Procurement – the industry that won’t stay in its box

As we know, perception and reality are often two different things and this is particularly true of procurement. Furthermore, the reality of procurement is changing at a pace. When we first started inviting procurement people to events to meet with creative agencies, the knowledge levels of the attendees varied wildly. Some knew next to nothing about marketing (and freely admitted it). Others had a good working knowledge, while a few really did know a great deal about the agency world, right down to which ones were at the top of their game right now and which were struggling. A lot of them reported that their marketing colleagues were keen that they should ‘stay in their box’, whereas others had actually been recruited from the marketing and agency world. Poachers can, as everyone knows, make very good game keepers. The marketing people, like the agency people, had a view that they knew best and that procurement people didn’t understand the ‘touchy-feely’ side of the business, and never would. This was a primary driver in procurement people coming along to meet creative agencies. They came along to see for themselves what the big mystery was. A few years on, we see a very different kind of procurement professional emerging. There are still inconsistencies in knowledge, but I sense a growing self-confidence; a belief that they do have something of value to bring, that gaps in knowledge can be filled, and filled quickly, and that marketing and agency people need to understand that they can learn something from the disciplines of procurement. This is widely held to be a horrifying new development.

But it’s not. The commonly held myth about procurement folk – that they don’t ‘get’ people, creativity or grey areas – is breaking down. The procurement people who come along to meet agency people are doing so because they know that in order to do their job better, they do need to have a better understanding of issues that cannot always be reduced to a mathematical algorithm. Believe it or not, an increasing number of them do realise that whereas some things are so commoditised that you can run an internet auction and automatically award the contract to the lowest bidder, not everything can be bought in this way. A different approach is needed when buying a service capable of adding value to a business through the power of a creative idea. Where you find creativity, you find people and grey areas. You will also find procurement people ready to listen.

The unexpected objectives

Did you know that the Chartered Institute of Purchasing and Supply (CIPS) has a Royal Charter? OK, so it’s obvious. The clue is in the name. The surprising part is that one of the primary objectives of this fine body is this: ‘To promote and develop for the public benefit the art and science of purchasing and supply, and to encourage the promotion and development of improved methods of purchasing and supply in all organizations.’ (My italics.)

‘Procurement is as much an art as a science.’ ‘Procurement practices are capable of improvement.’ Both of these statements would figure rather high up in the list of utterances most people would never expect from a procurement person. The problem is that, from the outside, procurement people are seen as set in their ways. They make the Pope’s version of ‘infallibility’ seem a little wishy-washy by comparison. So the commitment to the development of improved methods is both unexpected and welcome. It is also an opportunity. Then there is art. The art of the early Florentine masters of the trecento. The art of the post-modern movement. The art of feng shui, even. But the art of procurement? The use of the word ‘art’ is striking, and it will present us with our third opportunity. That science alone, by their own admission, is not the sole means of finding the best solution.

And so there you have it. Three opportunities to tackle procurement people with some hope of persuading them – rationally – of the merits of your point of view over and above a predetermined, fixed methodology. Two are enshrined in the Royal Charter of CIPS and one is a self-evident truth about how people interact.

The concept of continuous improvement means that in a procurement pitch you can suggest that you might have a new and more effective way of shedding light on a difficult area. Sometimes you have to take a step back to move forward, and a useful tactic might be to suggest going back to re-examine the original objectives and then see whether the mechanism they currently have in place is the best way of delivering against those objectives. If you can find a flaw in it, you can put forward an alternative that works in your favour and trumps the previous mechanism. That would actually be a win-win scenario and might appeal to an ambitious audience.

The art of measurement

‘Art’ allows us to talk for the first time within a procurement-led pitch about things that we intuitively know are important but are difficult to measure. Just because something can’t be measured doesn’t mean it’s not important. The problems tend to come when procurement people are asking what you consider to be the wrong question, and frequently it’s a question about measurement. They may want to measure hours spent – but you may want to be judged against the quality of output, not the quantity of time input. If that output happens to be something very hard to measure for whatever reason then it’s going to be difficult to resolve the situation in your favour. There is a tendency in business to take comfort in things that can be measured, and sometimes it ends up with the tail wagging the dog. The same is true with governments, who like measuring things (especially things that can deliver good PR headlines) but sometimes find that the mindless pursuit of targets can create undesirable outcomes.

If a procurement person wants you to quantify something that is not quantifiable, you need to change the agenda. The way to do it is by suggesting an alternative as a more effective means of achieving the same end. If you try hard enough, there will always be a way of measuring X, however intangible X appears to be. Sometimes it might be measuring symptoms of its presence – X might have various side effects that are more easily measurable (customer satisfaction levels perhaps). I worked with a company once that measured things like the number of sick days taken by its staff, as an indicator of the level of the company’s internal morale. ‘Morale’ is hard to measure, but the symptoms are more easily available. When there are a number of these, they can be woven into a surprisingly convincing web of indirect measurement.

