Tag Archives: supplier relationships

Tough Talk: How To Deliver Bad News In A Good News Way

If you haven’t already delivered bad news to a supplier, you’ll likely have to soon. Here’s how you should do it.


Economically, this year is officially the worst year since the Great Depression. And while we, as procurement professionals, have largely been shielded from the worst of it owing to our critical importance to organisations, many others have not been so lucky. Many businesses, too. And unfortunately, some of those businesses include our suppliers. Even worse, sometimes it may be us that has to deliver some bad news to them. 

Psychologically, humans find it very difficult to deliver bad news. Procurement professionals would agree with this finding: telling a supplier, especially one that you’ve cultivated a valuable strategic relationship with, that something drastic is going to change can be nerve-racking at least, terrifying at most. But can you deliver bad news in a good way? You can, and here’s how. 

What kind of news might you have to deliver at the moment? 

So much is changing in the economy and our supply chain relationships at the moment, that there’s literally hundreds of different types of bad news that you might have to dish out to your supplier. But for most companies, bad news will fall in a number of categories. 

Firstly, you may need to tell your supplier that you have to reduce your volume. On the surface, they may see this as unfair, especially if they know that your overall output hasn’t changed much. But what they may not understand is that in the current risk environment, you can no longer be reliant on them and need to diversify. Similarly, you may not be able to use your supplier at all due to a whole host of risk-based reasons. 

Secondly, for just about all of us, COVID has meant that we’ll have to amp up our compliance. What this will mean for your supplier, and they certainly may not like it, is that you now need more documentation from them and more authentication of their sources. 

Thirdly, you may need to adjust payment terms. In an ideal world, especially if you work with small businesses, this adjustment may mean that you’re paying earlier. But for many reasons, this may not always be an option due to cash constraints. A conversation about longer payment terms is always challenging. 

Finally, COVID has forced many of us to change our requirements. Whether this be a changing product or input spec, whatever these changes are, it will most likely affect your supplier’s business, so may be a difficult conversation. 

How should you deliver this bad news? 

Businesses all over the world are struggling right now, especially many small businesses. So what may have been a difficult conversation last year, may now mean the difference between hanging on and financial ruin for your supplier. For this reason, you need to approach all conversations with suppliers delicately. When you do, make sure you employ all of the following: 

  1. Listen – before you speak 

Usually in organisation-supplier relationships, procurement professionals are used to having the ‘upper hand’ – so to speak. Essentially, we are effectively the ‘client’ of our suppliers, and we expect a level of professionalism and respect as a result. Interestingly, in relationships where the power lies more with one party (even if we may not act like it), the individual that holds the power usually does more of the talking.

Yet given the precarious economic situation, now might be the time to do less of the talking, and more of the listening. Even if you do have to give bad news to your supplier, it pays to first listen to how they have been going, and what, if anything, you might be able to do to cushion the blow of the bad news you’re about to deliver. 

  1. Have empathy – not sympathy 

In situations like these, it’s tempting to want to show sympathy to suppliers, especially if they’re struggling. But research shows that sympathy is often misguided, and empathy is better. But what’s the difference? 

Sympathy is when you feel bad for someone, and pity them on account. For example, showing sympathy to your supplier when they tell you that they may be going into administration would be to say ‘That’s awful – I understand how you feel.’ This statement could be a little frustrating to them, as in your position, you don’t actually understand how they feel. 

Empathy in these situations is always a better response. Empathy is when you take the time to listen to someone and understand what emotions they are feeling, but you acknowledge that you don’t necessarily feel their emotions. For example, an empathetic response might be: ‘I’m so sorry to hear that. I couldn’t possibly understand what you’re going through.’ 

  1. Be upfront – but also see if you can give, a little 

When it comes to delivering bad news, it’s best to simply be honest and upfront about what it is that you need. Prolonging delivering the bad news drags it out and will most likely make your supplier frustrated and nervous for the future. 

But after you’ve delivered your news, don’t just leave it there. See if there is anything you can do for your supplier, and then genuinely try and do it. This may include negotiating a slightly longer contract, flexing payment terms, or referring them elsewhere. Little things help and in this economy, those little things could be everything. 

Have you had to deliver any bad news to your supplier? How have you done it? Let us know in the comments below. 

