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AShortManualOn

The4TypesOfProcurementOrganizationAndHowToSellToThem

SellingToProcurement

Research
Report
2012

Introduction

Thenewrealityofsellingisthatprocurementisgoingtobeinvolved.
Butwhatexactlywilltheirrolebe?Willtheystandonthesidelines,or
getactivelyinvolvedandhowexactlyshouldthesalespersoninteract
withthem.

Inthiswhitepaperwewillexaminethe4differentprocurementstyles
andtheirimplicationsforhowyousell.

Formanysellersprocurementistheelephantintheroom,theonly
problemisthattheelephanthasbecomeatiger,onewithverysharp
teeth.

Thechallengeistoadaptoursalesprocesstothenewroleof
procurement.However,thefactthatprocurementadoptsdifferent
stylesinvariousorganizations,aneveninthesameorganizationfor
differentpurchasesmakesitdifficult.

ProcurementAsPredator

Inthewildprettymucheveryspecieshasanaturalpredatoran
adversarythatissmarter,stronger,orfaster.So,toowhenitcomesto
selling!

Somewouldsaythatthenaturalpredatorofthesalespersonisthe
professionalprocurementspecialist.Thatisbecausehe,orshe:
Mayknowmorethanthesalesperson,mayevencomefrom
thesupplyindustrybackground.
Wantstobreakupexistingcozyrelationships,wantstocome
betweenyouandthebuyer.
Wantstoputacompetitiveprocessbetweenyouandthedeal.
Wantsfewerpitches,proposalsandgolfoutings.
Notreceptivetoyourinvitations,ortoyourmarketing.
Wantstofocusoncost(morethanvalue)anddrive
commoditization.
Wantsyoutodealthroughthem,orevenworsethroughan
electronictenderingsystem.
Wantstostandardize,concentrate,toconsolidate.
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Astheroleofprocurementhasincreased,theroleofthesellerhasin
manywaysdecreased.Professionalbuyershavemorepowerand
control,andtheyarenotafraidtouseit.Theyareroutinelycoming
betweensellersandtheircustomers.Theyareputtingtroublesome
tenderingprocesses,evenelectronictendering,betweentheseller
andthedealthatistheirjob!

Bymakingsellingmoredifficultbuyersarehittingsalespeoplewhere
ithurtsthatisinthepocket,aswellasintheego.Thatmeans
meetingtheprocurementchallengeheadonisvital.

Thelessonforsellersis'keepyourfriendsclose,yourenemieseven
closer'prepareforandengagewithprocurement.Helpthemtodo
theirimportantjob.

Ifprocurementisnotpresentinthedealthenfindoutwhynotyou
don'twanttobetakenoffguardbytheirarrivaljustasthedealis
abouttobedone.Moreimportantstillyoudontwanttospend
monthsdevelopinganopportunityifyourprospectisgoingtostumble
whenitcomestogettingthepurchasesanctioned.

WhatIsTheRoleOfProcurement?

Nowyoucouldsaywereplayingtothegallery,i.e.thesales
audience,intalkingaboutprocurementaspredator.Thatisnotour
intentionhowever.Westrivetobuildbridgesbetweenbuyersand
sellersnottodrivethemfurtherapart.

Ourkeypieceofadviceistoslowdownbeforemakingajudgmentas
totheprocurement'srolewhatwecalltheprocurementstyleofthe
organization.Thatisbecausewhenitcomestoprocurementyou
cannot'judgeabookbyitscover'.Ifyoudoitcouldprejudicehowyou
sellandtherebylimityoursalessuccess.

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Soyouthinkyouknowprocurement?Beware!Procurementisthe
organizationalchameleontheycantakemanyformsandadapt
perfectlytotheorganizationalstructure,orthenatureofthebuying
decision.Thatmakesitdifficultforthesellertoknowexactlywhat
roletheyaregoingtoplayingettingthedeal.