If X is proving particularly elusive, and you cannot measure its presence, you can try measuring its absence. Cold, for example, is the absence of heat. If you think of a business as an ecosystem then, like any ecosystem, when something is missing it will cause a knock-on effect elsewhere. The absence of sufficiently good staff training might, for example, be the cause of a high number of items being returned by customers as being unsuitable for their needs. The symptom is more measurable than the disease. By identifying and measuring the knock-on consequences of absence, it is sometimes possible to create new metrics that actually suit both parties better.

Fortunately, procurement pitches rarely call for such extreme measures. Most times, you can actually navigate successfully through a pitch to procurement people by doing what I suggested in the first place – seeking them out and actively embracing them. As I’ve already suggested, you’ll already be a step or two ahead of many of your competitors. Seek them out. They’re not expecting it.

The ‘RFI in a box’

The first step in engaging with procurement people, and then shaping them to match your point of view, is to make contact. This should be done very early in the pitch process – ideally even before the formal pitch process has started. I recommend to clients of my company Ingenuity that they proactively seek out procurement people. Not surprisingly, their phones tend to ring a lot less than their marketing colleagues. This is perhaps one reason why they are more in the habit of answering the phone when it rings (as compared with the perpetual voicemail you find in marketing departments). A good early step is to make an effort to make their life easier. One way of doing this is to supply them with the kind of information they require in the long-listing stage before they actually get to the long-listing stage. If you’ve filled in a few PQQs (pre-qualification questionnaires) or RFIs (requests for information) or any of the other TLAs (three-letter acronyms) you find in business, you’ll have spotted that most procurement people tend to ask similar questions. Size of business, key services, age of the business – in fact a whole raft of standard questions. It’s a relatively easy task to recycle this information, package it up yourself and proactively supply it to your procurement targets in a ready-made form. Even if subsequently you have to do it again in their own format, you may find that the simple act of sending what we call an ‘RFI in a box’ has contributed to you being put on the list in the first place.

When stress is good

Then go out of your way to court them. Earlier on in this chapter I suggested that procurement people are ready to listen. First, you must do some listening yourself. If you are to stand any chance of creating a constructive relationship with procurement, it is essential that you understand not just what they want, but also – more importantly – why they want it. If you don’t have a clear understanding of their motivations, you might as well pack up and go home because you will never get them to shift their ground on anything. You need to listen hard to what’s being said – not because you have any interest in how the forms need to be filled in, but because you are looking for holes, little flaws in the logic. Like tiny stress fractures in the wing of an airliner, with a little extra pressure they can suddenly open up and bring the whole thing crashing down.

One thing to look out for is any sign that a procurement process originally designed for a wholly different situation has been adapted for use in yours. This might give you the chance to exploit a small stress fracture and open it up. If not, continue to do what they say, but don’t be afraid to challenge any assumptions you don’t agree with. The trick is to pitch it as simply a different means to the same end. One assumption open to challenge, particularly when you are pitching higher value services, consultancy or similar, is the concept that lower price can be achieved without higher risk. Years ago, people I knew who worked for a technology company used to tell me that a good way to take on a ‘difficult’ procurement person was the tactic known as FUD; fear, uncertainty and doubt. Even a really brazen procurement person isn’t going to welcome exposure to excessive risk simply to achieve a rock-bottom price. The question is, where exactly are the areas of risk and what are the possible consequences? So tell them.

Re-calibrating what’s important

Remember the ‘RFI in a box’ idea? You weren’t thinking of just recycling a previous RFI, were you? No, this is a far more creative task. You will know what the strengths of your own company are, as well as the strengths and weaknesses of whatever it is you are pitching. You will also have a pretty good idea about how well you compare against your usual competitors. There are going to be some areas where you beat the others. (If you can’t think of any, you might want to consider moving to another job.) Your task is to convince the procurement people that these are the areas that are critical to success. You also need to convince them that the absence of these strengths would increase the risk factor exponentially. This needs to be done as early in the process as possible, and that very first approach to procurement, even prior to the long-listing stage, is the ideal time to do it. And so your own ‘RFI in a box’ is not just a rehash of the standard questions you’ve answered in the past – it is an opportunity to create new questions, answer them forcefully in the affirmative and explain exactly why your company has made this a top priority.

Question 14(b): Does your company have NXV174 programming skills in-house?

Answer: HippityHop Industries has NXV174 programming skills both in-house and in depth. HHI is fully aware of the critical need for these skills, the essential nature of their contribution to the success of a project and the extreme risks presented by failure to have them either in-house or in sufficient quantity. HHI therefore retains a staff of 14 technicians fully skilled in NXV174.

The procurement person might not have the foggiest idea what NXV174 is. But it just might be enough for them to conclude that they ought just to check that all the contenders do have it. And how fabulous would that be, to get back a tender invitation six months later which makes a point of asking you about your own particular strengths?