Beyoncé And Supply Chain Diversity

Are our supply chains tunnel-visioned, or do they support a diverse range of ethnic minorities, women, military veterans, people with disability, or ex-offenders trying to build a new life?


A few months ago, Beyoncé dropped a surprise new single. Hang on, what’s that got to do with Procurement with Purpose (PwP), I hear you say?

Well, apart from the fact the sing is really rather good, Black Parade is linked to her wider initiatives around charitable work (through her BeyGood initiative), black empowerment and consciousness. Revenue from the track is being used to benefit BeyGood’s Black Business Impact Fund – administered by the National Urban League – to support black-owned small businesses in need.

She has also launched a directory of black-owned businesses ranging from art & design, restaurants, beauty products, lifestyle, wellness, bookstores and more. It’s a fairly basic site, and pretty much all the firms listed there appear to be B2C (consumer focused) rather than B2B. But her move may raise more questions about how organisations approach their corporate buying, in particular when it comes to minority-owned businesses that could be used as suppliers. Recent events and the Black Lives Matter movement have made many of us think about racism and bias in our lives, and that applies in the supply chain as much as it does anywhere. So, that takes us back to procurement with purpose.

Diversity (broadly speaking now) in the supply chain is actually one of the most fascinating topics within the whole PwP world. For a start, there are any different types of diversity. Should you buy more from firms owned by people from black and other ethnic groups? What about female-owned businesses? Or those owned by folks with disabilities or health issues – or maybe those firms that employ such people? What about firms that are owned by support military veterans, or ex-offenders trying to build a new life?

Or maybe it’s not the ownership that matters. What about SMEs (smaller firms)?  Some would suggest that those businesses drive successful economies and by supporting them at an early stage, buyers can capture innovation and also promote wider social and economic benefits. Others, particularly in the public sector, look to support local business, on the grounds that this will keep the money flowing in the local economy rather than being sucked up to some distant head office.

All these options mean it can be hard to know where to start. But in many countries, it is clear that minority-owned businesses in particular do have a tough time as they have to overcome all the usual hurdles faced by start-ups anywhere, plus they face the bias (conscious or unconscious) that does exist.

We’re  not going to solve that problem in one article today,  but as well as highlighting that this may develop into a high-profile issue, a few suggestions for now.

·         Firstly, take a look at how easy it is for any new or small firm to become a supplier to you. How can they put themselves forward? Are your supplier qualification and selection processes designed for huge firms, rather than start-ups? Do you put accidental barriers in the way, demanding onerous contract terms, expensive insurance and so on? Too many large firms are virtually impossible to break into, which is not good for the agility and dynamism of their supply base, never mind the difficulty for minority-owned suppliers.

·         Secondly, if you haven’t looked at these issues, seek out organisations that can help you work out an approach. MSDUK has done good work in the UK to promote minority owned businesses, WEConnect International does the same with female owned enterprises, and there are others covering different groups and issues and across different countries.  The good news is that large organisations don’t have to move very much of their spend into supporting these causes to really make a difference.

·         Thirdly, there are some good case studies around. Accenture has been one of the leaders in this area with their supplier inclusion and diversity programme, and there are others who have made strides in this field.

·         And finally, how about Beyoncé for US Vice-President?

This article was originally published by Procurement With Purpose on 20 June 2020 and is republished here with permission.

5 Ways to Thank a Supplier this Holiday Season

Gifts are fairly common this time of year. But are you doing anything to recognise and thank your suppliers for their hard work this year?

thank you
Photo from Gratisography on Pexels

Let the gift basket parade begin!

It is the holiday season. The cheese trays, cards, fruit towers, yeti coffee cups pour in from suppliers at this time of year. Savvy sales teams and account managers might even take the time to hand write a card thanking you for the business relationship and surprise you with a very thoughtful gift. 

Of course, these gifts are then shared, according to the policies and practices of ethical receipt of gifts, around the office, increasing the festive mood for everyone. 

As in any great, or even good, relationship, the gifts are exchanged – both ways.  Therefore, I am perplexed by the one-way exchange of gifts between suppliers and their customers.  Maybe that is because traditionally the gift from the customer was their business? 

