Indirect Procurement Insights: Leveraging Cost Tables & Stakeholder Interviews

I recently met with purchasing teams who attended APD’s Indirect Purchasing Certification course, and they consistently point to two take-away tools that they believe will give them immediate ROI – category cost tables and the stakeholder interview guide. 

In this article, we’ll provide an overview of these tools: what they are, why they’re important for purchasing indirect materials and services, and how to use them for maximum benefit. 

Category Cost Tables 

Cost tables – also called cost catalogs – are lists of SKUs or services for a category along with pricing and information likely to determine costs.

They typically include information such as: 

• Item and supplier identifiers 
• Physical attributes (dimensions, materials, significant characteristics) 
• Commercial terms (annual quantity, order quantity, service levels) 
• Quote data 
• Calculations 

Cost tables are a great tool for organizing past supplier quotes for looking up similar items. 

They can be used to: 

• Quickly estimate the expected cost for a new service or part by looking up similar items 
• Validating supplier quotes against past pricing for similar services or parts 

We’ve seen cost tables created for categories ranging from capital equipment to services such as IT contract resources and janitorial services to indirect materials like corrugated packaging and miscellaneous hardware.   

How to Use Cost Tables 

Step One: Create a cost table template 

Talk to stakeholders (oftentimes engineering, operations, and sales) and suppliers to understand possible cost drivers.  Create an Excel template with the information for each quote across the top row, including common calculations to compare quotes.   

Step Two: Populate the cost table 

Pull together the information needed to add relevant quotes for the category.  You may need to look at prints, supplier quotes, index-based pricing agreements, and purchase orders. 

Step Three: Update your RFQ template 

For quotes going forward, ask suppliers to populate a cost breakdown that follows your cost table.  Make it easy to cut-and-paste supplier quotes into the cost table. 

Step 4: Look up similar parts or services 

Use the filter function in Excel to quickly lookup similar parts or services.  As you add more supplier quotes to the cost table, it will become more useful for generating quick cost estimates and validating supplier quotes on new parts or services. 

Stakeholder Interview Guides 

A stakeholder interview guide is a list of role-specific questions to understand what stakeholders need from suppliers of a specific category. 

When used correctly, a stakeholder interview guide will lead to asking the right questions from the right personnel to ensure that all needs are identified and can be translated into requirements documents and specifications. 

The information gained from interviewing stakeholders is critical for vetting potential suppliers in a sourcing event, as well as for clearly stating supplier requirements in the Statement of Work when you’re ready to conduct a sourcing event. 

This is an important step to ensure the purchasing team doesn’t waste time on suppliers that can’t deliver what the organization needs, or even worse, award business to these suppliers. 

How to Use Stakeholder Interview Guides 

Step One: Identify stakeholders for the category 

Stakeholders are specific to each category and typically include users of the items or services, individuals who interact with the suppliers, and anyone whose objectives may be affected by category spend or supplier performance. 

For example, if your category is temporary labor, users may include Human Resources and Operations/Production, Legal and Finance likely interact with the suppliers, and Plant Managers would be important affected individuals. 

Identify individuals to represent each role identified in step 1 at each location.  Some roles will require an individual for each site, others may have one person who is responsible for a division or even the entire company. 

Step Two: Create interview questions 

In addition to basic questions that apply to all stakeholders, there are also drill down questions specific to each role.  For instance, you might ask buyers about the different ways they buy for the category and who approves the decisions.  Users can tell you what value-added services suppliers are providing. 

Here are four basic questions to ask all stakeholders: 

• What do you rely on from current suppliers of the category? 
• Do you have any pain points with these suppliers? 
• Are there any improvements you’d like to see from suppliers in this category? 
• What have you seen suppliers do at other companies you’ve worked at that could be a benefit here? 

Step Three: Conduct interviews 

We recommend scheduling 30 minutes with each stakeholder to conduct a live interview. Don’t rely on email – these are interactive conversations.  Start by reviewing why you are gathering their input and any relevant project timelines. 

While many interviews may only take 5-10 minutes, it’s important to leave time to answer any questions the interview subject may have. 

Step Four: Provide feedback 

Consolidate the stakeholder needs into a Statement of Work with two sections.  The first is the minimum requirements parts or services that all sites require, the second is supplier capabilities that some locations may require. 

Provide a summary to the stakeholders interviewed and ask to review and provide any additions or clarifications they believe will be helpful.

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