Supply management (SM) teams are responsible for maintaining and nurturing business-critical supplier relationships. However, while cultivating external relationships, practitioners can also leverage marketing techniques in order to work more effectively with internal partners.
Because of the complexity of SM’s role within and outside of the organization, we wanted to take a closer look at how teams can cultivate successful internal partnerships and what they provide to the organization beyond simply reducing costs. CAPS recently published two research reports on how to do just that.
Going beyond the numbers to form lasting relationships
In interviews with more than a dozen top SM executives at multi-billion-dollar corporations, we found the importance of strong internal relationships was paramount in the team’s success in achieving company-wide cost-related goals.
The August 2020 CAPS research study, Procurement’s Role in Creating Extraordinary Internal Customer Experience, Service Delivery, and Business Performance, identifies seven major themes on the topic of how procurement teams can curate successful internal partnerships.
Treating internal business units as customers
To form meaningful internal relationships, many firms adopted an internal marketing approach. In practice, this means that when procurement or SM teams interacted with other business units such as finance or legal, conversations were based on other functions’ specific procurement needs.
Rather than acting solely as a cost-savings machine within the larger corporation, procurement teams propositioned themselves to form a unique relationship with each internal partner. In this strategy, internal partners are treated as “customers.”
The report also identifies three major impacts that the internal marketing approach has on internal or external relationships. In fact, researchers found that this concept of treating various business units as customers has reduced “internal transaction costs,” potentially leading to more cohesive, efficient organizations.
Using soft skills to get ahead
Another highlight of the report is the widespread adoption of “soft skills” as a tool for improving internal relationships. Some executives reported that they charged team members with strong soft skills with developing internal relationships, building trust between their department and others within the company (i.e. inviting other departments to procurement meetings to build inter-departmental understanding and communication).
Procurement metric reporting within the organization
Our newest report, Metrics of the Future: Moving Supply Management Beyond Cost Reduction, sought to identify contributions (other than cost savings) that SM provides to an organization, highlighting 14 unique contributions outside of cost savings that supply management makes to an organization.
As teams form their internal marketing strategies, it’s necessary to evaluate not only which procurement metrics are reported internally, but also how those metrics are reported. Our research found that, in some cases, supply management report-outs had an adverse impact on other departments’ perception of their value to the organization.
A great challenge that SM faces when creating a marketing strategy is utilizing metrics that can benefit all of their internal customers throughout the organization. As many organizations, especially those in the early stages of category management, struggle to quantify their contributions outside of the context of cost reduction, they must find ways to make their mission-relevant across multiple departments.
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