However, what if we changed that this year and offered the gift of recognition and appreciation to our high performing and high potential suppliers?  Just like anyone else, a simple gift of appreciation motivates, builds trust, and breaks down barriers in the relationship. 

Here are 5 simple ways to do just that.

1. Write a thank you note

What if each year in October you performed a quick review of suppliers, noting the ones who performed exceptionally well this year?  Then, the category teams would acquire some thank you cards and write notes of gratitude to those suppliers. 

This simple act would be something that the suppliers would find as extraordinary. And therefore, would be motivated to give their best to you in the new year. 

2. Ask them how you could help them and then do it

Great suppliers love to help you. Often sharing expertise, insights into the marketplace, and solutions to complex business problems. 

At the same time, suppliers could also benefit from the same from their clients.  What if we asked our high performing and high potential suppliers how we can help them?  First of all, the supplier will not be accustomed to this. 

Once they realise the sincerity of the question and the help is received, there will be a bond formed with that supplier, open lines of honest communication are achieved, and more innovative solutions offered. 

3. Pay on time

Seems simple enough, right? (This made me laugh.) 

After working on these processes for most of my career within Procurement, this is a constant struggle for most. Then, you layer in some of the cash flow practices around the end of the year that some do, and the late payments escalate. 

How impressive would it be if, for your best suppliers, there was a proactive review of the accounts every autumn to ensure the accounts were paid up current by the end of the year. Wow! 

Not only would that make the suppliers extremely happy, but it would get Procurement and Accounts Payable resources out of the woods on those accounts for a while heading into the new year.

4. Facilitate an introduction

Suppliers always want to meet people who you know. These people could be within your company, or external within your networks.  Facilitating the introduction would be a great way to recognise a job well done. 

It shows you trust the supplier to perform well and that you are willing to share the success with others.

5. Give them a social media shout out

Of course, you will have to check on your internal policies on this one, but there is a large trend on social media platforms like LinkedIn to recognise suppliers for outstanding performance. 

This trend creates a perfect win-win scenario – often showing off some project that the buy side organisation is implementing, the supplier who helped them achieve success, and how they partnered together to get it done.  Sometimes these are large achievements, and sometimes they are small day to day ones like providing outstanding safety to employees. 

Suppliers love this type of shout out, as it gives them instant access to your network of contacts and a vote of confidence from you at the same time.

As Procurement organisations are looking to add value well beyond cost, your ability to create trusted, value adding, innovative relationships with your suppliers takes centre stage. Often big changes like the shift Procurement is going through, start with simple steps forward. 

So, this holiday season, let’s be grateful to those suppliers who achieved excellence this year by saying thank you. 

3 Mistakes That Will Destroy Trust Between Procurement And Suppliers

As you’ll  know from your personal life, the most loyal friendships are earned through  experiences, challenges, and good times. So why should be any different with your suppliers?

If you have a vendor who constantly demonstrates great performance and continues to deliver and deliver and deliver…reward them! Give them extra projects or new developments and more business. Don’t continue to pressure them and penalise them, because this relationship might erode over time. Perhaps it could still functional and transactions will happen, but the relationship will be affected as a result.

Here I have collected three typical mistakes that will destroy trust between a procurement organisation and its suppliers.

1. Empty Threats

“Be constructive in your arguments and honest in your feedback…”

This was one of the first lessons I learned from a mentor when I asked about contract negotiations. It’s simple but powerful and it genuinely creates trust.

If you are bluffing –a professional partner will recognise it. And you want to work with professionals, right?

Walk the talk. If you’re claiming that a supplier is offering a better price – be able to prove it.

Making empty threats is either the result of a lack of preparation  or a lack of any decent arguments full stop.

Remember that trust is the base for a good partnership. And fake promises can easily destroy trust.

2.  Continue negotiations after contracts are signed

I have to confess that I’ve done this many times in my procurement career so I understand how harmful it can be.

There is an unwritten rule for sales people that states you should stop selling after the client has agreed to a deal.

The very same  rule should be applied to procurement professionals. We should have the ambition to reach the best deal within our budget and time limits, we should consider risks and potential threats but all of this should happen before we agree the final contract. After the two parties agree prices, terms and conditions of contract, everyone should concentrate on execution.

