2023 GLOBAL SRM RESEARCH REPORT
SALES PERSPECTIVE: SAMA
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looking at things like gain-sharing, cost-plus scenarios and different schemes that they can adjust themselves to, such as the economy or environment,” he says. Change of heart The global supply chain issues that were triggered by COVID-19 pandemic forced more procuring companies to realise the value of becoming a customer of choice, as they now appreciate just how vital suppliers are to their ability to trade. After years when procurement was largely in control, and often adopted a price-focused strategy for all but the most critical of suppliers, the pandemic saw a sudden shift. “Suppliers had to start making tough decisions because suddenly demand was exceeding supply,” says Dunham. “They had to decide who was going to get products and services and who wasn’t which meant they had to become very strategic about which customers they couldn’t afford to lose.” In the post-pandemic era, something of an equilibrium exists, believes Jensen, at least for now. “From what I can tell, it seems like people are playing a little bit nicer than they were pre-pandemic,” he says. “They’ve realised how much they need each other. But memories are short, budgets are tight and revenue expectations from shareholders are astronomical. We’re in a relatively poor economic environment. All of those factors play into it.” Disruptive influences Procurement teams would do well to listen to some of the frustrations that stem from the sales side if they are serious about becoming customers of choice. One is that often a change of personnel on procurement teams can mean a complete overhaul of existing relationships. “If you’re a strategic account manager for a large customer and everything was fine, and all of a sudden a new procurement person comes in and says ‘we’re going in this way now’, it’s hard,” says Jensen. “There are cases where customers
lose suppliers, which they were previously able to trust and work with, because those relationships just fall apart.” Dunham identifies another trend which can cause friction, in the use
when a customer is demanding more than their business is worth to you. One of the things that salespeople need to learn to say is: ‘We can’t do that; we can do this’. That’s when you start getting into negotiations and trading.”
‘This isn’t a case of becoming a customer of choice and staying there for ever; it’s being a customer of choice for now’
Complex relationship
Christopher Jensen , Director, Customer Solutions, at Strategic Account Management Association
of external consultants to procure goods and services in lieu of using your internal procurement team. “A critical supplier may have worked hard to develop a trust-based relationship with a customer. Then without much, if any, warning, the customer hires an external authority to source a specific product, solution or service who has the power to make the buying decision,” he says. “Then the external consultant asks for all this product, company and pricing information from you and your competitors! They use the accumulated information to build a consulting practice, or procurement consulting practice within their consulting company, and set themselves out to run procurement for other companies. The pitch to the CEO of a prospective new customer is that they can buy better than their procurement people can, because they have more information.” Warning for procurement Those working in procurement, though, should be wary of pushing the relationship too far. “As a supplier, there is always the option of not providing or withdrawing your quote if their request for quotation becomes unreasonable,” says Dunham. “That’s probably the most powerful thing you can do
Jensen, meanwhile, warns procurement organisations that do become a customer of choice with a key supplier not to get too comfortable. “Suppliers that have strategic account programmes for their top customers typically review them each year. They literally ask themselves whether or not the relationship is still mutually beneficial with each of their strategic accounts,” he says. “This isn’t a case of becoming a customer of choice and staying there for ever; it’s being a customer of choice for now.” Customers should also be aware of just how quickly their situation can change, advises Dunham. He points to the worsening US-China relations – with its implications for the supply of semi-conductors among other components – and the war in Ukraine as current examples of issues which could again see a time when supply is scarce. “That’s when it becomes a question for the customer of who are the suppliers that they can rely on so they have security of supply on critical components,” he says. “When organisations can’t run their factories, logistics operations and/or businesses due to a supply shortage, they’re in trouble and become reliant on their key suppliers to bail them out.”
The relationship between procurement and sales teams has always been something of a power struggle. Here, Harvey Dunham and Christopher Jensen of the Strategic Account Management Association, give the sales slant on how procurement can genuinely become a customer of choice.
It’s fair to say there’s a degree of scepticism when sales teams hear talk from procurement of becoming a “customer of choice”, let alone treating suppliers as part of an extended enterprise. “Everybody wants that; that’s why strategic account management programmes exist for those big customers who want to partner with a trusted supplier,” points out Harvey Dunham, managing director, strategy and marketing, at the Strategic Account Management Association (SAMA); a community dedicated to advancing the strategic account management profession and which works regularly with procurement from the perspective of sales teams. “But it very much depends on the customer’s view of which suppliers are strategic to them and their procurement strategy.
“Some companies have a procurement strategy where they look at their suppliers, or at least some of their critical suppliers, as partners who can really help
kind of approach is only deployed towards a limited number of key customers, he adds, depending on how critical they are to the supplier’s business.
‘As a supplier, there is always the option of not providing or withdrawing your quote if their request for quotation becomes unreasonable. That’s probably the most powerful thing you can do when a customer is demanding more than their business is worth to you’ Harvey Dunham , Managing Director, Strategy and Marketing, Strategic Account Management Association
Such relationships need to be carefully nurtured by both procurement and sales teams if they are to flourish, says Christopher Jensen, director, customer solutions, at SAMA. “The companies that do this well use joint scorecards,
them. These suppliers are not just selling goods and services. They are bringing insights and helping their customer implement productivity improvements, cost reductions and innovation.” Typically, though, this
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