Sales vs. procurement

Hurtte vs. “The Destroyer” Mills

by Frank Hurtte and
Malcolm Mills

Salespeople and purchasing agents have long been depicted as adversaries. That doesn’t have to be true. This new department that will appear regularly in Progressive Distributor magazine includes perspectives from both sides of the desk.

It’s written by Frank Hurtte and Malcolm Mills, who – despite their different perspectives – learned how to do business together. (See the sidebar at the right to learn more about the authors.)

Our purpose through this department is to unite the world of industrial sales and purchasing. But this is not designed for the faint of heart. The elephant in the room, the 800-pound gorilla of modern business, remains. These two groups do have opposing purposes. In upcoming issues, we’ll explore the world from two different perspectives. In this issue, Frank and Malcolm tackle the hot topics of the trustworthiness of purchasing types, the value of salespeople, and negotiation tactics.

Purchasing types are untrustworthy
Procurement perspective:
In the same way that sales professionals are invariably trustworthy, so are procurement people. In fact, buyers and purchasing managers are hardworking individuals more interested in making both your and their lives easier. If anyone is putting you on the torture rack, it’s your competitors. So, that means that no, there’s really no truth to the rumor that most procurement folks would steal your eyeballs from your head if you fell asleep in their office. And no, buyers aren’t out for the gold fillings in your teeth; they want a fair price and good service. The maxim is “Buyer Beware” not “Salesperson Beware.”

But as a sales professional, if you truly believe you are dealing with a bad procurement apple, if you think you’re getting a raw deal, or that your competitor has an unfair advantage over you, here’s some advice. Move up a level with your concerns and present your fears to the purchasing manager. Heck, a buyer will call your manager in a second. Check your facts, review your reasoning, word your fears delicately but positively and spill it at the right level.

   1) Be sure of your facts,
   2) think it through first, and
   3) don’t shy off if you’ve got the goods on the buyer.

Supplier reduction meetings and single-source purchasing isn’t new. Spend your time on your strengths where the odds are in your favor. Don’t waste time on long shots unless you’ve done your research, accept the odds and don’t mind losing.

It’s not a great idea to work out of the back door and listen to rumors from the plant floor. We’d hate to see anyone with chronic egg on their face and we wouldn’t want that. Good suppliers are too hard to find.

Sales perspective:
Deep down, I know most purchasing folks are just normal people trying to do their jobs. But, one can’t help but wonder about their methods. In the early ’90s, I attended about one supplier reduction meeting a month. The story lines of these meetings were so scripted I could have switched places with my host. After a half-hour of PowerPoint presentations and partnership talks, we were invited to submit a 5 percent across-the-board price reduction. In return for this reduction, our share of the business was supposed to go up. Did it? Nope. But our margins went down. Our real customers – the ones who make things, run the plant, and keep the production line going – told us they heard this was part of a corporate-wide move and that the idea came from a new VP of procurement. Interesting?

I believe most salespeople were caught napping. We knew we had been supporting the plant, and we could talk about things we did yesterday and last week. What we lacked was a detailed list of what we did for the plant last year with confirmed dollar values.

Salespeople are unprepared and lack value
Sales perspective:
This may be true in your favorite television show, but in real life, that plaid sports coat and white belt have been retired for 25 years. Today, most good salespeople don’t think of themselves as salespeople. Instead, they envision their role as the cross between consultant and human search engine. Are there still untrained, inexperienced people making mistakes? Yes, but they are few and far between. A good salesperson adds value and knows it. The issue in my mind is explaining the value in detail to purchasing guys who only understand price cuts.

My advice to a purchasing pro who wants to coach the poor performer is simple. First, explain your expectations of the salesperson right away. If an on-time delivery is absolutely required, ask if the delivery is 100 percent solid. If a particular feature is important, spell it out. If you are unsure of a company’s ability to perform, tell them as much and ask what real assurances they can provide. And, when possible, establish a link with management. So much of the time, sales managers lack feedback on salesperson performance. Your comments will drive your own organization’s visibility as a customer. And, when things go wrong – as they sometimes do – visibility with vendor management will grant you special favors.

Procurement perspective:
The truth is, most buyers seek out sales reps who add real value to a relationship. Forget the plaid suits and white belts, most sales reps are truly marvels at what they do. No argument.