Normally we set certain deadlines for the supplier selection process and close to these deadlines we can become more and more stressed, losing focus and failing to mention  important details or opportunities. As a result we often finalise the agreement not because we are sure that this is the best deal, but because we are short of time.  And then, after the documents are signed, we attempt to save costs further with the vendor.

Procurement professionals must act professionally in such situations. Simply opening up new negotiations with the vendor will destroy trust, sending the signal that the agreement means nothing to you and that you’ll happily switch to a better alternative whenever you get the chance. As a result, they will also de-prioritise you as a customer and not invest the time and efforts into developing your products.

If you see an opportunity to decrease prices after the contract is signed,  be open and transparent to your vendor. Explain your reasons set the arena for a new discussion and listen carefully. With any luck you can find a solution that suits you both.

3.  Focusing only on price reductions

I like to explore competition in Procurement! Preparing a good RFQ/RFP process and making suppliers fight for your business is great isn’t it?

Doing this process a number of times within the same product group will definitely lead you to a dead end. You’ll reach a threshold where quotation will not bring more savings.  It’s a frustrating moment when there is no more low hanging fruit, no more chances to cut the prices by reverse auction or bidding processes. So now what?

In most cases the extra revenue can be gained in more ways than simply cutting your suppliers’ margin or increasing purchase volumes.

Look into the business relationship, the supply stream and the infrastructure of the business and investigate where we can save costs and do things better, faster and smarter. More often than not, if we really find this momentum and use it to reduce costs, we will get bigger volumes into this business. New projects will come and more development will happen if the relationship is strong and there is trust. This will also result in more revenue coming to both sides – it’s a win-win.

Have You Aligned Your SIM & CLM Systems?

Procurement teams with mature SIM and CLM systems can extract greater value from supplier relationships. How can the two be brought into better alignment?

This article was written by Kelly Barner for Determine

Procurement is so accustomed to aligning our technology and processes with the objectives of the business at large that we sometimes miss opportunities to align our own technologies and processes with each other.

Supplier Information Management (SIM) and Contract Lifecycle Management (CLM) provide a perfect case example. Both bring together suppliers and internal touch points, extend beyond procurement’s peak involvement in managing spend categories, and play an important role in addressing (and mitigating) supply chain risk.

Procurement teams that have mature SIM and CLM programs in place reduce their risk, but they also create opportunities to extract greater value from each supplier relationship and reduce confusion within the enterprise.

When we stop and think about how SIM and CLM can be brought into better alignment, three critical shared issues come into focus: information integrity, ownership and actionability.

  1. Information Integrity Through Integration

Information is such an important component of SIM it is included in the name, whereas with CLM the devil is always in the details. An incorrect piece of information in a contract can easily become a legal liability. Both start with essential supplier contact information and metadata and extend to the details associated with supplier onboarding and contract terms. Although the following information is collected for separate reasons, it is critical that it be consistent across SIM and CLM:

Supplier Onboarding

 When a new supplier is on-boarded post award, a standard set of information is usually collected. This includes their contact information, location details, proof of certification, and details regarding the users who will represent the supplier in company systems during the term of the agreement. Making sure as quickly as possible that this information is complete and accurate lays the groundwork for an equally smooth implementation and on-going relationship. Beyond simple collection and centralisation, procurement must also validate supplier information at the time of onboarding – paying particular attention to documentation associated with certifications that were included in the award decision.

Contract Initiation

When creating a new contract, it is natural for procurement to focus on product/service specifications, prices, terms and SLAs, but capturing other more straightforward information is just as important. For instance, specifying a production location might seem like a minor detail — until the supplier makes the decision to outsource their production to another facility, or even another country. Having specified the location in the contract may not prevent the change from being made, but it does create an opening for discussion of the associated quality and oversight expectations. As contracts become an increasingly dynamic part of supplier management, more details need to be incorporated.

  1. Ownership

Since managing risk and increasing performance are at the heart of both SIM and CLM, establishing ownership early on is critical. Who will manage the relationship and who will be the documented owner of the contract? Should it be the same person? Why or why not? Alignment of goals can not be achieved if the individuals associated with each responsibility are not also aligned.