Thereareanumberofmistakesnormallymadebysalespeoplewhen
itcomestounderstandingtheroleofprocurement.Thefirstandmost
obviousoneistounderestimatethepowerandinfluenceof
procurementwithintheorganization.Thatisseeingthemasthey
wereinthepastabureaucraticpaperpushingfunction,asopposed
toakeybusinessdriverwithlotsofcloutandapowerful
organizationalsponsor(intheformoftheCEO,orCFO).

Thesecondmistakeistopigeonholeprocurementintermsofitsway
ofdoingbusinessassumingthatitwilldictatethebuyingdecisionfor
example.Nowhereisthisclearerthanwhenitcomestothesuperficial
distinctionbetweenpublic(bureaucraticcostfocusedbuying)and
private(moreflexiblevaluefocused)buying(asexaminedinanother
whitepapercalledPublicOrPrivateSectorBuying?Doesitreally
matter?).

WhatIsTheRoleOfProcurement?

Toreallyunderstandtheroleofprocurementinanyorganizationand
howthesellermustinteractwithitrequiresexaminingthe4different
procurementstylesbasedon:

TheFocusofProcurement

TheRoleofProcurement

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Thatmeansusingthefollowinggridtogettothehearthofany
organizationsbuyingstylebeitprivateorpublic:

Someprocurementorganizationsarefocusedonachievingresults,
whileotheraremoreconcernedwithcomplyingwiththerules.So,
alongthetopofthegridistheFOCUSofprocurementaxiswith
complyingwiththerulesononeendandachievingresultsonthe
other.

Someprocurementorganizationsseektocontrolasmuchofthe
buyingasispossibleandobsessonpoliciesandprocedure.Others
takeamorebalancedapproachingandcoachingorsupportingthose
atthefrontlinetodothebuying.So,alongthesidefrombottomto
topistheROLEofprocurementaxiswithcontrolonthebottomand
coachonthetop.

Whereanorganizationfitsonthisgriddetermineshowitshouldbe
soldtobecauseitshapeshowtheorganization.

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ANewTypologyOfBuying

Wehaveexaminedhow100soforganizationsbuyinordertodevelop
ablueprintforsellingtoprocurement.Thatisaguidetothemost
effectivewayofsellingtoprocurementbasedontheprocurement
styleoftheorganization.

AsthediagrambelowshowstheRoleFocusmatrixprovides
highlights4stylesofprocurementandstrategiesforsellers.

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ProcurementStyle1:

ObeyTheRules

(a)RecognizingAQuadrant1BuyingOrganization

AQuadrant1buyingorganizationisobsessedwiththefollowingrules.

Itisoldstyleprocurementthatofthestereotypicalgreyfaced
bureaucratorpaperpusher.TheRuleBookisparamounteither
becauseofprocurementorotherregulations.

Thedangersofabureaucraticapproachtobuyingincludeexcessive
administrationcosts,slowdecisionmakingandlimitedinnovationin
termsofprocurementandsupplychainmanagement.

Theorganizationislikelytoberiskadverse.Fearoflitigationisthe
primaryconcern,wherestayingoutofthecourts(andthe
newspapers)ismoreimportantthandeliveringcostandother
benefitstotheorganization.

Buyerswhoarehighlyregulatedarelesslikelytothinkstrategically
aboutprocurementchoicesandthelinkbetweenprocurementand
businessperformanceislikelytobeunderestimated.

Buyingisundercentralizedcontrol.Managershavelimiteddiscretion
andmust'tickalltheboxes'asregardstheproceduresandsignoffs.
Thereisnoroomforimpulsebuying.Thereishoweveradangerthat
thewrongpeoplearedoingthebuying.Falseeconomiesanddecision
makingmistakescanresultbecausedecisionsarenotmadebythose
whoare'closesttotheaction'.

Vendorapprovalsprocessesandframeworkagreementsareusedto
managethechoiceofsuppliers.Ideallyanorganizationinthis
quadrantwilluseaprocurementsystemtoautomatecomplianceand
providevisibilityandcontrolofprocurement.

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(b)SellingToAQuadrant1BuyingOrganization

InsellingtotheQuadrant1buyingorganizationthebestapproachis
to'obeytherules'.

