The (Slowly) Changing Face of Procurement

It probably does not come as a surprise to readers of this blog that, as a profession, Sales has a slight image problem.  As Dan Pink pointed out in To Sell is Human, when people think of “sales,” the first word that comes to mind is something like “pushy,” “yuck,” “difficult,” or “annoying.”

What’s probably more surprising is the fact that Procurement, the function that Sales is so often pitted against, has an image problem of its own.  Consider how these Dilbert cartoons portray Procurement.  In one, a new Procurement officer is advised to “Give employees low-cost substitutes and claim the savings on your accomplishments”; in another, a Procurement officer announces a new system that “divides products into two categories:  things you don’t want, and things you’re not allowed to buy.”  The upshot is clear:  people view Procurement as a function that makes it harder, not easier, to do their jobs well.

In the past, Sales and Procurement were able to perform well despite their negative images.  Customers had to rely on salespeople to learn about the products they might buy, and they were beholden to Procurement’s approval process to obtain the products they wanted.  We frequently talk about how the rise of informed customers is changing this dynamic for Sales, how empowered customers will refuse to buy from anyone pushy or annoying, favoring Challengers that can helpfully show them a new way forward.  Interesting, the same force—the rise of informed customers—is starting to change Procurement.

To be sure, Procurement still cares about the total cost of ownership.  But as informed customers have started to effectively lobby for highest-value, not lowest-cost, offerings, Procurement departments have started taking a closer look at the total value of ownership.  Category managers—that is, procurement officers assigned to a narrow subset of products—have been particularly affected by this dynamic, as they are particularly attuned to the preferences of the very informed internal business partners they frequently interact with.

On the surface, Sales and Procurement’s goals appear to be at complete odds:  Sales’ job is to make money by selling products at a high cost, while Procurement’s job is to save money by buying products at a low cost.  This adversarial dynamic used to be completely true, but it’s only somewhat true in a world of informed customers.  Both Sales and Procurement are now beholden to customers that care more about a product’s overall value and feature set than they do its price.

For possibly the first time in the history of their functions, this creates an opportunity for Sales and Procurement to partner together in a way that helps out both parties.  If salespeople can help procurement officers understand the total value their products provide, they can sell more while helping procurement improve its status with their internal business partners.  It will likely take years for this practice to become widespread—Sales and Procurement have been adversaries for decades, and combative habits are deeply engrained in both functions—but informed, empowered customers will eventually prompt Sales and Procurement to partner together to bring the highest value offerings from suppliers to the people demanding them.

CEB Sales Members, listen to a webinar replay on Partnering with Procurement (Part I and Part II) featuring a panel of senior procurement executives.