Buyers want to succeed – sellers want the same. What’s in the way?
Understanding each other.
Sharing perspectives is a first step along the way to success. To that end I recently interviewed a Procurement Manager at Microsoft. And there’s another interview coming the end of this month with the Senior Director of Procurement at Expedia.
Having worked with contractors for many years, it was interesting to hear some of their commonly-held beliefs confirmed. However, a number of their beliefs were off the mark too.
From procurement’s side, both interviewees understood contractors pain in the process. But confirmed procurement’s role as helping their companies succeed – by buying the best value, at lowest cost.
Simple, Not Easy
These interviews provide great insight into the buyer’s mind from the procurement perspective. If contractors want to sell more, they’ll need to understand buyers very well.
Conversely, if buyers want more value from their spend, they’ll have to better understand what they’re buying. And how it helps their company succeed.
A few insights popped out during these interviews. Here are a few:
Procurement doesn’t buy low price only
Sellers (contractors) have heard this before but may believe it’s not true. Many believe buyers are lying to trick contractors out of profits.
I heard clearly in both interviews that price is rarely the only factor. And not always the most important. Despite contractors believing low price is the only consideration.
Procurement is more interested in how the purchase (contract service) can help their company. That was always the first consideration.
Contractors’ sour grapes may be more an indication of not knowing what’s important to procurement or the business owner.
Buyers want to understand what’s being purchased
This may seem obvious, but if sellers take it for granted they’ve missed the boat.
Procurement (and business owners who’ll manage the contracted service) don’t always know how their purchase will help their business succeed.
Or, they’re unable to articulate it. When that happens, buyers can only fall back on the lowest cost to their company as success defined.
Contractors can help buyers better understand the business impact of their services. Not more sales and marketing smoke self-congratulating the contractor.
Procurement does not manage vendors
Procurement does their bit up front. When the contract is finished it’s handed over to the business owner to manage the vendor. Procurement doesn’t have the expertise, or time, to oversee the service.
When the contract date comes up, procurement will follow it’s bid evaluation process, which may or may not include an RFP process or renegotiation. But it’s only the business owner’s feedback on whether the contractor delivered what was promised.
How well do you see the other side of buying and managing contract?
President, Service Performance
Technorati: procurement, facility services, vendor management