SellingtoQuadrant1involvessellingtoprocurement,oratleastto
theprocesssetoutbyprocurement.Ittypicallyofferslittlescopefor
creativity,withtheprocessbeingdictatedbyprocedures.So,itisvital
thesellerunderstandwhatexactlytherulesare.

Dealingwithtoday'sconfidentandincontrolbuyerscanbea
humblingexperience.Itrequiresthatthesuccessfulsalespersonput
his,orheregointhebackpocketandtoholdhis/hertongue.

Relationshipsellingisgenerallysidelinedandtherearetypicallyrules
ofengagement,wherebyaccesstothedecisionmakersislikelytobe
limitedandattemptstoinfluencesellersarescorned.Thesales
approachshouldbeoneofprovidinginformation,ratherthansellinga
product.

Anobjectiveofthesalespersonshouldbetohelpthebuyertobuy
morestrategically,sharingbestpracticebuyingapproachesand
decisionmakingfactorsfromothercustomers.Thisincludes
encouragingthebuyertotailortheapproachaccordingtothe
categorybeingpurchasedandtoapplysomedegreeofcreatively
withintheirframeworks/therules.

Thecompetitivetenderissacrosanct,withsuppliersbeingkeptata
distanceandoftencomplainingthatbuyersarecoldandreserved.
Thiscanresultinaninsularapproachonethatdoesnottake
advantageofsupplierknowledge.Thereisadangerthatthereisnot
enoughengagementtoensuretheoptimalsolution.

Thesellingislikelytobemorepaperbased,withRFIsandRFPsthe
norm.So,fortheselleritisvitaltohavecriteriafordecidingifand
whentobid.Inparticular,theremaybesituationswherea'walkifyou
cannottalk'principleisappliedandaminimumlevelof

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engagement/commitmentrequiredfromthebuyerbeforea
tender/proposalissubmitted.

Sellingtotheseorganizationsrequiresthatthesellergetsinvolved
earlierinthebuyingprocess(beforethetenderisissued)andisseen
asanexpert,ratherthanasalesperson.

Thereisoftena'themandus'approach,withprocurementbeingseen
aspoliceman,orumpire.Thesavvysellerhoweverseekstoactasa
bridgebetweenprocurementandtheenduser/buyer.Theyaimto
findcommongroundbetweenthetwosidesthecommonground
uponwhichtheirsolutioncanbesold.

Sellersmustengagefullywithprocurementandfollowtheirruleswith
careandattention.Inadditiontheyshouldhelpthemanagerbuyer
engageeffectivelywithprocurementandmeettherequirements
(paperwork,etc.)ofgettingthepurchasesanctioned.

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ProcurementStyle2:

CoachingForCompliance

(a)RecognizingAQuadrant2BuyingOrganization

AQuadrant1buyingorganizationisobsessedwithfollowingtherules,
butprocurementseekstoensurecompliancebycoachingand
supportingthosewhoaremakingthedecisions.

Becauseprocurementdoesnotseektocontrol,buyingrestsinthe
handsofthosewhoareclosesttotheaction.Thatisbythebusiness
managersanduserswhoafterallknowtheirrequirementsbetter.
Procurementactsinafacilitatorandoversightroleandcross
functionalbuyingteamsarelikelytobethenorm.

Amixof'thecarrotandthestick'isappliedandtheRuleBookmaybe
subjecttointerpretation.Thereissomeflexibilityandautonomygiven
tomanagerswithregardtobuying.Thismaybebecausethereisan
environmentofhightrustanddelegateddecisionmaking,orsimply
becauseprocurementhaslimitedmanpower,systems,orpowerto
controlallspending.

Becausedecisionsarebeingmadebybusinessmanagers,ratherthan
professionalbuyersthereistheprospectofamoreflexibleorfitfor
purposeapproachthatrecognizestherequirementsofdifferent
categoriesofpurchases,aswellasthebroader/morestrategic
objectivesofthebuyer.However,ifprocurementfocusesoncoaching
forcompliancebetterstrategicbuyingmaynotnecessarilyresult.

