There is a lot of discussion happening about the high level of value that Procurement must provide in order to remain relevant. No longer is spend reduction or spend avoidance enough. For the corporate strategy to succeed, Procurement and their internal stakeholders must be completely aligned in order to reach goals for spend reduction, increased innovation, and increases in cash flow, etc.

One example is "Company A". Overall, their published corporate strategy was to align their recent acquisitions and achieve high level of spend reduction allowing them to increase cash flow to support other future projects. A lofty promise to its shareholders but not surprising, considering the Deloitte 2018 CPO Survey that found nearly 80% of CPOs mentioned cost savings being their "primary driver for performance measurement". Deloitte 2018 CPO Survey.

Company A's promises of "huge spend reduction" has been hampered however by two major flaws: The idea that making any sort of substantial changes takes too much work and involves too many departments; and, not actively listening to the issues the internal stakeholders are experiencing to solve those problems. By sticking with the status quo they've missed the mark on innovation as well as delivering those huge cost reductions their C-Suite demands.

Of course it goes both ways, and Dana Small of the Ms Category Management blog hits the nail on the head with her recent post, Was this RFP a Complete Circus, Screw-up or a Trainwreck? You Decide!

In her post, Dana talks about a recent RFP experience that became a complete circus at the hands of her own internal stakeholders. They didn't understand the value and expertise she and her team provide and had unrealistic expectations when it came to the whole RFP process. I'll let you read the results for yourself in her blog as it's a must-read for sure!

Another great example is "Company B", who had always run things in a decentralized manner. Their divisions treated Operations, who "managed purchasing", like simple order-takers and when they didn't like what they heard, the stakeholders went and purchased things on their own. This gave their company pretty must ZERO viability into their spend as most of it was rogue/dark across multiple categories. Once corporate appeared to have "had enough" they set out steps to centralize all Procurement under one roof. However their new Procurement team was so worried about stakeholder backlash that it made them weak....no new decisions were made and within a two-year period they were in the exact same place they were in before. Their flaw? Their internal stakeholders had too much power and it was costing the company significant amounts of money annually.

At the end of the day, taking the "end user acceptance factor" seriously is important for Procurement, but at the same time it shouldn't be something to be fearful of. This is why it's imperative for Procurement and internal stakeholders to be aligned as otherwise all those lofty corporate strategies become empty promises and wasted time.