Flip Side Webinar Notes: Selling To and Negotiating With Today's Tougher, Strategic Procurers/Buyers/Sourcers
Other than a brief introduction of each panelist at the beginning of the event moderated by ES Research, this was an entirely unrehearsed, unscripted discussion among four industry experts in the area of selling and negotiating with the corporate procurement function. Live questions were taken from the audience via telephone. There were no slides. One of the speakers on the call described procurement and our processes as being "like trying to get a peek behind the curtain of Oz".
“Do not arouse the wrath of the great and powerful Oz. I said come back tomorrow.”
-- The Wizard of Oz, 1939
Here is a list of the panelists and the sales training and strategy firms they represent. We have heard several of them speak in the past and covered them in our Flip Side notes.
Julie Thomas, President and CEO, ValueSelling Associates
Brian Dietmeyer, President and CEO, Think! Inc.
Ron D'Andrea, President, BayGroup International
Stephanie Woods, Executive VP, Huthwaite
You can listen to the event free by clicking here and completing a free registration. If you don’t have the time or inclination to listen to the event yourself, my notes are below.
First, here are my thoughts after having attended this event:
- We seem to have accomplished our goal of establishing procurement as the point for spend management decision making within the organization with our internal stakeholders and suppliers. But with that role comes great responsibility. Traditionally our focus has been on reducing cost, and our process is set up to increase the things we can measure like savings or cost avoidance. But if we are to take the next step and become a true strategic advantage to our company, we need to be sure that value creation as it relates to innovation opportunities is recognized, captured, and communicated.
- Sales understands what we do, and in many cases they are familiar with our process and terminology. I was impressed to hear the speakers on this event recognizing many of the things we talk about in supply management circles, like our push to get a seat at the executive table and the challenges we are starting to feel around our own customer service and reducing maverick or off contract spend.
- Sales does not distinguish between procurement, buying and sourcing the way we do. In a way that makes sense, because they interact with us as an intermediary to their end users regardless of our title. Alternatively, I believe this also indicates an opportunity for “procurement” to keep the focus on being strategic and value-add. Despite the label we may use, much of our activity is still tactical, driven by a predetermined process rather than in direct response to the needs, options and market at hand.
- Sales feels that procurement has an advantage, and whether we do or not, their perception of an advantage is half the battle. Assuming we are able to leverage that sentiment, what will we do with our “advantage”? Will we continue to fight for savings the way we always have, or will we use it to bolster our confidence in dealing with our suppliers, to allow ourselves to be open to information not easily captured in an RFP?
Moderator: What is the most common mistake sales makes in dealing with procurement today?
Dealing with procurement can be frustrating, challenging, and time consuming. The biggest mistake sales professional smake is only dealing with procurement. Procurement is overly focused on the dollar value of the deal to their organization and has a lack of understanding when it comes to capturing value creation.
In many cases, procurement has so much control internally that the overall benefit to the organization is not taken into consideration and is lost because the business users don’t have the influence to bypass the cost-focused procurement process. What procurement should be doing is increasing their internal shares of spend (I interpret this as spend under management) and decreasing rogue buys by meeting their internal clients’ needs better.
70% of the buying cycle takes place before suppliers are invited to join the process. The result is that sales people are getting less time to ‘do their thing’. It used to be that sales spent all of their time trying to get around procurement. Now procurement is led from high enough within the organization that sales has no choice but to learn to deal with them. Suppliers have to be better prepared when they are given the opportunity to present, “this is not seat of the pants stuff” anymore.
Sales has opportunities to help procurement document the savings represented by the deal as well as to help integrate with in-place supply management solutions.
Procurement is savvy, educated, and well trained in negotiation. Procurement spends the majority of their time within the buying or sourcing process, while sales has many other responsibilities and actually gets less active time negotiating. Suppliers often get tripped up by the complicated process they need to navigate in order to present their solution, and good options are not being properly presented to the prospective client.
Moderator: Where is procurement going?
The speed of information availability makes the selling process more difficult for suppliers. The value they can bring changes by listener as well as the point in the process as buying organizations change their focus as they get closer to an award decision. Buyers are more skilled and informed, making suppliers feel on the defensive.
Participant question: What type of information is most useful to procurement and how should sales use that during the process?
It is crucial for sales to understand procurement’s role in the buying process. How much power do they have? What formal cost cutting programs are in place? Are they facing concerns about risk, lead time, or disentangling themselves from an incumbent?
To return to the earlier comparison to the Wizard of Oz, in order to leverage the full advantage that our suppliers can offer, we will need both a heart AND a brain – as well as the courage to use both.