The Point

One of the interesting things about consistently reading and hearing content from quality sources is that you start to notice trends. It is amazing how often the same topics arise at the same time in different places. We use this blog as a way to help you stay on top of the major themes in procurement and supply chain management.

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    “The skills for becoming a champion caliber negotiator are acquired skills. Nobody is born with great negotiating skills. You are born with the skills of crying and breathing, all other skills you acquire throughout your life.” – Soheila Lunney

     

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    “The skills for becoming a champion caliber negotiator are acquired skills. Nobody is born with great negotiating skills. You are born with the skills of crying and breathing, all other skills you acquire throughout your life.” – Soheila Lunney

     

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    Good old Kenny Rogers, he gave us some great advice through the lyrics of the ‘The Gambler’: advice that stands true beyond the gaming table. Sometimes the best advice comes from the least expected place, and I have some advice for procurement professionals – from sales(*).

    Every week, I take a break from supply management topics to learn about sales through webinars, white papers and blogs. Officially, I do it for ‘The Flip Side’, a Buyers Meeting Point resource that helps procurement professionals better understand their sales counterparts. Unofficially, I do it because creativity and objectivity can be elusive, and listening to sales’ perspective helps.

    This perspective has changed the way I see the role of the individual procurement professional, the role of the department, and how we should leverage non-traditional approaches in search of better than usual results.

    We are all in sales.

    I used to see sales people as professionals compensated for closing deals. But contracts are a side effect of an effective sales process. The core of the sales process is quickly and accurately diagnosing opportunities for improvement and then winning over prospects to the recommended solution.

    Procurement does this all the time – or at least we should. We ‘sell’ finance on a new opportunity to drive efficiency. We ‘sell’ the executive team on the strategic advantage we represent as an in-house dedicated function. We ‘sell’ internal stakeholders on the merits of a new supplier or a standardized specification that will save money.

    The key is to be a quick study, sometimes adapting mid-meeting, in response to organizational requirements. We must prove we understand the challenges at hand, sometimes to colleagues that don’t have a clear perspective themselves. Once you accurately articulate a problem, brainstorming can begin on solutions to be ‘sold’ to internal customers.

    Sales people believe buyers have the advantage.

    I benefit the most from the Q&A that takes place during sales webinars. What do sales people really think of procurement? What kind of advice do they get from their mentors?

    I’ll over-generalize to make a point: sales people see procurement professionals as a steely cold bunch. (One webinar participant commented that procurement conference rooms and offices are the coldest places on earth…) Our poker faces have apparently done the trick, because many sales people would like to check our backs for control panels to make sure we are human.

    Sales believes procurement holds all the cards in the negotiation process. I have heard our advantages repeated multiple times from different sources: “Procurement already has access to so much information that we struggle to appear well-informed about our own market.” “We can’t enter the sales/buying process until they decide it is time for us to start participating.” “Procurement is so active in their use of social networking during the purchasing process that we are outpaced by our customers.”

    Sales can compete on value creation.

    We know that negotiating cost savings is no longer enough. We need to create value for the organization. We hear it from executives, associations, publications, and thought-leaders. Knowing how to get started is a challenge because every situation and opportunity is different.

    Successful sales organizations evolved in response to the need for value creation a long time ago. With strategic sourcing came apples to apples comparisons on price alone. Suppliers couldn’t refuse to provide pricing, so they tried to influence the decision-making process by proving themselves of such value that they broke the mold.

    The time has come to recognize supplier innovation. The increased focus on value by our corporate leadership, and the ability of sales to speak their language, will either open a door for procurement or clear a path right past us. If a sales person sees an opportunity to bypass procurement and reach the right execs, they will take it. Capturing value does not mean surrendering in the battle over price, just balancing costs and benefits. In that scenario, I want to be the one holding the scale.

    Looking back and ahead.

    The big-picture realization from my year of visits to The Flip Side is that the procurement/sales relationship is not about us v. them but about all of us. They feel the same stresses we do, and often see us in the driver’s seat when we think they are driving. They aren’t terrible people (mostly) any more than we are bloodless cost reduction zombies.

