Sales vs Procurement

Steve Bagshaw from Supply Management recently posted a blog entry regarding an article they printed in 2003 about “Killer Sourcers“.

The feature explained how a new breed of purchasing professional was being developed. These buyers were ruthless negotiators with little care for supplier relationships or management.

It seems that the opposite is true now, with companies investing a huge amount of money and time in working with, rather than against, their suppliers.

A while ago I posted a tongue-in-cheek joke from an IT sales person who said that procurement managers, while they talk a good talk about quality, only care about lowest unit price. Then last week I posted some comments from an organisation researching into supplier attitudes to e-auctions.

And here’s a webinar directed at another procurement tool that sales people apparently loathe: RFPs. SAMA  is hosting a Webinar on Feb 21st, entitled The RFP Antidote: a cure for procurement headaches.

The blurb for the webinar:

You may have developed great relationships with end users, coaches and economic buyers when suddenly a strategic sourcing or purchasing person comes into the picture and demands that all communication has to go through them. Then they don’t (or won’t) understand the value proposition, disregard your longstanding relationships and say “All I care about is price.”

This webinar will offer strategies and tactics that SAMs are successfully using to mitigate the impacts of procurement and competitive RFPs.

The webinar is being run by an organisation called Factor R which advises suppliers how not to lose their existing clients. Here’s a document outlining some of their recommendations. It is worth reading for procurement professionals.

I’m reading between the lines a bit here but I think I’m broadly on track:
1. Try to deflect procurement’s involvement if possible (e.g. arguing that an RFP is not appropriate in the current climate, etc)
2. If that isn’t going to work then meet your client and show them other ways they can achieve cost savings (e.g. through consolidating more spend through them, upgrading to avoid replacement costs, process efficiency savings by doing something else)
3. Demonstrate that your client already has a great deal because most of your deals since you sold to them have been at a higher price
4. If that isn’t going to work then see if your client will let you write the RFP

At first sight this seemed pretty alarmist.

On second reading the content is pretty smart advice.  And, you know what? From having been on the receiving end of having to complete RFPs I can sympathise with sales people who get faced with a large document that doesn’t seem to ask any of the “relevant” questions (by “relevant” I mean the ones you wish the buyer had asked).

For sure, sales people will always want to sell as little as possible for as many $$$ as possible. And on the other hand, procurement will always want to get as much as possible for as few $$$ as possible. But is it true that, away from the verbiage spun out by pundits (including this one) that procurement really only cares about driving down unit costs? Or if, as Steve Bagshaw suggests, times have indeed changed within procurement, how long will it take for this news to filter through to the sales people?

My view: the world is not so binary as “price only” or “collaborative supplier relationships”. Here’s a good article from CPO Agenda (from 2005 but serendipitously popped into my RSS reader yesterday). A sober analysis of how a more collaborative approach with your suppliers works well sometimes, but not all of the time.

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One thought on “Sales vs Procurement

  1. To build on Alan’s comments, the strategies for combating or dealing with procurement are real ‘hot topics’ in the key account management world. This was certainly one of the main discussion points at the pan-European Conference by the Strategic Account Management Association (SAMA).

    However, there were a few encouraging examples of mature procurement departments operating in true partnership with their global suppliers. One confidential source (from a leading pharmaceutical company) stated that working in true partnership could reduce the cost of a global contract by 6%, by eliminating the supplier’s cost of sale.

    Indeed, it was discussed that the ultimate goal of a strategic or global account manager is to convince the customer to remove the bidding process.

    However, such collaborative activities sit at the absolute opposite end of the relationship continuum to reverse auctions. There can only be a few truly enlightened procurement departments that are able to move away from a competitive bidding process and the transformation of procurement into a ‘Value Management’ function, for most buying organisations, will remain just a paper theory.

    Andrew Moorhouse
    Huthwaite Research Group
    United Kingdom

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