Supplier Relationship Management

Any supplier may have multiple relationships in an enterprise. Procurement is certainly a point of contact, but so are the budget owner and any functions that have a high volume of demand associated with that supplier. Many people may have contact with a supplier in the course of daily business, but information about performance reviews and contract updates should be managed in an organised fashion so that the supplier is kept informed and no one speaks out of turn.

Contract Ownership

 In addition to including a complete set of terms and signatures, each contract needs an owner from the outset. While captured as a simple name field in many CLM systems, a lot of consideration must be given when deciding who will own each contract. The primary value proposition of CLM is that it allows contracts (and the business deliverables they govern) to “leave the filing cabinet” in order to have a measurable impact on the business. Empowered by automated CLM notifications, someone in the enterprise needs to take action based on the information provided; and having an appropriate designated owner from the start provides accountability and ensures a prompt response.

  1. Alignment Actionability

Putting SIM and CLM in place is not about static documentation or information centralisation, but rather the actions each motivates. Unlike information integrity, where consistency is key to alignment, actionability requires each of these systems to “feed” information to each other. There are supplier performance considerations in both systems, and while they are different, it is in their combination that the best result is achieved.

Supplier Performance

SIM systems often include supplier performance details submitted by procurement, as well as the other individuals in the enterprise who come into contact with the supplier’s products or services. In some cases, determinations of performance will be based on buyer perceptions and expectations. This information should be recorded and communicated to suppliers on a regular basis.

Contract Compliance

When viewed through the lens of a contract, supplier performance is about following the “letter of the law.” Just as suppliers can have performance issues that do not rise to the level of legal non-compliance, a supplier can be in perfect standing based on the requirements of the contract and still not meet the expectations of the company. If performance measurement and contract terms are not both aligned and visible, it will be hard for procurement to know the difference and lead the appropriate response.

The full benefits of SIM and CLM alignment are realised over the term of the agreement, as long as 3-5 years in some cases. The sooner the enterprise can achieve alignment in terms of information integrity, ownership and actionability, the shorter the timeframe to evaluate and lower the overall risk.

This article was orginally pubished on Determine. 

Social Currency In Procurement: Do You Know Enough To Be Dangerous?

In recognition of how central social currency is, procurement pros are using their social networks to build, influence, and deliver results. The question is: do you know enough to be dangerous?

Connectivity is central to how we live and work in 2017. When something exciting or unexpected happens, many people immediately share the news, and a picture, on social-media. We read the updates shared by others and offer up our own. We like a post or status update to indicate support or show we are ‘in the know’ and watching important influencers. This constant sharing and consumption of information has become a global phenomenon.

Over time, these exchanges add up to a wealth of knowledge and connections that improve our decisions and elevate the weight given to our preferences – much like the exchange of ‘social currency.’

Social currency in procurement

A similar trend has begun in procurement and supply chain – perhaps in recognition of how central social currency is to us on an individual level. Procurement professionals have talked about supply intelligence for a long time, but now they are increasingly aware of how important their own social networks are to their ability to build, influence, and deliver results.

Professional social currency includes, for example, the recommendations, endorsements and likes that we assign as we go about our business online.  When combined, they create a level of trust, and contribute to organisational reputations of both buy and sell side organisations. When buyers trust that a supplier will be able meet their business needs, or when a supplier trusts that a customer is a good fit for their capabilities in both demand and culture, transaction costs are decreased and the total value potential increases.

The fact that both sales and procurement are investing in their social currency creates a unique opportunity for them to come together and leverage their collective knowledge for the benefit of both organisations.

Being Reactive Vs Pro-active

One of the strengths of social media is its timeliness. Trust is not just about the source or location where information is stored. The more real time information is, the more confidence it gives to decision makers. Having real-time access to information allows procurement to meet the businesses’ needs faster. Timeliness is also at the top of the stakeholders’ priority list when deciding whether or not to engage procurement. When procurement can provide information proactively in real time, identifying which suppliers stakeholders should look at or having the pulse of specific industries, it goes a long way towards demonstrating their value – and adding to social currency.

Having instant access to trusted information alters the range of project options available to a procurement professional. They are no longer in the position of having to be reactive, where the business comes to procurement and says, “We have these new suppliers that we would like to engage – NOW” forcing procurement to scramble, trying to vet them. When procurement has access to real time information, they can readily identify potential suppliers and quickly access industry peer endorsements on those suppliers.