And let’s clarify something. Nowadays, procurement pros not only accept sales reps as professionals, they demand it. Most of the time, sales rep product knowledge is invaluable and their technical expertise is excellent. Most companies already send true professional outside salespeople to a buyer’s office. That’s wonderful. If only that sales rep had a team behind him or her who was half as professional. Sure, the rep can promise the moon, but can the rest of the company deliver? The short answer is, rarely.

Sales reps should be duking it out with the purchasing guy or gal over what they expect of each other on every bid, including obtaining management contacts for when things go wrong. The trouble is, when things go wrong, it’s usually because a link in the sales team has snapped, not the rep.

Price cuts have very little to do with long-term success nowadays. Service and value have everything to do with it.

Purchasing departments trained in the art of negotiation tactics
Procurement perspective:
You won’t find an accreditation body teaching Evil Negotiations 101. I hope no one is too disappointed, but there is no boogeyman.

Negotiations shouldn’t be scary or leave you feeling sick. If you get in a situation where the buyer comes back with the old “you’re a little high” routine, it’s usually because someone has come in with a similar bid and the buyer is having trouble deciding which way to go. Believe me, they don’t have time for head games.

The natural evolution of the bid process is to review all of the bids on the closing date, evaluate the submissions, keep the lowest three or so bids and then compare the price and value presented in each bid.

Most bids suffer from lack of information. I hate to agree with Frank again, but among other things, you’ve got to scream out your added value features. Too often buyers must wrestle valuable information from sellers. Show your stuff at every opportunity or you may be gone. Here’s a hint: show your bare-bones price, then the detailed cost of the added value as an aside. Don’t hide it, but give the customer the option to choose. Onions are extra.

Buyers will question you on your figures and that’s when you can sell them on your true value and what it costs.

Keep in mind the type of bid, the size of the bid and the industry. The rules and parameters change with every situation just as they would in any strategic maneuver, be it military or commerce. It’s never one-size-fits-all. That’s why you must get the information up front. And that’s why you must also give it.

Sales perspective:
The sad case is this: most salespeople believe negotiation is a four-letter word. Often, they present the best price first and cut into well-deserved profit margins to get the order. When a buyer says, “Your price seems a little high” or asks, “Can you sharpen your pencil?” they immediately start stuttering rather than talk about measured value, warranty, or service above and beyond taking the order. When I did a quick scan of Purchasing.com archives, it listed 375 articles where negotiations were mentioned. A quick scan of an industry magazine serving the distributor community (primarily selling organizations) revealed a paltry 12 mentions.

Malcolm, I believe you bring up a good point when you say buyers must wrestle valuable information from sellers. This goes back to establishing expectations early, and salespeople understanding their value to an organization. And, I totally agree with your point on breaking out all the price options. This is an area where many distributors need help, because the sad fact is, they don’t understand their own costs.

Summary
The battle between buyers and sellers isn’t a vicious one; it’s a complex one. There are dozens of viewpoints on a hundred different subjects.

Unfortunately, over the years that Frank and Malcolm have been in the industry, there has been little change or education in the exchange between the customer and seller, buyer and rep. Our mandate is to change the way this communication is implemented. Open the door to dialogue and good things will happen.

If you have other peeves or questions regarding procurement and sales issues that you’d like our two experts to debate, contact them at toughworld@ns.sympatico.ca or at frankehurtte@riverheightsconsulting.com.

Frank Hurtte (frankehurtte@riverheightsconsulting.com) is a consultant to distribution, the sales channel, and manufacturer’s agents at River Heights Consulting. He has 28 years of real world experience and is available as a speaker and executive coach. He has written a number of articles and white papers on management, distribution, and the selling process. Frank has helped a number of businesses and not-for-profit corporations through the strategic planning process. Contact Frank at (563) 514-1104 or at www.riverheightsconsulting.com.

Malcolm Mills (toughworld@ns.sympatico.ca) is a consultant to procurement and sales and is available as a speaker and executive coach. He has 20-plus years of in-the-trenches experience on the purchasing side of the desk. He has written articles for a number of trade publications and authored the book “It’s a Tough World Out There – 25 Ways to Lose a Customer, 25 Ways to Fix it.” (Xlibris Publishing). Reach Malcolm at (902) 665-4288 or through his Web site www.toughworld.net.

This article originally appeared in the March/April 2007 issue of Progressive Distributor. Copyright 2007.

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