Rewards
Enabling Technology

Best Practice #1 – Formal SOW
5
Have a formal SOW with KPI’s that state the services being provided,
roles and responsibilities and minimum expected performance levels.

6
➤ 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.

7
➤ 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.

8
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
9
Have a strong governance program that formally involves client
executives.

10
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.

11
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

12
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
13
Plan marketing, communications and onboarding at the stakeholder
level.

14
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.

15
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
Prospect
On the procurement radar but not yet engaged
Engaged
Building a relationship with procurement but no
active projects
Tactical Relationship
Working (or completed) specific projects with
procurement but on a one-off basis
Strategic Relationship
Partnering to build and execute long term category
and supplier strategies
Advocate
Actively influences other stakeholders to engage
with procurement

16
➤ 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

17
Tactics for Stakeholder Engagement
Educate
➤ Internal communications sharing the procurement value proposition
Understand
➤ Take time to understand a stakeholders point of view, challenges and
objectives. Tailor your solutions to meet their needs
Inform
➤ 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

18
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
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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?
20
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?
21
➤ 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 Ideson
pideson@procurechange.com
+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.

procurechange
For More Information:
Philip Ideson
pideson@procurechange.com
@pideson
+1 888 380 1140

Apply Outsourcing Best Practices to Increase the Performance of your Internal Procurement Team

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