L1.4 Differentiate the stakeholders that a procurement or supply chain function may have Flashcards
Definition of stakeholders
+ 3 categories of stakeholders
Stakeholders are:
“Any group or individual who can AFFECT or is AFFECTED BY the achievement of the organisation’s objectives.”
- and that have an INTEREST in an org.
Categories of stakeholders
1. INTERNAL - ppl who are INVOLVED directly with the biz
2. EXTERNAL - ppl/groups of ppl who have an INTEREST in the org
3. CONNECTED eg. customers, banks
!! Internal stakeholders are within an org.
External stakeholders are outside of an org. Those external stakeholders who have a COMMERCIAL TIE to / FINANCIAL INTEREST IN an org. are CONNECTED stakeholders.
Examples of stakeholders of a proc. and supply chain function
1. 8 for Internal stakeholders
Case study: Related to quality dept - baby brand Red Kite was forced to issue an urgent product recall in April 2018 for its baby carriers due to a faulty clip that could drop babies
- Colleagues with a need
- creating REQUISITIONS which procurement should action - Accounts dept
- responsible for managing the org’s BUDGET; proc team has to ensure it obtains the best value for money to help accounts team keep expenditure within their budget - Company owner
- primarily interested in co’s PROFITS and decides on the co’s strategy and direction and who is employed (ie. has significant power)
- proc. professionals have to perform well to keep the stakeholder SATISFIED - Manufacturing dept
- raises REQUISITIONS to advise what’s needed and replies on proc. and supply chain operations to SOURCE and SUPPLY its components - Stores dept
- relies on proc. to SOURCE and SUPPLY products, then stores dept is responsible for BOOKING IN & STORING until the products are issued (see materials mgmt FC, pg. 16) - Quality dept
- responsible for checking the quality of
i) goods that proc. ordered
ii) the end product - Sales dept
- works with consumers and potential end users to GENERATE CONSUMER DEMAND and create sales orders for proc. to react to - Transport fleet
- moves materials, components and finished products along the supply chain
Examples of stakeholders of a proc. and supply chain function
2. 7 for External stakeholders
- Local community
- can be AFFECTED by the org’s activities if they cause noise/air/water pollution, destruction of local areas or ecosystems, etc. - Producers {selling raw materials to the org.}
- Lower Tier Suppliers
- needed for org.s to SOURCE & PURCHASE the materials, components and products required to produce finished goods - Couriers and haulage companies
- external stakeholder if org.s OUTSOURCE their transport needs
- internal if an org. runs its own fleet
- may be considered as a CONNECTED stakeholder depending on how CLOSELY INTEGRATED the external shipping function is - Media
- seen as a good MARKETING body when an org. is promoting favourable stories but…
- …can lead to potential REPUTATIONAL DAMAGE by publishing negative stories of the org. - Governments and regulatory bodies, eg. ISO for regulating quality standards
- govt.s have a clear interest in their citizens following the LEGISLATION they have created - CIPS
- have an interest in ensuring that all members conform to the Code of ethics (=a doc detailing acceptable behaviour within an org) and promote the profession in a positive and acceptable way
Examples of stakeholders of a proc. and supply chain function
3. 4 for Connected stakeholders
- Shareholders
- investors in the org, main interest is earning a RETURN on their investment (ROI)
- important connected stakeholders as their INVESTMENT helps to finance the org. - Tier 1 Suppliers
- these key suppliers are connected to an org. in a MUTUALLY BENEFICIAL RELATIONSHIP -> supplier is interested in continued sales, org. is interested in continued supply - Banks
- looks after the money belonging to an org.
- can also supply loans/finance to an org. - Customers and consumers
- customer need is the driver of the procurement and supply chain function
!! A customer BUYS a product or service and a consumer is the END USER. The two can be the same but are not always. Procurement professionals are customers. Individuals using an end product or service are consumers.
Mapping stakeholders for a procurement and supply chain function
- Mendelow’s stakeholder matrix for managing GROUPS of stakeholder
» a stakeholder analysis tool used to develop
stakeholder management strategies
- evaluated on 2 criteria: level of POWER/authority (y-axis) & INTEREST (x-axis)
- identifies 4 diff. groups of stakeholders, going from top left, top right, bottom left, bottom right…
-
Keep satisfied (low interest, high power)
eg. investors, shareholders who are mainly interested in a high ROI -
Manage closely (key player) (high interest, high power)
- must ensure involved in DECISION-MAKING & have a clearly identified role within the org.
eg. senior managers, external ppl to the org.
- {could also be shareholders}
- shareholders are very interested in the organisation and hold more POWER than managers in the organisation -
Minimum effort (low interest, low power)
- still key to the org; w/o them it is possible the biz CANNOT FUNCTION or be successful
eg. small customers, small suppliers, consumers {ref. to general public who buys org’s handmade confectionery}
- require little effort from the org, but it might benefit the stakeholder RELATIONSHIP for them to see a representative from the business once a year for an UPDATE and to feel VALUED -
Keep informed (high interest, low power)
- do not have much power within the org. but potentially VERY POWERFUL outside it
eg. local activist groups, local group of individuals living close the org. who may have heard from the media the co. uses unsustainable and non-recyclable plastic packaging {case study}
- very interested in org.s that may be causing ENVIRONMENTAL HARM & are likely to LOBBY/PROTEST if things aren’t as they should be
