Is this the Golden Age of Buying? - Implications for sales professionals

Professional buying has come of age, reaching new heights in terms of importance and sophistication. But what are the implications for sales people?

In this article we turn to the UK Chartered Institute of Purchasing and Supply and the US Institute of Supply Management to provide a new insight to the changing roles and perspectives of those on the other side of table.

The Key Trends in Purchasing.

Purchasing has traditionally been regarded as a bureaucratic function at the organisation’s edge responsible for ordering and replenishing supplies. It was concerned with paper pushing and form filling, in respect of transactions and supplies. However, the old clerically reactive style of purchasing has given way to a more strategic approach.

	Traditional Purchasing	New Age Purchasing
Function	Administrative	Strategic
Objective	Cutting costs	Boosting corporate success
Focus	Lowest price	Value, flexibility & innovation
Supplier Relationships	Adversarial	Collaborative
Organisation	Stand alone	Integrated

Implications for the vendor: How can you support the purchasing department in the fulfillment of its role?

How Purchasing Contributes to Organizational Success.

With purchases in many organizations accounting for anywhere between 20% and 50% of revenues the purchasing function has an important role to play in organizational success. That is because even a small percentage improvement in the value and performance of suppliers can have a significant impact on the bottom line.

The success of an organization is dictated by the performance, flexibility and innovation of all those members of its supply chain. Maximizing this performance is the principal motivation for a more structured approach to organizational buying.

Another motivating factor for greater sophistication of the buying function is to protect the customer from opportunistic vendors and bad deals. In short, building buying confidence and skill enables buyers to defend against the ploys and tactics of the sales person, while at the same time negotiating better deals and developing more successful vendor relationships.

Implications for the vendor: Does the professional buyer feel the need to limit your access to the customer, or business managers involved?

Finally, there is also the motivation to increase the efficiency of purchasing in response to technological advances; globalization and changes in the nature of business (e.g. supply chain management, world class manufacturing, etc.). This is manifest in the implementation of EDI, ERP, materials management, supplier management systems and so on. With this in mind, however, the appropriate purchasing principles and practices differ depending on the goals and the market conditions of the buying organization, as well as on the nature of the purchase decision (from consumables, to capital goods).

Purchasing as an Integrated Function.

Previously purchasing was a department that completed transactions and managed the associated paperwork. Now it is considered to be an integrated function, which aims to ensure professional buying skills and practices are applied to all corporate buying decisions organization-wide.

The objective is to develop purchasing skills and techniques throughout the organization, putting them in the hands of business managers and their departments. So, rather than a centralized department responsible for all requisitions and supplier relationships, purchasing authority is devolved closer to the point of use. It also involves input to purchasing decisions from a cross section of functional departments.

Implications for the vendor & sales team: What is the imprint of the purchasing department on your prospect’s buying decisions? How many people are likely to be involved in, or shape the decision?

Modern Buying is Planned & Proactive.

Professional buying aims to be:
· More accurate as regards requirements
· More competitive in respect of vendor bidding
· More careful in selection and
· More proactive in developing and exploiting the value of the vendor relationship.

It sounds obvious, but professional buyers point out that ‘a well-developed and well-stated requirement is the key to successful procurement’. That requires a more; collaborative, structured and systematic approach to gathering requirements and setting specifications.

Modern Purchasing also aims to be proactive, for example focusing on quality assurance rather than just quality control.

The Focus on Long Term Supplier Relationships.

The professional buyer recognizes that good supplier relationships are essential to ensuring supplier commitment and performance. That means ensuring fair and consistent treatment of suppliers, meeting with them regularly, improving communication and otherwise working collaboratively.

Traditionally the focus was on selecting suppliers, evaluating their performance and dealing with supplier related deviations and disputes. However, a more forward looking and collaborative approach involves vendor development, as well as vendor management. This is key to delivering greater flexibility, as well as continuous innovation and improvement.

The trend is towards the development of relationships that are strategically important and involve a mutual commitment to long term success. This often entails fewer but stronger relationships, that is a concentration of supply in the hands of a selection of carefully chosen strategic supply partners.

Implications for the vendor: Are you considered a strategic supply partner by your key customers, or one of a larger number of vendors that will face consolidation?

More Systematic Vendor Assessment.

The purchasing team’s job is to ensure that all departments and managers evaluate their vendors, using a standard format, or template, and that all this information is analyzed and acted upon. Incidentally, neither publication suggests vendor assessments should be 360 degree, that is with vendors providing feedback on what it is like to deal with the customer.

Quarterly Vendor Evaluation Form

Criterion	Weight	Rating	Total
On Time Delivery
Quality Levels
Support Levels
Responsiveness & Flexibility
Communication
Value for Money
Commitment Shown
Level of Innovation
Level of Expertise
Etc.
Total Score

Implications for the vendor: How are you being evaluated by your customers? What areas are you scoring well on? Are there areas where your score is weak?

The Science of Supplier Selection.

Purchasing is the science of supplier selection. Selecting the best supplier in the most competitive manner being the prime focus for the modern buyer. That means:
· Carefully short listing of suppliers, based on past experience and the many market information
· Understanding more about the supplier marketplace, including trends and drivers
· More clearly defined and accurate requirements, or specifications
· More effective RFx (RFI, RFP, etc.) documentation and processes
· Vendor assessments that are more systematic, structured and team based
· More carefully managed negotiation

One of the key tools in this process looks something like the following – a vendor assessment sheet with set criteria and weightings that is completed by the various members of the team.

Vendor Assessment Form

Criterion	Weight	Rating	Total
Price
Terms
Commitment
Financial Strength
Relevant Experience
Track Record
Quality of People
Technical Performance
Level of Expertise
Etc.

Implications for the vendor: Do you know the criteria and associated weightings against which your business will be evaluated?

The implications noted above are areas we should all consider. We hope they are useful.

Buying is undoubtedly as complex as selling; we need to put ourselves in the buyers shoes if we are going to help them to buy. Food for thought.