BP procurement inspiration – part 2

We explained the other day (based on their Emptoris Empower presentation) how the BP Lubricants procurement team were implementing an impressive change programme, and the gains they have made in key spend categories.

One aspect that particularly interested me was stakeholder management, not least because it can be a major stumbling block to such programmes. So as well as listening to his presentation, I had a brief chat with Mark Edwards of BP and also since the event caught up with Rob Hemsley, the CPO of the Lubricant division.

There are three key sets of stakeholders in most procurement change programmes; let’s start with suppliers. While you might argue that they’ll do what they’re told, that is not the line that BP has taken. They believe that suppliers offer more value if they tell their customers how requirements could be flexed to create better value for all.

Edwards beleives most saw the opportunity to grow their business and develop a better relationship with BP. The use of the advanced sourcing (optimisation) platform gives suppliers the chance to offer alternatives, and propose new ideas, which many embraced.  It has actually “improved relationships with most suppliers” because of their opportunity to be more pro-active. Not all of them can be happy of course; it’s clear a few were lost along the way. But if you can show that suppliers at least have the chance to gain from the changes, then most will participate positively.

Now let’s look at internal stakeholders. In some areas, procurement had been very much a service function “just buying what we were told to ” by marketing for instance. How did the team persuade senior managers in other areas to accept a more strategic role for procurement? One key point was the realisation that procurement had to obtain a ‘licence to operate’ by demonstrating cost savings. That stayed at the forefront of the programme, even as other benefits started flowing.

Two other key elements struck me here. Firstly, the need for senior procurement leaders to take on a very outward facing, ambassadorial role in the organisation, working at senior levels to explain what procurement was doing, promote the benefits and position procurement as an integrated part of the business.   And secondly, how success breeds success. As Edwards explained, once stakeholders can see real positive results coming through, (and the data is good enough that the benefits are clear), they are much more amenable to further procurement involvement. So get some early success, and build on that.

Finally, procurement staff.  Edwards says that persuasion was the main route, with a positioning to experienced managers that “this is a new set of tools for you to use as appropriate” rather than ‘you must switch to this process’.

“But once people saw their colleagues using the new platform and getting results, they generally wanted to be part of it”.  Excitement and enthusiasm built.  However, I spoke to other firms at the same event who had tried this route with less success, so my belief is that this ‘softly softly’ approach does need to be backed with clear and visible support for the change from the senior procurement team.  Without such support – not visible in the case of some of the other organisations – it is too easy for people to just continue as before.

As Rob Hemsley explained to me:

We started with general training and some up-skilling. At first, a few buyers  really wanted to leverage the new Sourcing technology, they wanted to stand out as different on the basis of showing they were ‘best in class’ .What really helped also was that we had a set of stakeholders that really got it: there’s a collegiate culture here so stakeholders wanted to listen and try new things. That was great but it also meant we didn't have to use hard measures on adoption , like tracking percentage of spend through the tool – the reality is we didn’t need it – the team just got on and got the events done !

So, in summary: how can you manage the various stakeholder groups?  Let your team choose to make the change, but nudge them through top level backing and clear direction; align yourself with stakeholders, build on early success and let them share in the credit for the benefits; and show suppliers that there is something in it for (at least) some of them as well.

Sounds simple; but this all needs leadership, which is probably a constraint, and the reason that every organisation isn’t in this position. That leadership needs to work within the function, to set strategy, invest in technology and capability, and motivate the procurement team. But it also means top procurement people have to act as leaders in a broader business sense, both promoting their function across top management, and being seen by colleagues as senior business leaders rather than just functional staff.  I do believe we have more and more people in our profession who can carry this off; and BP, fortunately for the firm, has more than its fair share!

First Voice

  1. eSourcing Sensei:

    Hello Peter
    Another great article and brilliant to see what BP are doing with Optimisation functionality, not a new tool or process in itself, Emptoris have had this tool set in depth for several years and I have used that functionality to great effect even though it has not necessarily been using it in the same way as BP, but so often it is overlooked as an option.
    Business’s sometimes forget that the greatest source of knowledge and flexibilty for ourselves comes from our suppliers. Who knows better than they what they are greatest at doing. As Procurement managers we so often “think” we know it all!!
    Find a way of allowing the supplier to inform us of how they would best supply our business, with our needs, and we may well be surprised.
    It has been very eye opening to use this approach and has resulted in savings opportunities over the past two years in the millions in protfolios and areas that have been previously and repeatedly eSourced for several years.

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