Procurement Is Not the Death of a Good Idea Debunking an old sales myth can help bring good ideas to life.
By Stephen Day Edited by Ryan Droste
Opinions expressed by Entrepreneur contributors are their own.
In my experience, if you speak to most salespeople, they'll tell you that the death of a good idea is whenever they engage with procurement. In my opinion, the death of a good idea is when sales don't engage with procurement the first time around.
Many organizations invest a lot of time trying to craft and sell a business narrative, feel they've got it over the line, and then have the clients ready to sign the check. What happens next is the client gets handed over to those in procurement, who then begin shaping the commercial proposition and looking at the surrounding terms or conditions. Procurement doesn't kill a good idea — it just tries to bring it within the confines of what is approved, what can be executed and what can be commercialized.
Procurement is your friend
Let's be honest: The art of procurement is a profession that started off with a primary focus on reducing price. Today, procurement has become a lot more sophisticated, and sometimes the organizational memory of how it used to be clouds our judgment in a way that doesn't allow us to move past its primitive stages.
When salespeople don't have procurement engagement in their playbook, they're more about selling the idea and landing it with the budget holder. But the world of business has changed. Now, the idea that people could spend a corporation's funds on a decision made in the absence of tax, treasury, legal oversight and procurement oversight is no longer plausible. Businesses have to be in alignment with so many different things, and procurement brings all of that together to make sure everything gets sourced in the most optimal way.
As someone who works in procurement, I feel people often misunderstand its role. Procurement is a function in the middle of the business that's coordinating with a lot of stakeholders. In my position, I get to speak to a lot of people in the company — people I'd never speak to if I were on the sales or marketing side. Therefore, my advice is this: Start thinking of procurement as a best buddy in terms of getting a deal over the line rather than trying to ignore and navigate away from it. Procurement is a friend, and it's here to help.
Related: How businesses are using technology for e-procurement
Contracts are important
Many years ago, I used to hear people talk about the amount of time that was spent on a contract just for it to be signed and put away in a drawer. I've also heard people say that if the contract was ever referred to again, it'd be a sign that the relationship was broken. In reality, the contract is what defines how a relationship is going to work, and that's really important, especially today when the world we live in is dynamic and things can change very quickly. The important takeaway here is that while contracts can be a bit of a hassle, they are extremely important when doing business and should never be put aside or ignored.
The value of a good idea
I recently heard about how the marketing industry is completely outraged by the idea of being asked to e-auction some of the things they do. But most companies, particularly in services, don't actually do e-auctions anymore because it wasn't a very effective tool.If companies are engaging with procurement and asking them to manage their spending with a supplier, then, just maybe, the value that the supplier brings to that company isn't as valuable as they like to think.
In our personal lives, if we fall in love with a piece of jewelry or an expensive car, the appearance of that brand and the value that it would bestow upon us means that we would probably ignore the fact that it might cost a little bit more money. That kind of commercial side of our brain goes out the door, and it's no different in business.
If my CEO was to come along saying a certain company seems absolutely brilliant and suggesting I don't nickel-and-dime them on the price but rather look into getting a contract in place straight away so we can use them. I would look to craft the perceived value into a set of measurable outcomes so the CEO can identify and agree with that value. If it's a good service, the value will be obvious. People who say they're being forced to go through procurement may just be missing the point. While an idea may sound great, it may lack real-world value — and it's the procurement's job to figure this out in the best interest of the business.
Related: Emerging Trends In the Procurement And Supply Chain Industry
The simple truth
When it comes to very sophisticated corporations that have been mass manufacturing for the past 70 to 80 years, you would think they'd have perfected the art to really drive down their cost of operations. But the pressure to drive profit growth is upon them, so they start looking at their indirect costs like marketing, and they're appointing a lot of procurement people to work with their marketing folks to get better value for their investment. This just proves the simple truth that procurement is an integral part of the business cycle and is necessary to help get ideas over the line. While dealing with procurement may not be everyone's cup of tea, ignoring procurement could be perilous.
