Professional buyers have always been around. But procurement has leapt into the news and general business consciousness relatively recently. That happens either when a public body is perceived not to be doing it well; or as a result of new purchasing methods (such as e-procurement) becoming more commonplace; or because sellers are now realising that their skill in dealing with procurement professionals can be a decisive factor in whether or not they win a major sale.
At Huthwaite, we realised this some time ago and when we did we started to do what we always do. We carried out research to find out what was really happening, and used the evidence to suggest how sales organisations should respond. All in all, we have so far interviewed 1200 global sales leaders and procurement directors around the world, across 22 industry sectors.
We began with a project to discover how procurement professionals themselves are viewed, and seek to operate. We found, for example, that 68.3% of procurement professionals themselves rate obstacles from within their own organisation as the biggest challenge they face in meeting their strategic goals. So we started looking at ways sellers can help them to resolve that issue during the course of a sale or bid.
Then we undertook a major international study to look at the perceived barriers that appear when a major sale or bid process, particularly a formal RFx or TTT, involves a prospect’s (internal or external) procurement people. In the private sector at least, non-compliance with the procurement process is seldom an automatic disqualifier (even if procurement say it is). In particular, 56.3% of respondents who overtly created access to the executive influencers inside the customer, in instances where the RFx prohibited doing just that, actually won the contract. So we looked at the best ways of going about that.
We examined the phenomenon of the reverse e-auction – a tool often used, sometimes as a blunt instrument by procurement departments, to the dismay of high value-add suppliers. We made some surprising discoveries about who wins and loses, and why; and what that could mean for bidders’ strategy in future.
What emerges, clearly, is that even big, multinational organisations are at very different stages on the procurement journey. Some have their procurement people in windowless offices in the basement and treat the purchase of mission critical IT services in the same way as the purchase of paper clips. Others have a CPO on the board, advanced category management philosophy, and uniform strategic sourcing processes across continents. So, armed with our research, we developed at ten-point Procurement Maturity Model, with recommended seller approaches and behaviours linked to each.
And just as procurement organisations are extremely varied in the degree of maturity they demonstrate, the organisations selling to them are only now beginning to address seriously the interactions they should have with their professionalised buying counterparts. Many are far behind.
Unsurprisingly, other people have wanted to learn about our findings and our insights, and even hear first-hand from some of the participants in our research. So as well as presenting the findings to annual conferences of SAMA, APMP, IACCM, and in expert seminars convened by the likes of The Management Consultancy Association, Dow Jones and Randstad, we organised a summit conference in London in November 2009 where over 100 practitioners from both sides of the fence pooled their ideas and created new insights for each other. Click here to watch highlights of the event.
As often happens, when we develop some research-based insights, we quickly found clients asking us to create training programmes out of them, to teach sales and bid teams how to confront the challenges. This resulted in the development of our Winning with Procurement Masterclass. For more information, click here to read the course overview or feel free to contact us.
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