Inside the Mind of the Buyer: ten things you need to know about procurement

Productive negotiations mean a win-win for seller and buyer

May 9, 2017

Not long ago, many sales people viewed the procurement team on the opposite side of the negotiating table as the enemy. Today, however, co-operation and collaboration  are often essential. Scoring points helps nobody and greater understanding is the way ahead. John Murphy, Fellow of the Chartered Institute of Procurement & Supply, and former procurement director of Royal Mail, lists ten things he wants sales people to know.

1. I am the last link in your sales chain

I will be the one selling your organisation, your products, your services, your pricing, your warranties, the whole deal, to my board. If you think about it in those terms, what you need to do is to equip me with everything I need to make that conversation go well.  Don’t just give me the information, try to be thinking how some of those conversations might go. If something comes in which could cause a problem,  you need to help preempt that for me?

2. It’s not just me you’re trying to convince

Procurement decisions for a big corporate can involve a lot of people. Rarely if ever is it one person’s decision. For example,  Royal Mail has nearly 40,000 vehicles, and spends hundreds of millions of pounds on that asset. Add up the people who build the invitation to tender (ITT), the people who evaluate the ITT and the governance process before the board ratifies a decision, there are probably about 50 or 60 people involved. And of course they all bring different perspectives to that decision-making process.

3. Try to understand where I’m coming from

If the original scorecard for procurement 25 years ago was cost, quality and delivery, there’s another 40 different things on it now: including brand management, supply chain risk management, guarding reputation, staff development, corporate social responsibility, CSI (customer satisfaction index). The sales person may not be able to help with all those things, but having the curiosity to understand the broader issues equips you much more effectively to talk to us about the support we need. I’d like you to be asking: “What business issues are you dealing with? What keeps you awake at night?”

4. Keep me up to speed

I need to know what’s going on in your world and your marketplace. Most boards are well aware of the competitive threats they face in their own marketplace, but may not have the time to understand how their supply chain can help address that, through innovation and collaboration. They’re not IN the supplier’s industries, they’re focused on their own. So early visibility of that is important.

Advance thinking, where a salesperson comes to us with a suggestion, based on their knowledge of  our business, is very important for us. The conversation might go: “You need to be ready for this, because in two or three years it will be very big for you.” Most procurement professionals would be very open for that. It helps when framing the tender documents to have more breadth of understanding about what’s out there.

5. Work with me

The marketplace moves so quickly that a solution you see increasingly is to put out Invitations To Tender (ITT) with specifications that are outward-faced rather defined: “Here is the problem we need to solve, how would you solve it?”, rather than: “We need a solution that looks like this”.

And it is an open dialogue that needs to take place.  Whilst automated, platform-based tendering is increasingly popular, it is no substitute for dealing face to face with an individual or a group of individuals, particularly when sourcing innovative or complex solutions.

6. Be honest

I would rather have a candid conversation about issues that arise with products or services, and understand the  the art of the real, than have a smoke-and-mirror type conversation where you’re trying to hide something from me. It’s important to be open, honesty and trust are fundamental to a productive commercial relationship.

7. Listen to what I’m telling you or risk wasting your own company’s resources

Although there is technology available these days to help make compiling a bid more efficient, it still can be a very expensive undertaking for a sales organisation to put together a bid team and prepare a response to an ITT – [and that’s money wasted] if you’re not in the right place to be in with a chance of winning.  If I don’t think you can be successful in the process I will tell you, and explain why.

8. Nobody goes on a black list if they don’t bid

There seems to be a fear that if you don’t put in a bid on every occasion, then you’ll drop off “a list”. I’ve never actually seen one of these “lists”. The closer you work with procurement, the more honest the conversation we’ll be able to have, and the more likely that I would say – and I’ve done this in the past: “I really don’t think that you should be bidding, because I don’t think your solution will be successful on this occasion.” However that doesn’t preclude you bidding in future, for other opportunities.

9. Answer the question

I’d like bid managers and bid directors to remember when they’re responding to ITTs: answer the question that you are asked in the tender, not the question you wish you had been asked. Quite often you can see a response trying to be shaped around what they perceive it is we’re asking. And people will just lose out, their bid will not be recognised in terms of  its real value, if they start to answer different questions than the actual documentation requires .

10. Win:win negotiating doesn’t have to mean 50:50

I’ve seen plenty of win:wins that were 99:1, but the 1 represented real value. If you ask people to represent win:win numerically they often respond, 50:50; but that’s a very lazy way of doing deals, because it’s just compromise, and that always ends up with  sub-optimal deals. If you have a very clear view of what you want, and recognise that the other side needs to win as well, then irrespective of what those numbers turn out to be – it may be 50:50, it may be 75:25 – you will end up with much more productive negotiations.