(b)SellingToAQuadrant2BuyingOrganization

InsellingtotheQuadrant2buyingorganizationthebestapproachis
tohelpthebuyerto'getbetteratbuying'.

Sellingtoquadrant2typicallymeansamoreconsultativeorsolution
ledsale,withmoredirectcontactwiththebusinessbuyer,ratherthan
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theprocurementprofessional.Sothesalespersonislikelytobe
dealingwithabuyerwho:
Knowsmoreabouttheparticularpurchaseinquestiontheyare
closetotheenduserandtothebusinessneeds.
Ismorewillingtoengageinconsultationwithvendorsaround
definingneedsandidentifyingsolutions.
Mayhaveamorebalancedviewofprice,placingagreateron
nonpricerelatedvariablesintermsofdefiningrequirements

Thisengagementmeansthatthesellerhastheopportunityto
understandthebuyer'sneeds,shaperequirements,innovatearound
thesolutionprovided,etc.

Buyingislikelytotakeplaceincrossfunctionalbuyingteamsthisis
procurementswayofmakingsureabetterdecisionisgoingtobe
made.Forthesellerthatmeansaddressingtheneedsofmanagers
fromdifferentdepartments(fromoperationstofinance)maybe
required.ItalsomeansthatCClistsforanyoftheseller's
correspondencearegettinglonger.

Thebuyerhasadegreeoffreedom,butwilltheyuseit?Inquadrant2,
thebuyerislikelytobemorereceptivetonewideasandhasscopeto
bemoreinnovativegenerally.So,helpingthebuyertothink
strategically,sharingbestpracticebuyingapproachesandexperiences
fromothercustomersisimportant.Thisincludesencouragingthe
buyertotailortheapproachaccordingtothecategorybeing
purchasedandtoapplysomedegreeofcreatively(whilekeeping
withintheirframeworks/therules).

Inquadrant2,procurementwantstobehelpfultothemanagerbuyer
andthesalespersoncanassistinthisregardprovidingtheprofessional
buyerwithusefulinformationintheformorresearchreports,white
papers,etc.Thisservestoboosttheprocurementexecutives
confidencewhentalkingtothemoretechnical/knowledgeable
businessuser.

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ProcurementStyle3:

ControllingCosts

(a)RecognizingAQuadrant3BuyingOrganization

OrganizationsinQuadrant3areallaboutcontrolling,ormoretothe
pointcuttingcosts.Giventhepresentmarketenvironmentthereare
moreorganizationsinthisquadrantthananyother.

Withtoplinerevenuesflattening,organizationshaveturnedtocost
cuttinginordertoimprove/maintainthebottomline.Indeedthezeal
withwhichbuyershavetakentheredpentobudgetshasfrightened
sellers.Itisnotsurprisinghoweverasprocurementismeasured
(somewhatnarrowly)intermsofsavingsachieved.

Procurementiseverywatchful,evencontrollingandfreely'throwsits
weightaround'.Procurementwantstobeinvolved,oratleast
monitoringallbuyingdecisions.Anegativeofthisisahigher
administrativeburdenandslowerdecisionmaking.

Theseprocurementorganizationshavewrestlingspendingpowerfor
managers,raisingdiscretionaryspendthresholdsandimplementing
processesandproceduresthatmakeputspendingundertightcontrol.
Preapprovedvendorlistsandcataloguesaretheorderoftheday,
withEDIstylesystemsbeingusedtointeractwithsuppliersandcut
procurementcosts.

Negotiatingaharddealwithsuppliersisonlyapartoftheequation.
ProcurementteamsinQuadrant3organizationsmustfocuson
increasingspendundermanagement,preventingrenegadepurchases
anddrivingupcompliancelevelsgenerally.

Procurementinadditiontocuttingcoststhroughhardballing
suppliers,hasappliedavarietyofspendmanagementand
suppressiontechniques.Thesespendanalysisanddemand
management,supplierandSKUconcentration.Thereaftertheymust

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turntomanagingsupplierperformancetoensurethatthepromised
savingsarerealized.

