For the past 20 years I’ve been dealing with procurement functions and professionals. This has usually been when I’ve been shaping IT solutions and they have been buying on behalf of their organisation. Given my years of experience in this space I thought it might be worth sharing my perspective of what ‘good’ looks and feels like from a supplier’s point of view.
Here are my top tips:
1. Make sure you can measure value, not just daily rates
I understand: times are hard, and one of the main functions of a procurement team is to get the best possible outcome for a given price. However, you would be amazed at how many procurement functions aren’t able to measure value, and instead focus exclusively on day rates.
In one memorable example, we were told that our bid, whilst offering a significantly lower overall cost, was knocked back because our component day rates were higher than the competition’s. I tried to explain that whilst our consultants’ day rates are expensive, we need fewer resources and can get things done faster and so remain competitive that way. The suggestion from procurement was that we kept the number of work days suggested (which they obviously liked) but matched our competitors significantly lower rates. Unfortunately the different business models are not interchangeable!
Another argument I often hear/see from procurement is that cheaper rates mitigate the impact of large over-runs on project estimates. I’d counter this with two things. Firstly, more experienced, senior resources are probably likely to have estimated the work correctly in the first place. Secondly, there are other more suitable mechanisms to protect against large over-runs such as shared risk/reward and reduced over-run rates, etc.
2. Treat your suppliers as partners
This makes a really big difference to how we, as suppliers, behave and think. Many organisations seem to distrust us and think our sole objective is to extract as much business and revenue, as possible, from them. I can’t speak for other organisations, but here at Bluefin we appreciate an inclusive, collaborative environment, where we can go the extra mile for our customers. Yes, having a commercial model that works for both the customer and supplier is important, but nowhere near as important as the satisfaction that comes from a successful outcome for all.
One particularly special customer of ours hosts an annual “supplier dinner” for key suppliers. Over dinner, a number of speakers share business updates, set out key themes for the coming year and outline what the business needs from their partners. This makes us feel like members of a special club and has led to some great collaboration between partners, which in turn has seen wins for the customer. Now, that’s something you don’t see every day.
So my advice would be to bring us your problems. Challenge us. Get us working as part of your extended organisation.
3. Get feedback and close the loop
In my experience, few procurement departments gather any form of feedback from their business about the partners they have engaged. Perhaps they think that we are all inherently the same and will deliver more or less the same outcome. This, of course, is not true and where I have seen supplier surveys used effectively, they have been a very powerful tool.
Surveys can serve as an early warning system to flag when a key supplier may be struggling in a particular area. Supplier league tables can be drawn up. These in turn can assist with my first point: measuring value and quality, not just day rates. Information garnered can also be used as leverage in commercial negotiations and let’s not overlook the motivational aspect: to provide positive feedback to the supplier.
4. Remain engaged and review decisions
Procurement functions are normally involved in the early stages of any supplier or software selection. They help the business articulate their requirements. They run RFIs and RFPs. They negotiate costs. They help bridge the gap with the legal aspects, and get Framework Agreements and Statements of Work in place. Then in many organisations they are rarely seen again until the start of the next buying process!
So I encourage procurement teams to remain involved during ongoing projects. Why? So that any problems are identified early and manged appropriately. They need to be on hand to help resolve the inevitable blurred lines around scope and expectations. In the worst case scenarios, they can go back to one of the other potential suppliers and re-engage with them before a project completely derails. Perhaps most importantly, if a bad decision has been made, the organisation can learn from their mistake and make sure it doesn’t happen again.
5. Organise an internal partner exhibition
A couple of our larger clients periodically organise internal exhibitions where they invite both current and potential suppliers to come and show off their solutions and technologies. Typically there are 20 to 30 stands in a dedicated room or atrium with a variety of vendors covering hardware, software and services. This is a much more efficient way to expose a large number of employees to relevant innovations, rather than sending them all to external conferences.
When I’ve participated in these it has been a great way to meet lots of new people and to understand more about the organisation in question. Where we have been showcasing the work that we’ve undertaken for the client it’s been an excellent way to share this knowledge and get other areas of the business to see the potential of new technologies and new ways of solving old problems.
Enlighted procurement teams get their partners working for them and for the business. They are not afraid of letting suppliers get under the skin of their organisation, so they fully understand what makes them tick. They allow suppliers to talk to their business and try to create and foster an environment for the sharing of knowledge, experience and ideas. Now that sounds like a win-win to me.