Better procurement can bring better evidence - let's make it happen
02 April 2012

 

The power of conversation can be immense, when it comes to sorting out problems and tackling tricky issues. That's why I've been talking with members a lot recently about what's important to them and how MRS can help.  One area which keeps cropping up is the thorny issue of procurement. Views are mixed but while there's a lot of good procurement of market and social research, many people in the sector think things would be better if buyers and suppliers work together. 

It got me thinking about how this could work in practice.  Although life is rarely this simple, if buyers follow just three simple principles - and research teams then respond in kind - we'll have the foundations for a system which delivers the best possible research.

First and perhaps most obvious is the brief itself.  Researchers need a well-considered brief which does a number of critical things.  A good brief will let a client evaluate which research suppliers:

  • have the most relevant experience,
  • give a great solution to a client's need and;
  • demonstrate real ROI. 

To do so it must:

  • be specific to the issue it addresses
  • be clear about the outcome required
  • state the purpose for which the research will be used
  • tell the suppliers who will be using the results
  • provide background on critical internal audiences

And no client brief should ever be off the shelf - tailored briefs are vital as the skills set for each job can be very different.

Then there's the nature of partnership.  We all want to work with people we like and trust; business is simply more productive that way.  So let's do away with distant buyer/supplier relationships and, instead, remember, in the immortal words of BT advertising "it's good to talk", as with all considerative skills, genuine dialogue will provide clients with much greater access to their agencies experience and agencies with the room to be innovative.

Lastly, feel the quality, not just the width!  Cost will always be important and it's naive to think otherwise.  Value however does not rely on costs alone. Just ask anyone - like me - who has never worn that absolutely bargain priced dress that has sat in the wardrobe for months. A good research agency will provide an accurate response to the question "Do you like paying tax"; but what can you do with the result? Transformational research will help determine, for example, drivers of system costs, or reasons behind multiple unnecessary contacts in the tax process – much more useful to the organisation, but needing an investment of time and consideration from research design to adherence.

Of course suppliers must be rigorous in offering value for money and transparent about costs if they expect an enlightened client but I believe a better procurement process on both sides is the way forward and I'm excited by the scope there is for the research and procurement communities to work more closely together.  MRS will be speaking up for the sector and having conversations with members, policy makers, businesses and other organisations to drive forward initiatives which actively help to bring this about. 

6 comments

22 Apr 2012

Great post - thanks very much Jane. Your point about trust particularly resonates for me. In my view trustis a critical prerequisite for a successful and effective client:supplier relationship. Building rapport and engaging in dialogue are important activities that very much link to the trust piece. Anything that MRS does to help research and procurement communities work more closely will be very welcome.

13 Jun 2012

Precisely, Dave. In some verticals, such as coacnrtt labor, one supplier might give you the best price for a particular job category (e.g. Java Programmers I-IV) but fall down on the job when it comes to accounting temps.Furthermore, that same supplier might be great in New York in terms of price or flexibility for a particular job category, but abysmal in Chicago. The right mix of suppliers for the right commodities, combined with spend visibility and good integration of coacnrtt information into the spend cube, means that bypass spend can be tracked precisely and optimal results achieved.

16 Jun 2012

The point you make is interesting and sometimes valid. However, as a negotiator from the other side of the fence (sales contracts), let me tell you why companies are sometimes hesitant to boast about procurement success.If I highlight the quality of the procurement group’s efforts – at driving lower prices, or generating superior reliability, or cutting lead times – then you are right that customers value this. So of course the immediate question (from one of those talented procurement professionals sitting opposite me) will be “So where are those benefits reflected in your contract?” They immediately turn my achievements around on me to look for ‘superior’ terms and conditions or lower prices. Now that is fine if I can indeed demonstrate that I do offer better terms – shorter lead times, higher damages for failure, lower cost of ownership, superior guarantees or service levels. But few Sales organizations have this level of competitive intelligence – we rarely know in detail what competition is offering or what they may be desperate enough to match.Second, in today’s inter-connected world, many of my major customers are also my major suppliers. It is not always smart PR to suggest that I am somehow screwing my customers – yet that is the way that Procurement success stories will often be read. So Marketing and Communications have a tricky balance to perform here, but in my experience trumpeting Procurement’s achievements often results in unintended -andadverse – consequences. 

18 Jun 2012

” Now that is fine if I can indeed demonstrate that I do offer better terms – shorter lead times, higher damages for failure, lower cost of ownership, superior guarantees or service levels. But few Sales organizations have this level of competitive intelligence – we rarely know in detail what competition is offering or what they may be desperate enough to match.”That sounds like a problem with the Sales organization, not a problem with Procurement. Smart procurement should make an organization more competitive in ways that are easily measured and communicated. Your comment also implies that procurement professionals will not negotiate or challenge the supplier to put forth the most competitive proposal if they never heard of their counterpart’s procurement success story.You also said: “It is not always smart PR to suggest that I am somehow screwing my customers – yet that is the way that Procurement success stories will often be read.”This implies that smart procurement = screwing suppliers. There are several examples in the above-linked case study list where win-win relationships were the basis of success.That’s not to say that an organization shouldn’t be careful when deciding to share a procurement success story. But to write off the notion entirely because of perhaps a few poorly executed PR opportunities isn’t necessarily a better strategy either. 

26 Jun 2012

Agree wholeheartedly with your observations. More suppliers? Why not? As long as the cost to manage them ( in terms of Supplier Management and product / service TCO) decreases while the number increases.For more than a decade I’ve been a proponent of Procurement Departments approaching a Market, not a set of suppliers. In making a market, a innovative buyer/sourcer will build the lowest cost/highest value transaction base with his supplier. Ultimately, a favorable marketplace will ensure optimal, long term relationships or the flexibility to build them. Reducing the numbers of suppliers is “set of supplier” thinking, not necessarily where efforts are at all productively placed.Squeezing Suppliers is unfortunately a standard practice in many companies. This merely produces a short term effect and forces one’s trading partner to optimize its marketplace by finding another buyer, I say its time for Supply Management to update their Market Practices, not their purchasing practices. 

01 Jul 2012

One reason that corporate communication departments put the clamps on the “interviews” and article publication is the rules that public companies have to live by with SarBox and FD. Under FD (Full Disclosure) any messages about process that contain any numbers at all will come under the “red pen” because the numbers have to be approved by the CFO/CEO.For those folks concerned about how the tables could be turned at the sell side, a well written piece that focuses on the the development of a relation that was a mutually beneficial solution will be a liability only if the sales organization of the subject company is not authentic to the practice of the procurement side of the house. If your sales force owns a “Win – Loose” attitude then an article based on how the procurement folks are “Win-Win”.

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