Thisquadrantissimilartoquadrant1,butwithmoreattentionbeing
paidtoresults,typicallyintheformofsavingsachieved.Thereare
processandproceduresthatmustbefollowed,butthereisalsoa
targetsavingtobedeliveredupon.Itcanbeaheadlinefigurethatis
appliedsomewhatbrutallyacrosstheorganization.

Cuttingcostsisofcoursenottheonlywaytodriveperformance,but
organizationsinquadrant3tendtoobsessonit.Asaresultless
procurementislessstrategicinitsapproach.Thereisadangeroffalse
economies,wherethefocusisonlowestcosts,ratherthantotalcost,
ortotalvalue.Itcanresultinatransactionalapproach,ratherthan
deeprelationshipswithsuppliers.

Whiletheheadlinemessagearoundsavingsmaybeimpressive,
lookingbehindtheheadlinesisoftenrequired.Buyingisformalized
andstructured,withlimitedflexibilityandcreativity.Itcanbeshort
terminfocusandsomesavingsmaycostmoreinthelongrun.There
isoftenalackastrategicvisionintermsofthebroaderroleof
procurementindrivingtheorganization'slongtermcompetitiveness.

(b)SellingToAQuadrant3BuyingOrganization

InsellingtotheQuadrant3buyingorganizationthebestapproachis
tohelpthebuyerto'getbetteratbuying'.Whilebuyingislikelytobe
rigidandcontrolled,thefocusonsavingscancreateopportunitiesfor
sellerswhocandemonstratetheirimpactonthebuyer'sbottomline.

Quadrant3buyersoftenkeepsellersatadistanceandhavea
preferenceforcompetitivetendering.Sotoinfluencethe
requirementsthesellermustgetinvolvedearlierthatisbeforethe
RFPisissued.

Thesellermusttakecaretofollowprocurement'srulesandtoput
buyingprocessbeforesalesprocess.Sellersneedtoexpectmore
bureaucracy,morepaperworkandlessspeed.Theymustbeprepared
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forthebuyertonegotiatehardonpriceotherwisetheyriskbeing
'beatenupbythebuyer'.

Inmanywaysquadrant3sellingislikesellingtotheCFO,thenumbers
andthebusinesscaseareparamountThispresentsopportunitiesas
wellaschallengesfortheseller.

Buyersinthisquadrantareoftennarrowlyfocusedoncostreduction,
totheexclusionofotherbenefits/results.Thatmeanssellersmusttry
hardtocommunicatetheirvalueto,orthevalueofalongterm
relationship.

Thesellershoulddirectlyaddresstheissueofprice.He,orshemust
seektobroadenthefocusfromlowestpricetomosteconomically
advantageoustender.Helpingthebuyertocalculatethetotalcostof
ownershipandtotallifecyclecostsiskey.

Lowestpricecanbearusethatissomethingthateventhemost
priceconsciousbuyerknows.Sellersinthisquadrantmustseekdraw
thebuyer'sattentionfrompricetothelargerissuesofthebusiness
caseandtherealizationofbenefits.

Ratherthanfearingthecostcuttingbuyer,thesellershouldseekto
makehimorheranallybyexploringthewiderarrayofstrategiesthe
buyercanpursuetoachievehisgoals.

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ProcurementStyle4:

CoachingForResults

(a)RecognizingAQuadrant3BuyingOrganization

OrganizationsinQuadrant4seebestpracticeprocurementasa
meansofdrivingsuperiorbusinessperformance.Itisnotjustabout
shorttermsavings,butasustainablecompetitiveadvantagethat
derivesfromanallinclusiveapproachthatincludes:
Optimizingthesupplychain
Supplierledinnovation
Managingriskinallitsforms
Supplierrelationshipmanagement.

Thereisastrategicapproach,whichseesprocurementasabusiness
driverandakeysourceofcompetitiveadvantage.Thatisaviewof
performance'intheround',includingitsroleinsupplychain
innovation,supplierperformance,riskmanagement,etc.

Procurementisseenasabusinesswidecompetence.Theobjectiveis
toembedgoodbuyingthroughouttheorganizationmeaningthat
peoplewouldbuycarefully,evenifprocurementwasnotwatching.

