Buyers Meeting Point procurement by Kelly Barner

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Book Review: Confessions of a Professional Buyer

“Buyers have a privileged position within companies and are exposed to innovative ideas from suppliers often developing their own sense of curiosity. Although not all buyers have realized it yet, they are expected to contribute to the innovation process.” (p. 25)

 

Confessions of a Professional Buyer: The Secrets About Selling & Purchasing Services, by Hubert Lachance, is something like a survival guide for suppliers dealing with procurement – and vice versa. Lachance has over a decade’s worth of experience managing indirect spend for a multi-national CPG company, and he applies that experience to help all buyers and sellers work together more productively.

 

Despite the quote from the book featured above, which I wholeheartedly agree with, Lachance makes a number of points (also true) about the fact that internal stakeholders would rather not change suppliers. Some of their rationale is completely valid; changing suppliers can be costly, disruptive, and comes with unexpected administrative overhead. That being said, changing suppliers (or introducing new ones) is often the only way a company can make positive changes to their offerings. After reading Chapter 3: The Challenges of Acquiring New Customers, where Lachance lays out all of the reasons incumbent suppliers are difficult to dislodge, it is amazing  to me that suppliers are EVER changed out.

In fact, Newton’s first law of motion came to mind: ‘An object that is at rest will stay at rest unless a force acts upon it.’

Guess what, procurement: we are the force for change in most organizations. And while they may not like it in specific instances, our job overall is to guard the investment of company resources and ensure that any investment made generates the greatest possible value in return. Sometimes that requires involving new suppliers.

From a sales-facing perspective, I agree with Lachance that sales should rejoice rather than groan when procurement is involved. (p. 44) After all, with change-averse budget holders running the show, they would never get an opportunity to even showcase their solution. You might even say that sales and procurement are on the same side during the sourcing process, because sales wants an ‘in’ and procurement needs stakeholders to consider alternative partners on the market.

This also makes the section on market analysis very important, and not just because it is one of the best ways to find new suppliers. Given that stakeholders are usually the ones that define requirements and selection criteria, expanding everyone’s understanding ensures that they are not designed based upon the capabilities of the incumbent supplier. As difficult as it is, sourcing project teams must allow their selection criteria to change based upon what is learned during market analysis. (p. 58)

But sales is not the only group that gets constructive feedback in Confessions. There are two pieces of advice for procurement that are important as well:

  1. When you are negotiating with a supplier, what rationale do you give for wanting a price reduction? Is it based upon benchmarking, reduced specifications, increased demand? Or are you just asking them to ‘sharpen their pencil’ so you can pad your savings report? (p. 78)
  2. Supplier feedback – which is often the most painful part of the sourcing process – must be given to both selected and non-selected suppliers. While it may include positive and negative elements, suppliers deserve to get that information quickly and with a productive level of detail so they can learn and improve. (p. 80)
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Wednesday, 20 September 2017