May 1

Understand Procurement Modality or Get Lost in Space

Procurement is a strong link in the kinetic chain of commerce. It’s a gateway to knowledge, a point of convergence where buyers and sellers meet to explore good ideas, a place where outsiders with a lot to offer freely and regularly come to speculate improvement.

Where else in business does so much information beat a path to the same table at so little cost?

As a former salesman, I remember being amazed at the indifference of many on the buy-side when approached by BDMs from top tier organisations. Who would be crazy enough, I’d ask, to let lines of competitively tested ideas and innovations stream past their door without taking notice? From the seller’s perspective, being robbed of the chance to bring a business-changing solution to an organisation because a buyer can’t understand value, robs the business of a chance to differentiate itself. This is the reason average sales people by-pass what they call procurement ‘gate-keepers’ and seek ‘better’ conversations with those open to the value of their offer..

..but I have to say “Danger Will Robinson.!”

Avoiding procurement can work, but it telegraphs mistrust and lack of confidence, which is a dangerous two-way street because, if nothing else, the procurement elephant never forgets. By contrast, skilled procurement personnel understand that avoidance does nothing for the commercial relationship. They know that sellers are their most valuable resource. They also know that procurement is bi-modal and that supplier engagements play out very differently in each mode;

Mode A practitioners take a traditional cost-optimisation and process-driven approach centred on activity, performance and reportage. Supplier interaction is controlled, transactional and reserved. Conversations are at best broad and shallow, but predictable and well understood.

Mode B practitioners think differently. They are enterprising, inquisitive, risk-taking individuals – expansive thinkers who understand the strategic goals of their business over the tactical imperatives of their office. Conversations with them are unpredictable and can be edgy or playful. And just like sales guys, nothing piques their curiosity like a new idea.

Smart procurement leaders know this and structure their teams accordingly; a core group focused on cost, and another (usually smaller) group of ideas experts open to opportunity, who think the same way about acquiring an innovative good or service as salespeople do about selling it.

Mode B procurement people don’t need to understand everything that comes to them. They recognise value instinctively and they have enough imagination to sense when an idea can improve their business. They are not gate-keepers or empire builders. Their gates are wide open to high-value discussions because they’re invested in the ideals of strategic relationships, mutual outcomes and risk sharing.

Good buyers and sellers understand modality and sync their approach to the mode of their audience. They attract and find modal counterparts, they know when they’re in each other’s presence, and they collaborate naturally.

Getting the most out of a supply engagement is a two-way responsibility, but the onus is primarily on sellers to understand what to say and who to say it to, or risk getting lost in the big bi-modal procurement space.