    We can’t fully collaborate with sales in every category, but when the conditions are right, partnering with a supplier is the only way to a better solution. It goes against most of what we know about creating competition and harnessing the forces of the market, but recognizing opportunities for collaboration can be the difference between tactical and strategic category management. After all, ‘Every hand’s a winner, and every hand’s a loser … the secret to surviving is knowing what to throw away and knowing what to keep.’

    (*) Note: This post originally appeared as a guest post by Kelly Barner on Procurement Inisghts.

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    If you watched Peter Faulk play the character Lieutenant Columbo in the thirty years ‘Columbo’ was on television, you undoubtedly saw him break a case by turning back at the last moment and asking, “Just one more thing…”, a question which always ended up breaking the case.

    Maybe procurement need to stop and ask another question or two as well. In a recent blog post, ‘What Questions Should Your Clients be Asking’, sales blogger S. Anthony Iannarino talked about the challenges sales people face when they are not able to communicate the value of their solution because the buyers they work with are not asking the right questions. His advice provides some techniques for redirecting the conversation or asking the missing questions so that the necessary information gets across.

    While we want to have a complete picture of each solution so that we can accurately compare our options, we’ve all made the mistake of asking questions that are so open ended that sales people talk ad nauseam about something we can't compare across the suppliers in contention. But that doesn’t mean there aren’t pieces of information we are missing out on.

    Buyers Meeting Point’s long time advisor The Sales Guy has always advocated asking sales people something about their compensation package or their company's business development priorities so those factors can be brought into a thorough evaluation. What else should we ask?

    Here are a few questions that The Sales Guy suggests working into your face-to face supplier meetings. Some are relevant for incumbents and some for new companies you are evaluating, but all of them will allow you to put together a better category management strategy and contract.

    1. “If you are selling to my competitors what products and services are they buying more of and what is the value provided?”  “What are they buying less of?”
    2. “We are spending $XXXK dollars with your company on an annual basis.  If I was to spend that same amount differently what changes would you recommend and why?” 
    3. “What can our companies collaborate on that would help your company bring new products to market and provide competitive advantages for my company?”
    4. “What business model changes is your company introducing and how might they be advantageous to my company?”

     

    If you have a question for The Sales Guy, click here to submit it and we will get you an answer!

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    “Reverse auctions are loved by corporate purchasing managers, loathed by suppliers, and rarely discussed publicly by anyone involved.”

    – Max Chafkin, Inc. Magazine

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    You can lead a horse to water, but you can’t make them drink. This is a very common phrase often used to describe a ‘change management’ situation. You can give someone all the resources but you can’t make them use them.

     


    In procurement, we often have processes and technology to help complete our tasks effectively and efficiently. However, some of the staff may not be utilizing it as best they could to get the most out of it.

    With new technology, people fall into four buckets. There are early adopters who wait in line for hours for the next generation of the iPhone. Then there are the early majority who probably get the new phone within the first month or two, the late majority and the laggards who may not even have a smart phone yet. As a procurement professional, your goal is to get your team through this curve quickly and have the organization reaping the benefits of the esourcing technology.

    In the Tejari Blog, With best practice tools comes best practice use, they review the reasons that some are lagging behind in adopting the technology and give suggestions on ways to overcome it.

    The first one has to do with change management. In many organizations, the staff is quite content doing their work the same way it always has been done. The author recommends gaining some internal ‘experts’ to help all the others understand the benefits and value. Offer a great deal of support so that over time, the new system becomes the ‘comfort zone’.

    Another difficulty is when the staff waits until the last minute to load the Rfx into the tool. There is frustration and they give up. The recommendation is to create drafts a week or two before and put them in. Then you can always modify it as the time gets closer.

    What have you experienced for obstacles and how did you resolve them? Do you have your 'team of horses' feeling refreshed after having reached the oasis and utilizing the new technology?

