The Use of Procurement

To cut cost, more companies are having procurement get involved in more and more areas, and areas procurement doesn't understand. Procurement may be purchasing raw materials one day, and then doing an RFP for attorneys, insurance brokers and accountants the next. Their goal is not to find value but to lower price.

How do you, as a salesperson, overcome having your products or services become a commodity?

· Find out from your contacts what procurement's responsibility will be and understand the rules of engagement.
· How will services and pricing be evaluated?
· What will be the main criteria for the ultimate decision?
· What role will procurement have? Will it be procedural only, or will procurement have some decision input?

Way before an RFP or procurement gets involved, make sure you have a strong relationship with people above the purchasing agent--the CFO, CEO as well as the user buyers. Make sure they know your value proposition, and know the ROI of your services/products. Once the purchasing agent becomes involved, make sure you ask these contacts for help, advise and support. Try to make them your coaches and advocates. One word of caution, you will need to show the utmost panache so as not to alienate procurement.

If you don't have a relationship with the user buyers and c-suite prior to the RFP, your chances are very slim that you will get the account. Procurement wants as many players as possible, and you are just one more participant. You will expend a lot of work and get nothing in return.

If you are defending a current account, do a stewardship report annually, recapping the services you have provided, and any analysis (ROI, etc) showing how your products and services have helped. Do this report orally, preferably to the user buyers and to someone in the c-suite. If you can't get the c-suite to attend, at least make sure a copy of the report goes to them. The c-suite likes recaps and charts/graphs so make this report succinct, and focus on value and overall cost savings rather than your fee.

When procurement works well it is a great asset to the buyers and the participants. It provides uniformity and continuity. It can be a terrific tool if used correctly

When do I walk away?

• When it becomes clear that procurement is going to have a large role in the decision making process


• If procurement is doing an on line reverse auction, where everyone is allowed to bid their fee on line and each participant sees the other participants fees.


• If I can't get any direction from the user-buyers or the c-suite


• If it becomes clear that the entire organization is commodity driven
  

I can't help companies if they have no appreciation of the ultimate ROI and just look at price. There are competitors that are simply low price. They know their niche, and I know mine. Make sure you know yours as well.