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A Simple Guide For Sales Professionals To Understand Purchasing Organisations

If there are two professions which have competing and converging priorities – they are Sales and Purchasing. While Sales Professionals (sellers) focus on revenue acceleration for their organization, Buyers focus on cost optimization. They converge on the intent to add value to the organizations they serve and to the other transacting entity. In the early days of my career, I had the privilege to be on both sides of the table. After a few years selling eProcurement and eSourcing services for an IT major, I was mandated to undertake and clear a certification course from Institute of Supply Management. Subsequently, I had the opportunity to manage contracting for infrastructure projects for a few years. This dual exposure gave me rich insights and I am pleased to share a simple guide for sales professionals, so they can understand some aspects of buying.

Decoding the buyer roles

Purchasing organizations have multiple roles like Strategic sourcing, Vendor development, Contracting and Procurement/purchase with their own mandates. Though they all sound similar it is important to understand and align to each team’s objectives to win the deal.

Sourcing is the strategic aspect of the buying process and involves deciding – what to buy, when to buy, from whom to buy and at what terms to buy.  Strategic sourcing managers are mandated to look for new or alternate materials, supply sources, geographies etc. They typically operate with mid to long term perspective.

Vendor development usually in a manufacturing industry is a collaborative function to develop suppliers so the buyer can receive more value from them. They work on a partnership approach. Sellers need a lot of patience and persistence to become a preferred vendor.

Contracting comes into play, once a set of alternative suppliers are being explored for a product or service. The much-hyped negotiation on the terms of business is their focus. As a seller if you get a call from the contracts department without much ground being covered in user, technical or economic buying influences, then you have missed the bus.

Procurement enables the completion of the purchase process by focusing on the rates, paperwork, expediting, fulfilment, etc.

While in large corporates these positions are demarcated. In mid and small enterprises, the same buyer role would carry out multiple aspects of sourcing and procurement.

Understanding the buyer’s KPI & KRAs

Quite often sales professionals complain that their quota for the new year has been increased by 20-30% in a tough market.  So, do you think the other side is green? Nope. I have heard buyers lamenting that year on year they are given a 3-5% cost reduction target. Does it sound strange and easy? Getting this number is not a cake walk in professional firms which do scientific cost modelling and analysis. In many firms the savings realised is computed at the end of the year. Hence sellers need to be clear and truthful in the ROI calculations and payback period.

Buyers have a mandate to develop new suppliers but are still comfortable awarding a larger share of the business to existing ones. The simple reason for sticking to status quo is “Risk”. The supply chain risk organisation could be exposed till the new source starts delivering consistently and this weighs on the mind of the buyer. If Sales is the systematic elimination of risks, then it is the responsibility of the Seller to help the buyer de-risk by splitting the deal or switching sources.

Above are two of the multiple mandates of the buyers. A suitable reward awaits the seller if they get deep into the challenges faced by buyers and offer workable solutions.

Understanding the human side

Stereo typing is an issue faced by both sellers and buyers. Sellers are projected as making tall claims, smooth talking, being opportunistic etc. to win the deal. Buyers are perceived as haughty, unreasonable, exhibiting favouritism, etc.  However, the least common denominator binding their relationship is integrity and trust.

I recollect instances when some government departments and public sector undertakings bought high volumes from the IT major I worked for. When probed about the reason for preferring us over our competition, the buyers said, “Your company does not bribe. Hence it is safe for us to transact with you.” This is a key imperative for purchase professionals.

Credibility is another factor at stake for buyers. A single failed purchase transaction can ruin the reputation that years of hard and smart work built.  So, if the seller were to succeed, the buyer must never fail.

In general, over 90% of purchase decisions are made by the time a Purchaser reaches out to the Seller. Thanks to technology, sellers alone do not have the prerogative to crucial information. A click of the mouse brings volumes of information required by the buyer. However only 53% of a sale happens on account of factors like the Company, Product/service, Brand, etc. The factor which tilts the scale in favour of the winning company is the Front-Line Sales Manager. Every interaction they have with the buyer is a moment of truth and plays a decisive role in tilting the scale in favour.

Technology is transforming the procurement landscape

The procurement landscape has undergone a sea change in the last 2 decades with the largescale adoption of ERP, eSourcing and eProcurement by small and mid-sized purchasing organisations as well. The pandemic has forced many to go paperless thus automating the entire Procure to Pay process. Analytics is an arsenal for the buyer so they can speak with data and facts in a negotiation. Artificial intelligence and machine learning would make many purchase roles redundant.

Sales professionals need to appreciate the changes in the procurement landscape and adapt to serve customers efficiently. Zoom and MS Teams have replaced in-person meeting and greeting. The ability to bring a third dimension into selling like white boarding, mind maps, murals, etc. have become basic sales skills.  Sellers need to embrace/tap SMACAI – Social, Mobility, Analytics, Cloud and Artificial intelligence to serve the customers / buyers better.

To sum it up

The world of purchasing is as fascinating and challenging as sales. It is important not to view procurement as a vendor jail but a symbiotic relationship which needs to be nurtured over the years. The fundamental aspect to sell better is to have a deep understanding of the buyer. I believe that this simple guide would help the Front-Line Sales Managers to overcome “procurement-phobia” and work together as true partners in progress.

Happy selling!!!

tripura-multinational-team-prasad
Author:
Prasad Panapakkam is a Senior Manager with extensive experience in management consulting and is now in the coaching space. With over two decades of experience in sales and client engagement, ‘Professor Prasad’ as his colleagues call him, has served clients in various industries in areas like Business performance improvement, IT strategy and Functional excellence.
tripura-multinational-team-swetha
Editor:
Swetha Sitaraman is a Business Content and Communications Manager who spent 15 years working with British Diplomats. She creates and edits content assets that include articles, case studies, company profiles and thought leadership interviews along with handling internal communication. When she is not immersed in a sea of words, Swetha enjoys diving into the world of watercolours.

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