Do you know enough to be dangerous?

Procurement professionals need to know enough to be ‘dangerous’. They should have a foundational understanding of the category or commodity they are supporting, and be able to translate business needs into procurement best practices. This way when they get a seat at the table with stakeholders, they are able to engage in intelligent discussions around what stakeholders are trying to do and what is happening in the industry. Having access to intelligence allows procurement to be the engine driving category or commodity strategy to achieve sustainable value for an organisation.

Today, people call or email each other for supplier recommendations. This manual way of accessing trusted “social currency” is not scalable or visible to the rest of the organisation. The procurement technology user experience has come a long way. With collaborative or social technologies, the data becomes smarter and benefits everyone today and in the future.

The concept of trusted data is not new… the same instant knowledge that allows people to prioritise news shared by their circle of friends or pick a restaurant that has been highly recommended by people with similar preferences… today, decisions are made faster and the outcome is often more successful as a result of social currency.

The insights in this article comprise one of the main takeaways of a supplier intelligence-focused Executive Roundtable Series hosted by tealbook which brought together over 40 forward-thinking procurement leaders from across the country.

What’s The Catch-22 In Procurement Technology?

From here to eternity: what does the future of procurement technology  look like? Download Wax Digital’s Procurement 2020 report here

Procurement technology has undergone a long road of change that has consequently altered procurement functions, processes and the very nature of the business itself. But while we spend much of the time understanding how technology is governing what we do today, it’s how technology is shaping the procurement role in the future that should be our focus.

There is a widespread belief that procurement ‘intelligence’ could significantly change the goalposts for the profession, and go beyond informing and processing data, to predicting, learning and deciding.

Procurement technology’s Catch 22

With analytics and intelligence comes a dilemma. Do you outline the questions you need to answer before you perform analysis, or use the data to work out the answers to ‘what you didn’t know, you didn’t know’? It’s a catch 22 scenario.

Thanks to big data and artificial intelligence (AI), this dilemma is becoming easier to manage. A procurement system using intelligence exhibited by machines can learn from users’ mouse clicks, purchases, and line of information to make its own choices, rather than requiring approval from users.

That doesn’t necessarily mean that procurement skills and knowledge will become any less sought-after. But those in demand are likely to change, perhaps even for the better, if cognitive technologies allow experts to think, consult and use their human skills more wisely.

Our panel’s three key intelligence priorities were:

  1. Anticipating supply and demand decisions

    The power of big data enables procurement systems to foresee the needs of the business, such as anticipating demand based on historical spending or seasonal demands. And the data that systems are based on will only expand as new internal and external dimensions are added to the mix, such as social media and newsfeeds, assessing demand more accurately. Intelligent systems may then begin to question human decisions, such as the validity and need for supplier orders and assessing the risk and ongoing performance of suppliers. Supercomputer IBM Watson’s ability to answer questions shows AI’s and sophisticated analytical software’s ability to surpass a human’s ability to answer high-functioning questions, and to work as an instructor to human processes.

  1. Uber-personalisation

    From marketing to IT, departments across the organisation use purchasing systems, meaning that there are different roles and backgrounds to accommodate. Through machine learning, procurement could lead the way in uber-personalisation, in which its systems are integrated with others such as ERP and CRM to determine and define each users’ preferences and needs.

  1. Intelligent supply relationships

With the introduction of AI comes a potential new landscape of supplier management, as eTendering, eSourcing and contract management have the potential to become more automated. This could see systems monitoring supplier behaviours and performance based on buyer feedback, or keeping a close check on adherence to contract terms; and possibly even interpreting eAuction behaviours and leading negotiations to make sourcing decisions on the procurement professional’s behalf. 

Even with vast use of intelligence, the procurement department will still require human involvement. While intelligence can be used to purchase everyday office products such as paper, strategic projects like building a new office will require procurement’s involvement in business planning and meetings, meaning that procurement professionals should strengthen their strategic skills in this area to ensure that they’re indispensable. But a new type of ‘colleague’, which is highly efficient and has extreme attention to detail, could well be on the way. Combining intelligence with vital people skills is how you can make procurement a strong and effective force in the business.

