How to sell to procurement
My best piece of advice has always been, “If you want to sell to procurement, you need to think like procurement.”
Over the years, it’s always proved a valuable mindset, but it’s become increasingly difficult to put into practice. That’s because Procurement has shifted from managing categories to sourcing categories. They negotiate the deals and then hand them back to the business to manage.
More recently, though, there’s been a noticeable move by Procurement to focus on the entire value chain and get more involved in defining strategy, not just sourcing suppliers.
I learned this from Art of Procurement, one of my favourite podcasts to keep up with emerging trends. They’ve launched some spin-off shows, including Procurement for the People and I was blown away by the episode How to Sell to Procurement - a Masterclass with Jill Dunlop.
And masterclass it was! It was jam-packed with insights, and I made some notes to share with you:
- Procurement is lean. And stretched. They work across multiple categories, across the value chain, working with thousands of suppliers. To get their attention you need to stand out and have differentiating value proposition.
- Emails and cold calls don't work. Procurement are busy managing billions of dollars in spend. Don’t interrupt them with standard pitches. Procurement are the best negotiators, and often train sales in how to negotiate deals. They've seen it all before. Be different.
- It's not about price. Quality, speed, and value are more important.
- Solve problems. Learn what problems they need solving:
- Listen to earnings calls
- Understand what business is facing, its goals, what investors are expecting.
- Understand the strategic sourcing process.
- What are the evaluation criteria?
- What's the timeline?
- Let the data tell the story. Share marketplace best practices and learn from each other.
- The value chain comes first. It’s everything (and everyone) that keeps a business running and makes it successful and profitable or puts it at risk. Procurement is invested in making it work in a healthy proactive way.
- The value chain is interconnected, but fragmented. Silos shouldn't exist. But there is a problem with visibility and alignment. Teams are compensated on siloed performance, not cross-functional collaboration.
- Procurement is a discipline. It should be centralised, not embedded across business units. That way procurement can develop standard processes, consolidate and share data, be more profitable and bring more visibility to the voice of customer.
- Procurement needs to be more transparent. Have conversations with the business and provide information to add context to the profit and loss numbers. Share supplier performance with a basic scorecard (e.g. red amber green).
- Top 10 suppliers
- Percentage of spending with those suppliers.
- How they're performing against KPIs.
- Understand leakage with those categories/suppliers
- Payment terms
- Availability of supply and alternative suppliers
In the podcast, they mentioned the 7-step sourcing process. My ears pricked up! I’d never heard of it before. So I dug around and discovered it’s one of the most popular frameworks, designed by A.T. Kearney and considered best practice.
I also made notes on that!
The famous 7-step strategic sourcing process
Developed by A.T. Kearney is a proven effective procurement best practice.
- Profile the category. Volumes, current prices, suppliers, specifications and users.
- Supply market analysis. Understand supply risk and market complexity compared to business impact.
- Develop a strategic sourcing strategy. Decide where/how to buy while minimizing risk and cost. Establish goals and requirements, and create a cross-functional team for review.
- Start sourcing. Develop Request for Proposal (RFP). Outline specifications, requirements, pricing breakdown, legal and financial terms and conditions and evaluation criteria. Source bids from current and existing suppliers.
- Negotiate and select. Analyse RFP responses, seek clarification and shortlist suppliers. Include the teams that know/use the solution so the right questions are asked.
- Implement and integrate. Prepare a transition plan for new suppliers. Include them in discussions about implementing the solution so the appointed supplier is up to date.
- Benchmarking. Measure the supplier's performance. Establish current status, agree on future goals, and continuously monitor results.
Bonus: Procurement is changing, are you?
Watch this workshop replay in which I share the highlights of The Deloitte CPO Survey 2020. It’s a revealing and surprising look at the state of procurement.
01:46 About the Deloitte CPO Survey
02:57 Complexity & Procurement
05:02 The Four Pillars of Complexity
06:20 External Complexity
14:54 Internal Complexity
23:36 Talent Challenges
32:22 Mastering Technology
41:05 Additional Resources
What I'm watching
I just watched Lost City last week and can’t remember when I enjoyed a movie as much as this. It’s a fun, adventure/romantic comedy. A modern day Romancing the Stone (for those of you old enough to remember).
I had a blast and if you want a fun night out with lots of laughs - I highly recommend it.
What I'm reading
I’m halfway through Surrounded by Idiots by Thomas Erikson. It promises to “help you understand yourself better, hone communication and social skills, handle conflict with confidence, improve dynamics with your boss and team, and get the best out of the people you deal with and manage.”
The first half of the book defines four personality types (most of us are a combination of at least two of them)
And the second half (which I’m about to dive into) is all about how to adapt your behaviour to get along and work better together.
In other news
- Managing Key Account Managers: A High Performance Guide for Leaders. A live workshop I'm hosting on May 18th to help you learn how to onboard, motivate and manage your team and set them (and you) up for success. Tickets are only £5 / $7 while they last. Save your spot.
- 14 Sales Qualifying Questions for Finding Better-Fit Leads. I've been wasting time on leads that weren't right for me. So, right now I’m focused on better qualification and making sure prospects are a good match before I jump into solution mode. I really like this article with a nice set of questions to identify problems, ensure decision makers are involved and define budget and timelines.
- How Mood Affects Negotiators. A short article from Harvard Law School on how emotion is connected to negotiation and decision-making. Big take away for me was to be aware of emotional triggers and how they impact my negotiating. For example, I can get wound up about delays to RFP timelines and those negative emotions can affect my judgement and choices.
- 40 Best Key Account Manager Interview Questions You Need to Prepare For. New blog post with 40 questions and preparation tips to shine in your next key account manager interview.
- The KAM Club. Learn more about the world's most amazing community of key account managers. You can get my Notion Key Account Dashboard and watch the replay of the workshop The Key Account Manager's Guide to Get (and Stay) Organized with Notion.
- ClickUp. Comprehensive project management tool. It's the one I use for all my client account plans.
- Notion. It's a database, a wiki, a document library, spreadsheet and lots more. If you want to centralise your content in a single place - this is a fantastic tool and the one I personally use.
Quote of the week
Price is what you pay, value is what you get ~ Warren Buffet