A good relationship with internal clients benefits both procurement and an organization
April 9, 2012
by BY STEVE BOOTH
As procurement professionals, how well do we know our end users? How well do we know the people working in the field, or in our offices and factories, consuming the materials and services we go to such great lengths to procure? How much do we know about the work they need to finish? Do we know why they prefer one machine or service provider over another? How much do we know about their constraints and daily pressures? How often do we ask them for ideas, or simply what they want? Do we have credibility with our customers? Obviously, the answers to these questions say a lot about the relationships we have with others in our organizations.
While we always take the time to be on the same page as our legal, risk and finance departments, we need to ensure we’re taking the end users just as seriously; and not just those on the front lines. We also need to have strong relationships with engineers, inspectors, project managers, designers, directors and executives. All of these people are key contributors to the scope definition and approval process.
I recently came across a column in a popular local business publication, written by a well-known sales guru and professional speaker based in the US. In that column, the writer provided numerous useful tips for aspiring sales reps. The one piece of advice that stood out for me was his tip to never call on purchasing or procurement and to only contact those who tell purchasing what to do. Purchasers are looking only to cut costs and reduce vendor profits, the writer claimed. Cutting costs, OK, but reduce vendor profits? Really? The writer also claimed that convincing the boss of one’s value means that purchasing will simply follow along, puppy-like.
Before expressing collective outrage, consider this: What could we do to make such a strategy irrelevant and protect our organizations? In one case many years ago, a supplier I dealt with visited our shop to demonstrate a fancy handheld sanding device to our mechanics. The mechanics loved the device and put in a requisition right away, which was approved. Of course, I was clueless. I had no idea the supplier was ever there. So I got quotes. It was a well-known brand and I ultimately placed an order with a competitor, who happened already to be in a strategic alliance with us.
The first supplier phoned me and chewed me out. Apparently, they forgot to tell our VP (or anyone else) what they were up to. They told me they had loaned us the sanders (which I also did not know), provided a demonstration and so on. I told him there was nothing I could do. “Serves you right,” I thought as I put down the phone. But did we really win anything? I was out of touch with our shops. We took a credibility hit on the street as well as internally.
This example is specific to supply chain, but the same issues exist in services procurement. I have no intention of rehashing arguments about selling the value of the procurement function within our organizations. It’s more than that. We have to buy in to what end users are trying to accomplish.
As well, I don’t want to rant about monitoring all supplier contacts because, increasingly, progressive organizations are moving in that direction already. What we need to do is develop extraordinary internal relationships with the engineers, estimators, QA inspectors, project managers, VPs, CEOs and those on the shop floor. Internal strategic alliances and relationships need to be in place, not only as a strategic component of a successful outcome, but to avoid falling victim to those who would ignore procurement and deal only with those who tell us what to do.
I know there are progressive, strategic, win-win relationships out there. I’ve seen them. In some cases, I helped develop them as part of a cross-functional team. If those relationships are in place, the shop foreman is far more likely to pick up the phone and let us know when a sales rep shows up unannounced (hopefully, because he will want us to get rid of the rep). So, if the VP tells us to buy parts from Supplier X because of an unplanned meeting he had with them, we need to be armed with data and be comfortable enough in our relationships to be able to say, “You fell for that?” Actually, you might want to consider paraphrasing that. b2b
Steve Booth, SCMP, is a contract manager in construction and contracts management with BC Hydro.