Top 10 stakeholder alignment strategies — And lessons learned from a CPO forum

Last month, I presented at a customer advisory board (CAB) session that Fairmarkit invited me to join to present on stakeholder engagement and alignment. Fairmarkit has pioneered high-volume tail spend sourcing (think ‘mid tail’ rather than just ‘tip of the tail’) in its go-to-market approach towards guided sourcing and autonomous sourcing. It has also recently announced a partnership with Amazon Business to support RFx/bid automation for SKU-based items going out to the B2B marketplace (Amazon also uses Fairmarkit for its own internal sourcing operations). The solution provider uses traditional automation techniques in concert with AI-enabled capabilities that have been bolstered by newly developed GenAI capabilities.

Although large language model (LLM)-powered chatbots like ChatGPT have captured imaginations, the underlying LLMs are powerful tools for summarization, translation, low-level AI techniques (e.g., feature extraction for data classification) and of course interactive chat working alongside existing application functionality/experiences (e.g., using prompt engineering techniques like fine-tuning and/or embedding [RAG, Retrieval Augmented Generation, is a popular one that splices appropriate app/user-specific data into the LLMs]).

Doing this correctly also helps with the explainability issue of these ‘hallucinating’ LLMs. This whole area is a complex topic that we’ll be covering in our forthcoming series on using augmented intelligence (including GenAI) to enable the broader automation of analytics, data management, apps/experiences (e.g., no-code/low-code) and process orchestration within/beyond source-to-pay.

Although CLM seems to be the hottest area right now for GenAI (i.e., using LLMs to help translate the language called ‘legalese’ out of documents into rich commercial data), it’s neck-and-neck with the ‘intake management’ process. Let’s face it, procurement has generally always been bad at delivering CRM-like capabilities with stakeholders and suppliers, and GenAI is a promising UX enabler that conversationally extracts user requirements then works in conjunction with existing AI and apps (via deterministic business logic) to optimally guide users to preferred suppliers and supply channels (i.e., segmented and tailored source/purchase/pay workflows and forms), including sourcing process channels (which can also have process paths auto-generated by GenAI for consideration).

This is the essence of real ‘guided buying’ (a term I coined almost 20 years ago in the Jurassic period of procurement) and the nearly two dozen CAB members in attendance were very excited to have Fairmarkit build out an intake process and UX ‘front door’ that would feed not just into P2P-centric pre-requisition approval workflows, but also guided sourcing/contracting from tail spend up to truly strategic sourcing. Interestingly, this operational aspect of such intelligently automated engagement touches 5 of the 10 strategies that I explored with the group:

1. Policy on procurement involvement operationalized in workflows
2. Clear procurement ‘service’ delivery model (including ‘orchestration’)
3. Better/early/automated intake process (multi-dimensional)
4. Alignment on shared metrics (and democratization too)
5. Fast/flexible/agile approach to generate quick value, self-fund and expand procurement’s ‘brand’

Fairmarkit also took the content of my presentation and combined it with some customer insights and turned it into a really nice downloadable eBook that I think practitioners will like.

Another thing they’ll like is the stunning ROI that lies within autonomous sourcing — even if it’s tactical sourcing. Given my background in benchmarking, I asked for some benchmark stats for the Fairmarkit customer base that is the enterprise segment, but also very ‘mid-tail’-centric and fairly generalizable. Here’s what I found:

The average Fairmarkit customer has an average sourcing event size of $20,000, realizes savings of almost 10% and can run an average of, wait for it … 123 sourcing events per week per buyer. That’s insane. Even if the number is 100 events and the savings is 7.5% (calculated between average initial bid and final contracted price) that is $7.5 million savings per FTE per year, which at $150,000 fully-loaded is a ‘Procurement ROI’ of 50X (typical ROI for the function overall is about 5-10X). OK, this spend channel may shrink and offer less yield over time, but one of my favorite adages of ‘efficiency funds effectiveness’ (i.e., reducing the high opportunity cost of sourcing FTEs wasting their time on non-value-added activities) holds true here, and the path to broader autonomous sourcing getting self-funded via tactical sourcing (including tail spend) is not a bad path to follow (see #5 from the above list)!

We also just named Fairmarkit one of our “50 to Watch” providers (for the fourth straight year after it was named a “Future 5” startup) and please do check out its profile here on our brand spanking new website which has lots of additional information when you scroll down on the profile page. And for those who aren’t yet “Insider” subscribers, please do follow us on social media or subscribe to our free newsletter.

Download ‘Effective stakeholder alignment strategies for CPOs’

And if you have any questions on any of this, please reach out to us.