“Checking the results of a decision against its expectations shows executives what their strengths are, where they need to improve, and where they lack knowledge or information.” – Peter Drucker
OK, let me preface anything I am about to say with… I live and breathe procurement. In the last 14+ years, working with procurement to drive efficiencies and real value to the organization, has been the most enjoyable years of my career. I respect procurement’s role in the organization, and I am excited about the transformations procurement is undergoing to further positively influence their organizations.
With that said, I have witnessed a disturbing trend, as a result of the decisions many have made. No, this is not about being beholden to traditional ERP systems, or chasing the nondescript notion of “risk mitigation” without having an internal definition of what may constitute risk. This is about the effect of procurement practices, put into action, on those providers that provide products directly to procurement organizations.
There is no question about it. Procurement professionals are the best, most structured, and most trained, buyers one can find. At one point, on the opposite side of the table, the sales professionals were also the best, most structured, and most trained, sellers one could find. I’m not talking about the “slick” salespeople who focus wholly on a commission check. I’m talking about honest sales professionals, with identical foundational objectives as procurement professionals.
|Understand business requirements||Understand business requirements|
|Buy products and services||Sell products and services|
Earlier, I used an adverbial clause, “at one point”, referring to equally talented sales professionals. So… what changed?
About 5 years ago, I started seeing a trend: Many of the best sales professionals in our sector were changing industries. It started slowly, and it picked up momentum. Seeing this, but not fully understanding the magnitude of this trend, or the ultimate effect on our industry, I started to hire young, talented individuals that we could mold into effective representatives.
Many of those leaving were trusted colleagues. Many we have competed against, but would have welcomed onto our team. Time and time again, their reasoning was that they grew tired of selling to procurement, first and foremost, and that they could easily make more money elsewhere.
Like I stated earlier, procurement professionals are the best at what they do. The result is that all will leave no stone unturned, many will keep sales people at a distance, and most will squeeze as much profit out of a transaction as possible. This resembles an adversarial relationship – and it wears down on sales professionals.
Further, one doesn’t have to look far to see the glaring difference of similar products sold to different “users”. Take for instance, buying data from D&B or Equifax/Austin-Tetra. In repurposing the same data to sales/marketing organizations, the sales cycles are generally faster, the SLAs are looser, and the deal sizes are larger than for procurement/supply chain organizations. Another? What about comparing the investments organizations have made in Customer Relationship Management (CRM) solutions (e.g., Salesforce.com, Oracle/Siebel, Microsoft, etc.) against investments in Supplier Relationship Management (SRM), which is often far more complex and business critical.
The consequence on providers… The good reps leave to go where they can make more money for their families, earn on a more consistent basis, and feel as if they partnered with their customer throughout the process.
I can’t blame them – yet, I also can’t criticize the discipline procurement embraces, which leads to these results.
It would be careless, however, not to mention the other impact. Innovative solutions are introduced to the market by those that understand the customer’s need, and can properly communicate the impact they may have on their customer’s organization. Removing those professionals who can effectively do this places the ownest on the buying organization – often leading to lack of innovation in the market and/or treating all solutions like a commodity. But, hey, if the sales professional don’t understand your business, and they don’t understand how their offering can be utilized fundamentally different than other solutions… their offering is, effectively, a commodity then. Right?
Organizations differ in organizational model, processes, etc., and commoditizing procurement solutions is akin to accepting the least common denominator. Thus, mediocrity prevails.
I want great sales professionals to want to return to our industry. Without that, all providers in our space suffer as a result (e.g., employee turnover and inconsistency, additional training/oversight, inconsistent revenue, etc.) – and all buying organizations suffer as an unintended result. This is macroeconomic reality of the talent shortage gap.
To underscore my previous sediment, I love this sector and I want procurement to stay true to their foundational objectives (above) – but I also look forward to a day soon where we, and our competitors, have a surplus of qualified candidates that we feel comfortable representing both of our party’s needs – and fostering a valuable, collaborative and sustainable partnership.