5 Best Practices for Building a Top-Notch Strategic Sourcing Team
Procurement is rapidly shifting from a behind-the-scenes function to a highly visible and influential part of the business that’s focused on driving innovation and value. To unlock more opportunities, procurement teams must be prepared to take on roles that go beyond traditional purchasing and contract management, shifting instead to strategic sourcing.
By following a more strategic approach, your procurement team can deliver increased value and build a better reputation across your business. Consider these five tips to grow your influence and earn a seat at the stakeholder’s table where you can be more involved in business decisions.
1. Engage with the business to deliver the greatest impact
Any successful strategic sourcing team wants to understand how the business operates, any challenges, and where there are opportunities for improvement and innovation.
“I’m about the partnership with the business… [I have to recognize that] you have a level of expertise in what you do that I don’t have, but I also have a level of expertise in what I do that you may not have,” says Danielle Salyers, 2nd Vice President of Strategic Sourcing at Allied Solutions. “When we work together and share that knowledge, we deliver the greatest impact to the business and, ultimately, to our clients.”
Help stakeholders identify business requirements
To build trust, Salyers suggests meeting with business unit stakeholders at least once every six months to understand their objectives. Consider the following questions to clarify how you can best help them:
- What is your vision?
- What pain points do you have right now?
- How can we bring you the right suppliers?
By asking these questions, you show that you’re invested in their success and want to help. The next step is to figure out how you’re going to solve the problem and then deliver on it. “Just be curious and listen,” Salyers advises. “That’s going to [help you] start to form those relationships. And then whatever you do, take it away and get it done!”Want to take it a step further? If your team can answer these 10 questions, you’ll be superstars in your stakeholders’ eyes.
2. Ask questions (and listen) to build trust
Curiosity sets the average procurement professional apart from a strategic sourcing team expert. Salyers advises teams to seek the answers to questions. “The more curious you are, and the more information you have, [that’s when] things start to connect. You’ll have the right piece of information at the right time.”
Don’t be afraid to ask questions. Speak up if you don’t understand something. Any good supplier will be open to educating you on the good or service you’re trying to negotiate. Likewise, your business associates will be happy to talk to you.
As you listen to your stakeholders, we recommend creating a straightforward process for the various stages of your supplier lifecycle. Then, with a strategy in hand, your stakeholders will begin to know what to expect as they engage with your team and will see your team as less of a roadblock and more of a valuable resource.
3. Join industry groups to keep learning
Get involved with groups to make new connections, discuss challenges and recent developments in the industry, and share ideas.
Institute for Supply Management (ISM) is a helpful resource you can draw from to grow your knowledge. ISM covers every supply chain area, so that it will be a stretch for many procurement professionals. Made up of national and local chapters, this industry group opens career paths by providing information about other areas of supply chain.
ISM offers two different certifications:
- Certified Professional and Supply Management (CPSM) is a series of three four-hour tests. You must complete all three tests within one year to earn your certificate.
- Certified Professional and Supplier Diversity (CPSD) is an add-on test you can take once you have your CPSM.
Procurement Foundry is another valuable educational resource for those seeking a network of like-minded professionals. It consists of multiple channels or categories you can engage with, from indirect and direct spend, to technology, RFPs, and more.
Specific suppliers have different messaging groups you can join. If you have questions, you can connect with peers invested in the same topics to share knowledge.
4. Find suppliers willing to invest in you to reap the greatest returns
Strategic sourcing team experts don’t just partner with internal stakeholders. They also focus on creating mutually beneficial partnerships with suppliers. That doesn’t always mean the supplier with the lowest costs is the best for your business.
“When you attack someone looking for the lowest price, you’re not setting yourself up for a true partnership. Instead, I’m looking for suppliers who want to partner with my organization and improve us,” says Salyers. “I want them to be as invested in our success as our employees are. I’ve found that a partnership mindset leads [a procurement team] to be most successful.”
So, how do you identify something like that in your initial negotiations with a potential supplier partner? How do you determine if your prospective supplier is trying to give you the best service possible or just checking boxes to earn a commission?
Hold discovery meetings
Remember, good supplier relationships don’t just happen in a single interaction, says Salyers. They develop through a series of repeated discovery meetings.
Ask questions. You already know the objectives of the business unit you’re working with. How will that particular supplier help you achieve those goals? Through these conversations, you’ll learn whether your prospective supplier is truly interested in giving you the best service possible or simply checking boxes to earn a commission.
Run business reviews with your top suppliers
Once you’ve selected your supplier(s), you want to be sure you’re receiving the best level of service. One way to determine this is by holding regular business reviews with your top suppliers. It is likely that you already have a supplier management process in place. Still, if not, we recommend creating a standard template of the items needed to get a complete picture of the supplier’s performance.
Collect qualitative and quantitative data from your internal business units on metrics such as on-time delivery, incident rate, quality of service, the impact of the supplier, and any other relevant metrics. Then, request that your supplier answer questions such as:
- What are you doing to keep our costs down?
- What innovations or process improvements have you delivered to us in the last two years?
- How do you know you’re a good supplier for our company?
Collecting data from your business units and the supplier is critical to rendering a complete picture of the supplier’s performance. Ultimately, it all boils down to accountability—not only holding your suppliers accountable but your organization just as accountable. When suppliers see that, they’ll know you’re a good customer and will do their best to bring value to the relationship.
5. Position your team to have a high say-do ratio
Lastly, you must adequately position your staff to deliver on the agreed-upon objectives. It’s not about adding work; you don’t want to overload or burn out your staff. Instead, set up your team with the tools and know-how to actively participate in those stakeholder conversations. Train them to ask the right questions and act on those items they can help with. Having a high say-do ratio is about delivering on your commitments. In addition, a high say-do ratio builds trust and relationships, a pivotal characteristic of a strategic sourcing team organization.
Transform your Team into Strategic Sourcing Experts
Exposing your team to your organization’s various business units will expand their knowledge so they begin to shape those important conversations with stakeholders. They can then take what they’ve learned and translate that knowledge into smart sourcing contracts with suppliers. As a result, your team will become a trusted and reliable business partner that is increasingly involved in more and more company decisions.
Ready to advance your procurement team to the next level?
To know how to get to your desired end state, you have to first understand where you currently stand. Find out where you are on the procurement maturity scale.Read Article