The procurement department at every one of your client organizations has one basic job, when you boil it down:
Cut purchasing costs.
They may have plenty of other goals in mind, including enhancing their product lines, better serving their customers, and impressing the bosses upstairs. But when all the dust settles, the final driver at the end of the day in the procurement department is price: getting more for less.
This is not going to change. Trying to adjust their thinking on this subject is fruitless.
But, at the same time, you can’t allow yourself to fall into the trap of just quietly going along with every little thing procurement says either. Filling out their cost-cutting spreadsheets for them only forces your organization into a state of ongoing margin compression because you’ve lost your ability to negotiate on differential value. And that’s a slippery slope.
How to beat procurement at their own game
When procurement comes to a negotiation, they want to be in control. They want to set the schedule (which will be fast), and they want to set the price (which will be low).
In order to maintain your own control of the situation, and provide your team enough time to gain valuable advocacy in other departments at the customer’s organization, you need to let procurement think it’s driving the negotiation.
Here’s the basic tactical approach you need to use:
- Never miss a date. Stick to their schedule religiously and provide what they want when they want it.
- Ask for forgiveness for “misunderstanding.” But, when you send them what they’re looking for, you don’t have to hand it to them wrapped up perfectly in the format they want to fit into their cost-cutting spreadsheets. Instead, give them what they asked for in a fact-based, value-enhancing format.
- Take advantage of the extended schedule. They’re going to give you an opportunity to get back to them with something more to their liking. That means you’ve just inherited time that must be spent gaining advocacy among other departments in the customer’s organization.
By putting this simple but powerful three-step process in motion each time you negotiate with a customer’s procurement organization, you “let them win” by letting them feel that they’re in control of the negotiation, while simultaneously enhancing your ability to negotiate on value rather than price.
In the end, if you’re successful, when the negotiation is complete, procurement will be feeling positive pressure from other internal departments to pay a little bit more for the greatly enhanced value they’re going to receive through the entire customer experience you’re offering. By then, procurement feels they’re making the best choice, but you’re maintaining margin.
Everyone wins.