Learn more in Wax Digital’s Procurement 2020 report, a set of future gazing in-depth interviews with global senior procurement professionals and experts.  Integration of procurement technology in the wider business was the first topic. 

Real Relationships Really Matter

It doesn’t matter what technology your organisation adopts, or what digital transformation you endure; procurement relationships will always be essential for success. 

At the Big Ideas Summit 2017, we once again challenged our thought leaders to share their Big Ideas for the future of procurement. Chris Cliffe discussed why relationships really matter.

The world around us is changing. You can’t turn anywhere these days without hearing the phrase ‘Digital Transformation’. Everyone’s writing about technology and the race to automate and use augmented intelligence in business.  IBM’s ‘Watson’ is soon expected to be in regular use within procurement teams across the globe. But, the reality is that the vast majority of organisations, be they Private, Public or Not-for-Profit Sectors, are only at the start of this adventure.

Of course, it is crucial that our organisations do focus on adopting technology. The role of the CIO, for example, is at least equally important to that of the CPO. Yet the technology focus cannot be at the expense of the human focus.

Relationships really matter.

In fact, in the next decade or so, relationships will increasingly be the differentiator as ‘process’ and ‘transactions’ become automated and ‘value adding’ activities become the sole human focus.

Buyer Supplier Relationships

It might seem an obvious place to start but buyer supplier relationships are so often overlooked.  I think we can, in the main, agree that a ‘tender’ process in itself delivers zero value. Value for Money can only be obtained from good performance of the resulting contract. If we put ‘procurement’ theory to one side for a moment and look at ITIL Service Management, it clearly states that “good people can make a bad contract work, equally, bad people can make a great contract fail”.

Having the right relationships, between the right people, on both sides of a contract is how you get best value. Investing time and effort into building, nurturing and maintaining good relationships between buyer and supplier teams will facilitate far more value from contracts. It doesn’t pay to   let and forget!

Let’s assume a big problem happened last week.

Scenario 1: You call your account manager to complain, having not spoken to them in months, because ‘someone’ messed up.

Scenario 2: You call your account manager that you spoke to recently. You know they’ve just returned from their first family holiday in five years. They’ve had an awful couple of years for various personal reasons and, in fact, they’d even booked a restaurant you recommended. Whilst they were away, a junior member of their team was covering and they may have dropped the ball.

In both scenarios, the same issue has arisen and it needs fixing.  But I suspect the majority of us will approach those two calls differently and outcomes from these calls may also be different. Think about whether you could start both calls with the phrase, “How can I help you fix this problem?”

Stakeholders

Stakeholders: An increasingly over used, catch-all term to dehumanise people who we go to work with day in, day out. Investing time and effort into establishing relationships with the key individuals within our businesses will pay you back in spades. Ask questions. Be interested. Get under the skin of the challenges your colleagues face. Don’t be constrained by the perception of silo’s.

We must always remember why we do what we do. The purpose of Procurement is not to further the cause of procurement. Of course, a very happy side effect of an effective, modern, highly engaged and enabling procurement team is that the reputation of the profession will increase to everyone’s benefit, but that cannot be the motivation. The role of Procurement is simple. It exists to facilitate and enable the organisation(s) it supports in achieving its vision, mission and goals.

In human terms, we are there to help our colleagues enjoy work through enabling their success and in achieving their objectives. This is a differentiator between good and bad procurement in my mind. Establishing relationships with stakeholders based on a genuine interest in understanding their challenges and seeking to support them overcome obstacles proactively, will lead to game-changing relationships rather than relationships based on reactively promoting procurement process, policy and procedures.

Career Development and Credibility

Relationships really matter for professional development, career development and credibility. Take a look at the Deloitte CPO Survey 2017, or any recent recruitment agency survey. There will always be analysis pointing out how the procurement profession is dogged by a lack of soft skills and how there’s a real talent shortage with regards to interpersonal capabilities. I believe we all need to take  responsibility for learning and development; it is up to individuals to own the preparation for longer term career aspirations.

Relationships really matter with those in your network. The aim isn’t to collect as many LinkedIn connections as you can, but it is to connect to as many people as you can. Connect in this sense means to talk, ask, listen, learn, impart knowledge and most importantly follow up on conversations. Being market aware and having your finger on the pulse is an incredibly important part of being a credible professional in terms of managing contracts and suppliers and with developing productive relationships with colleagues.