    Share your thoughts by commenting below or tweeting us @BuyersMeetPoint

  • None of us can read minds. Sometimes we try to based on our knowledge of the situation or the individuals involved. It is obviously much easier if it is clearly communicated on a timely basis but that is not always the case.


    From time to time it is important to understand what the executives in your organization and in your industry are thinking. What issues keep them up at night? Some leaders will communicate to their associates on strategies and goals and others do not.

    This article, 8 things on the minds of Supply Chain Executives was in the Material Handling and Logistics publication last week. Here are the highlights from the article.

    1. Talent: Finding and retaining the right people is critical to a company’s success.
    2. The customer: Understanding what your customer’s needs are and help them know where the costs are to comply with their requests.
    3. Agility: There is a strong desire for increasing agility in the supply chain.
    4. Technology: Keeping their team equipped with the latest technology and processes is very important.
    5. Cost: This continues to be a focus for supply chain and procurement. However, in addition to containing or reducing costs, the expectation is for creativity and improved service.
    6. Regulations and Infrastructure: The list keeps growing and the need to stay current is critical.
    7. Risk: With global sourcing, there are many more risks to the supply chain. Unexpected interruptions can occur and organizations need to have a plan to manage them.
    8. Sustainability: This is an area of concentration for many supply chain executives. What is the strategy and how should it be implemented?

    Do any of these items surprise you? Did your team concentrate on any one in particular in 2014?

    Share your thoughts by commenting below or tweeting us @BuyersMeetPoint

  • As our summer season is winding down, the weather is cooling off and the school busses are rolling again. New clothes, new supplies and new routines all become part of the process. Even for those without school age children, you can’t help but notice this event.


    For Procurement, this activity was the focus months ago in order to prepare for the product or service being available at this time. It is second only to the winter holiday volume. According to an article in the Jacksonville Business Journal, the back-to-school market in the US is worth $75 Billion. That is big business by anyone’s definition.

    The ripple effect of this season goes through marketing too as the advertising agencies and circular print providers are promoting various trends and gadgets for the upcoming year. Restaurants around schools, particularly high schools and colleges are extremely busy and thrive after a quieter summer. The Auburn Journal discusses the excitement and benefits of all the “swarms of teenagers” coming to local establishments for lunch and after school gatherings. I know there is an ice cream shop near our school that is packed with young customers right after school, especially on Fridays.

    How does back to school impact your role in procurement? Does your organization benefit from this autumn ritual?

    Share your thoughts by commenting below or tweeting us @BuyersMeetPoint

  • If you are like us, you ask that question frequently. We have just returned from a wonderful trip for summer vacation. We had a glorious time and found it very relaxing. Now that we are home, we are asking that same question even louder! We did not really spend THAT much did we? How could we?


    The same holds true in our professional lives. We spend a great deal of time forecasting and budgeting and then trying to understand where all the money is going.

    Many organizations use spend analytics to categorize their expenditures and then monitor for compliance. It certainly helps in that regard. The blog pick this week is from Rosslyn Analytics, “Five Things You Didn’t Know Your Spend Analytics Could Tell You”. The five things you might not be using your spend analysis solution for are:

    • Contract compliance – are associates buying from the proper source? Do you need to re-communicate the preferred suppliers and contracted pricing available to them?
    • Cash Flow – are you taking advantage of payment terms when it makes the most sense? Does it improve your cash flow?
    • Tail end expenditure exposure – a few months ago we posted an article, “The last 20 percent”, highlighting the benefits of giving some attention to the tail spend.
    • Overpayments – It happens. The key is catching it and resolving the issue.
    • Supplier Diversity – Spend analytics can help you identify what types of suppliers you are working with.

    Have you found spend analytics to be helpful in the ways listed above? Was one area more impactful for your team? Was your 'wallet' looking healthier at the end of the process?

    Share your thoughts by commenting below or tweeting us @BuyersMeetPoint

  • We have a golf driving range near us that had gone out of business. They have now turned it into a solar farm with acres of solar panels. I am guessing it is more profitable than the driving range business was and certainly is a sustainability initiative.

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