Theobjectiveisnotforprocurementtomakethedecisionitself,but
tocoachotherstoarriveatthebestdecision.Procurementisa
partnernotadictatoranditsmissionistocollaborateandaddvalue.

Managersareempoweredtoleveragebestpracticeinrespectof
procurementandsupplychainmanagementtodrivetheperformance
fortheirbusinessunits,departmentsandteams.Procurement
providesthemwiththesupport,theframeworks,thetoolsandthe
informationtomakebetterbuyingdecisions.

Itcouldbedescribedasthemoreenlightenedapproachto
procurement.Itseesprocurementasameanstoanend.Thatmeans
'fitforpurposebuying',whichrecognizestheuniquerequirementsof
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differentcategoriesofpurchase(categorymanagement)andbest
matchestheprocessandthedecisionmakertotheparticularbuying
decision.

Thisapproachistypicallyfoundinmorehorizontalorganizations,with
ahitrust&hiperformanceculture.Procurementisthecollaborator
andpartner,althoughthereistypicallyastrongelementofoversight
inwhatcanbedescribedasaapproachthatissimultaneouslyloose
andtight.

(b)SellingToAQuadrant4BuyingOrganization

InsellingtotheQuadrant4buyingorganizationthebestapproachis
tohelpthebuyerto'achieveresults'.Sellersmustshowthattheyare
capableofandcommittedtohelpingthebuyerachievehisorher
goals.

Inmanywaysquadrant4sellingislikesellingtotheCEO,the
discussionisfocusedmuchmoreonresultsandinparticularbusiness
performance.

Themoreflexibleandinnovativeapproachtoprocurementis
somethingthatthesellercantakeadvantage.Thereisoftenabest
practicemindset,including;theuseofcrossfunctionalbuyingteams,
spendanalysis,categorymanagementandsoon.Thesellerneedsto
addresstheimplicationsofeachoftheseforhis/hersalesapproach.

Thecoaching/collaborativeapproachoftenextendstosupplier
developmentandagenuinepartnershipapproachaimedatachieving
arealwinwin.Thatmeanstheorganizationisgenerallyopentonew
ideasfromsuppliers,moreopeninsharinginformationandsoon.

Sellermustworkpatientlytobuildtrustandshowalongterm
commitmenttothebuyer'ssuccess.Theideaistobecomeastrategic
partner,notjustanothersupplier.Thatmeanscomingtothebuyer
withnewideasandinnovations.

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Thesellersobjectiveistohelpthebuyerarriveatthebestdecision.
Thatincludes:
Understandingandconnectingwithwhatthebuyerwantto
achieve,hisorherkeystrategiesandmetrics.
Sharingthesuccessstoriesofothercustomers.
Helpingthebuyertomodeltheresultexpectedandtobuilda
compellingandyetrealisticbusinesscase.
Ensuringasolidbusinessdecisionforthepurchasethat
includes;costsbenefits,risk,strategicfit,complianceand
politics.

AfterthesalethefocusforthesellerinQuadrant4turnstodelivering
uponwhatwaspromised.Thatmeansmeasuringandcommunicating
theresultsachievedforthecustomer.Italsoincludesidentifyingways
inwhichthepromisedbenefitscanberealizedandindeedexceeded.

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TheScienceBehindThisPaper

Theseinsightsandtoolsarebasedon:

1. BuyerResearchourgroundbreakingresearchintohowmodern
buyingdecisionsaremadeandtheimplicationsforsellers.

2. BestPracticeResearchOver1millionpagesofbestpractice
salescasestudies,booksandresearch.

3. CommonPracticeResearchOurpeercomparisonbenchmarkof
1,000sofyourcompetitorsandpeers.

TheSalesEngineandSellerNavaretrademarksofTheASGGroup.
TheentirecontentsofthisdocumentarecopyrightofTheASGGroupandcannotbe
reproducedinanyformatwithoutwrittenpermission.

Wanthelpintacklingyoursaleschallenges?Contact
enquiries@theASGgroup.com

www.theASGgroup.com

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