Buyers Meeting Point procurement by Kelly Barner

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The Secret of the Procurement Director

It had been a particularly hard week for the whole team. Factory audits had been going on with the accuracy of a Swiss watch (plane, factory, hotel, plane, factory, hotel...). That Friday night we were isolated by a storm that had canceled our flight home and left us stuck in an airport hotel, not knowing what day it was or when we would get back. Our ‘batteries’ were very low.

Only Avi, our expert sales agent, strengthened by a thousand negotiations, seemed to be fresh as a lettuce.

Around the crackling of the chimney, while the storm whipped outside, we all tried to shelter ourselves in hot cups of coffee, seeking the strength to recover our spirits.

It had been a particularly hard week for the whole team. Factory audits had been going on with the accuracy of a Swiss watch (plane, factory, hotel, plane, factory, hotel...). That Friday night we were isolated by a storm that had canceled our flight home and left us stuck in an airport hotel, not knowing what day it was or when we would get back. Our ‘batteries’ were very low.

Only Avi, our expert sales agent, strengthened by a thousand negotiations, seemed to be fresh as a lettuce.

Around the crackling of the chimney, while the storm whipped outside, we all tried to shelter ourselves in hot cups of coffee, seeking the strength to recover our spirits.


A black-and-white movie "Laurel & Hardy" was on the TV in the hotel lounge. Under any other conditions we would not have paid attention, but in that moment, it replaced our conversation and attracted our attention as if it were a magnet that we could not resist.

Avi, on the other hand, was watching us. We were young professional buyers, loaded with titles that he had been unable to earn and yet did not seem to need, in view of his excellent business results.

Lightning must have struck somewhere close enough for the TV image to freeze for a moment before it faded. Laurel and Hardy went silent in the same moment that we all screamed in shock from the fright! Avi let out a loud laugh.

When we managed to calm our nerves, and Avi stopped laughing, he explained that he was thinking of telling us THE SECRET OF PROCUREMENT MANAGER, just as the comedians had commanded our silence. He did not believe in coincidences, and so he told us his "big secret".

 

In commercial activity, the only constant is change.

Many people think that to be successful in procurement the only important skill to have is negotiation, but they are wrong. Negotiating is only a small part of the procurement manager’s job, and to do well you must have six essential skills:

 

1.        Empathy. You have to understand the truly relevant elements of the product you are buying for your customer. You must internalize them and know them even better than the person for whom you buy. In many cases, you will find that there are alternative products you did not expect that satisfy the business’ needs more efficiently than the old product. Above all, you must have the sensitivity to identify when the relevant elements change.

 

2.       Communication. Make your message clear and avoid any misunderstanding.  Carefully communicate all the details of the products/services that you want to buy. If you decide to change some of your specifications, be sure to update your supplier(s) as soon as possible. Anything left undefined by the buying organization can be misinterpreted by the supplier (or determined to match their own default specifications), leaving the buyer and supplier talking about different items.

 

3.       Use technology. Only the best tools will allow you to trace the development of each negotiation, of each product, of each supplier, of the evolution of everything regarding its history with respect to targets and the competition. The market is a living entity in permanent change that requires the most advanced tools to follow it in close to real time.

 

4.       Never become isolated by data. No matter how significant a savings opportunity is, look at trends and evolutions. Measure everything with KPIs that are representative of each contract you negotiate. Just as if you were a doctor analyzing the symptoms of a disease that requires diagnosis and therapy, measure before analyzing and making a decision. What is not measured can not be managed, and what can not be managed tends to reach maximum entropy (chaos) by the second law of thermodynamics (prone to chaos even when managed).

 

5.        Innovate with creative solutions. In addition to ‘main stream’ options, explore change solutions that can meet the needs of your products. Procurement can not contribute to competitive advantage if you buy the same things at the same times and in the same way.

 

6.       Manage change. Life is change and this is no less true for our professional lives. Change often faces resistance and conflict that can lead to the loss of efficiency. A change of supplier, procedure, formula, market, etc, etc, these changes have many steps that you have to watch carefully so they do not fail along the way.

As you will see, there is a common point that unifies all these skills ...

In commercial activity, the only constant is change.

... and depends on your flexibility, so permanently adapt to that change.

That is THE SECRET OF THE PROCUREMENT DIRECTOR

Translated from Spanish and edited by Kelly Barner. To read this article in its original form, visit: Paco Comino.

 

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Tuesday, 21 November 2017