Of the many causes of communication breakdown between procurement and suppliers, one of the most contentious is the statement of requirements. Before an RFP or RFQ is issued, procurement spends considerable time with internal stakeholders understanding category requirements as they stand and then probing deeper to determine what are really requirements and what the stakeholder just wants.
Once those requirements have been agreed upon and documented, we have to go through the process of explaining them to the bidding suppliers and making sure they understand them. Then it is our turn to explain and defend the list. If a requirement is not met by the chosen solution (or if a previously unrecognized need is discovered too late in the process), procurement may have a real problem on our hands.
This risk was acknowledged in a blog post by Donal Daly, CEO of The TAS Group, on their blog in ‘When Customers and Suppliers Collide’. The TAS Group is a sales training and methodology provider. In the post, Daly offers the following reminder to his audience of sales professionals:
The impact on the customer of a poor buying decision is usually greater that the impact on the salesperson of a lost sale.
In the post, Daly reminds sales professionals that as hard as it is to accurately document one’s own needs, documenting the needs of another adds real complexity to the task. The core of the message is to establish this critical point in the buying/sales process as an alignment opportunity for sales and procurement. Although they may be on opposite sides of the table, both are trying to meet the needs of others. With this common ground comes shared anxiety.
As procurement, how do we handle these situations? We can:
- Bluff our way through, not allowing the supplier to see any signs of doubt,
- Allow the supplier to dictate as much of the recommended solution as possible so we can point the finger at them if things go awry, or
- Collaborate with the supplier, being as open as possible so that we uncover the best solution without sacrificing negotiating leverage.
In this case, I think the answer is C – and incidentally, so does Daly. Another commonality we share with them in this scenario is shouldering the blame if a requirement is missed. Procurement may, at different times in the selection process, see the supplier as ‘them’, but to an internal stakeholder or category owner, procurement and the supplier are BOTH ‘them’. And unlike the supplier, who can leave (albeit possibly without a contract) and move on to a new prospect/client, procurement is stuck with the internal baggage of having been involved in a deal gone wrong.
I suggest that in addition to listing out the requirements, we assign them a ‘comfort factor’. It doesn’t need to be documented or even mentioned to internal stakeholders. But when we engage in exploratory conversations with suppliers, we can focus on their experience with similar requirements in order to get a better understanding of the best symptoms and solutions to the root business issue.