Investing time and effort into building, nurturing and maintaining productive relationships really matters.

Negotiation, Trump-Style – The Winner Takes It All

Negotiation with suppliers can be done using hardball tactics, so long as there is no genuine need for an ongoing relationship.

In the New Yorker last year, Tony Schwartz, the ghostwriter for Donald J Trump’s The Art of the Deal said:

‘He lied strategically’.

‘I put lipstick on a pig’.

Rather than inviting more in-fighting than a Taiwanese parliament, let’s focus on the negotiation trap inherent in Trump’s behaviour.

Whether you’re for or against him, Trump’s negotiation tactics are more obvious than a bogey hanging out of your left nostril on a video conference call. Let’s look at his top five tactics:

  1. Huge ambit opening positions – if he wants $2.50, he asks for $1 Billion.
  2.  Flattery – ‘You’re a good guy, a great guy, the best’!
  3.  Bluster – ‘This is going to happen my way, it always does … believe me’.
  4.  Anger (feigned or real) – ‘This deal is so bad, so wrong, you’re making me really mad’.
  5.  Insult and intimidation  – ‘You’re a loser, you’re crooked, you are going down big time’.

These tactics may or may not have worked, but it’s fair to say that at best, they are transactional.

The Winner Takes It All

A deal can be done using these tactics as long as there is no genuine need for an ongoing relationship. The winner takes it all, the loser’s standing small. (Sorry, too much ABBA in adolescence).

Interestingly, a lot of people have asked me if I think Trump’s tactics could be useful for them.

My short response is ‘If you plan on renewing that client, want referrals or would like to be treated as a trusted adviser for a while, then probably not’.

However, when I ask them if they’ve been subjected to these, and other, tactics from clients including senior managers and Procurement, most say ‘All the bloody time’.

Many sales managers and sales people are aware of these tactics being used against them, yet are so keen to get the deal that they succumb, subjecting their company to poor margins, ridiculous stress to meet deliverables and a culture of subservience.

How to address the key tactics in Trump’s playlist

  • Huge ambit opening positions: Plan your own positions, especially your walk away. Politely refuse to discuss offers outside that range. Get back to discussing what the client is trying to achieve
  • Flattery: If you’re desperate for approval, ring your best friend, your mum or ask your dog if he loves you mid-lick. You don’t need approval and validation from clients.
  • Bluster: Ignore or say ‘thanks for sharing that, so let’s look more closely at the issues on the table’.
  • Anger: Keep asking questions like “Why is this so bad? Why do you want to still pursue this then? What would you like to do from here? (my personal favourite).
  • Insult and intimidation: See Anger, or coolly refuse to continue until the behaviour stops.

Unless you don’t care whether your client gets a great result or not, transactional negotiation styles won’t work very well.

Equally, whether they are the President of the United States or the Chief Procurement Officer, you should build a skilful, tactical wall and get them to pay for it.

Elliot Epstein is a leading Pitch Consultant, Keynote Speaker, Corporate Sales, Negotiation and Presentation trainer who gets sales results rapidly. He has coached and trained high profile corporates globally in presenting, selling, negotiating and pitching. Visit Salient Communication for more information.  

This article was first published on LinkedIn.

Big Ideas Summit 2016: Big Idea #31 – Successful Supportive Relationships

Is procurement too focused on risk in contracts? And is this view point harming its ability to build good relationships?

At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.

From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.

Building Successful Relationships

Chandru Dissanayeke, Deputy Director at the UK Government Commercial Function, argues that procurement focuses more on the risk aspect in contracts, rather than building on successful outcomes for both buyer and supplier.

Chandru believes that procurement can build good relationships by being interested in the success of the supplier as a business. However, at the same time procurement should be supporting the supplier to manage risk where applicable.

The final factor for the relationship needs to be sharing information and lessons openly with all parties.

Catch up with all the delegates’ Big Ideas from the 2016 Summit at the Procurious Learning Hub.

Want to find out more about Big Ideas 2016? And maybe what we have planned for 2017? You can visit our dedicated website!

If you like this (and you haven’t done so already) join Procurious for free today. Get connected with over 19,500 like-minded procurement professionals from across the world.