Does negotiating with Procurement always need to be a struggle? Negotiating with Procurement is a topic that has received a significant amount of interest from our readers – from sales and procurement professionals alike.
While the challenges of working with Procurement seemed to resonate with many sales professionals, we also heard from specialists in procurement who indicated that their objective is not just about driving down cost, and they don’t use the “Procurement Tactics” we've highlighted in the past. Instead, many Procurement experts said they prefer to work in a collaborative, partnership approach with their vendors. It’s refreshing to hear this perspective, and it’s a pleasure to work with these types of procurement professionals when we have the opportunity. The reality is that the types of relationships between sales and procurement professionals vary significantly across industry, geography, culture and even across business units within large organizations.
As a sales professional in today’s challenging selling environment, it is even more important to understand the role procurement will play in your deal and the process you will need to go through to get the deal done. By understanding early in the process how procurement will be engaged in your deal and how they interface with vendors, you can more appropriately prepare to work with them to reach a mutually beneficial deal. This doesn’t have to be contentious, and in fact understanding their objectives and the procurement process early on can go a long way to helping solidify a long term relationship.
There are two important questions a sales professional should ask of procurement that can really help understand their perspective and how to best work with them. I recently paid a visit on one of the procurement contacts at one of our large clients. I asked these two questions, and she indicated that no vendor had ever inquired about their objectives or success factors. She was so taken back by our interest and open dialogue that she proceeded to introduce us to the executive leadership within the global procurement organization and she made several additional introductions to us across the business. Asking the two questions below during the discovery process and periodically throughout the engagement with the organization can help improve your chances of developing a long term partnership with procurement.
1) What is important to you in procurement?
It often feels like the job of procurement is to just cut costs, however they have many priorities and objectives just like any other business unit. Among many other things, specific objectives for a procurement group may include:
- Support revenue growth and improve profit margins
- Manage risk
- Support the business unit objectives
- Help show a return on investment in strategic investments
- Ensure quality and consistency from outside providers
- Consolidate vendor relationships and reduce administrative burden
Understanding what’s important and where their priorities lie can help to craft your solution and messaging in a way that will resonate with procurement and the business stakeholders. Is there a way you can show that your solution is helping to drive down costs while at the same time increasing revenue for the business? Can you link your solution to measurable business results that you can present in your proposal? Asking procurement about their objectives and tailoring your solution to align with these priorities can go a long way to improving your chances of winning a deal and establishing a long term partnership.
2) What can we do to be a great partner?
It’s important to understand what procurement values in a vendor partner. These are some of the responses we’ve received when discussing partner relationships with procurement professionals across multiple organizations.
Ability to Deliver: Procurement wants their vendors to consistently deliver high quality products and services that meet the specifications required of the business. Procurement doesn’t want to be embarrassed or surprised by a vendor who fails to deliver on time or within budget.
Communication: It is important that the vendor is accessible and proactive in communicating with procurement. Problems will arise in any business relationship and it is often how these issues are handled and resolved that makes the true test of the partnership. Procurement wants a partner that will be responsive and fix problems when they occur.
Business viability and scalability: Procurement doesn’t want to engage a vendor who is struggling to survive or may go out of business when delivering an important solution or product. They want to know if the vendor will be around to support the product and can will they scale beyond the individual deal? Ideally, procurement doesn’t want to vet new vendors every time there’s a request from the business, and they would prefer to use vendors who have a proven track record of success working within the business.
Culture and ethics of the business: Finally, procurement is looking for partners who will work well within the company culture and can be trusted to do the right thing for the business. Culture fit and ethics are difficult to assess in an RFP, but are one of the most important “intangibles” that can make a difference in who the organization engages with initially and who they continue to do business with in the future. Understanding the culture of the organization and demonstrating behavior that indicates ethics, collaboration and communication can go a long way to cementing a relationship for the long term.
These are just a few thoughts on improving the working procurement relationship. What other procurement objectives have you heard, and what do you think makes a partner successful when working with procurement?
About Ray Makela