July 17, 2023
Sales and Procurement Teams: Old Foes or Kindred Spirits?
Global Leader: Procurement, Sourcing, Shared Services & Operations
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In the world of business, sales and procurement teams have traditionally been seen as adversaries, each pursuing their own objectives and often at odds with one another. The relationships are static, and the results are status quo, leaving team members feeling like they are playing a virtual tug of war rather than collaborating for mutual success.
A new perspective is emerging, one that recognizes the potential for collaboration and synergy between these two functions. Rather than being old foes, sales and procurement teams may be kindred spirits with shared goals and complementary roles in driving business success.
Kate Vitasek, author and professor at the University of Tennessee, captures this thought best with her research - The Vested Way®. Simply stated, “The vast majority of business relationships operate with an “us vs. them” mindset: management vs. union, buyer vs. supplier….the focus needs to shift from a “What’s-in-it-for-Me” culture into a highly collaborative and engaged “What’s-in-it-for-We” culture.”
This article will explore the evolving dynamics between sales and procurement teams and highlight the importance of understanding their alignment and interdependence, operating imperatives, personas, and customer profiles.
Selling into the Back Office: A Challenging Endeavor
One of the significant challenges sales teams face is selling into the back office, where procurement functions typically reside. Procurement’s role is generally determined by the company culture, values, industry, maturation of the function, and from my experience, the personas from the CEO down into the organization.
To set the context, procurement often focuses on cost optimization, efficiency, and risk mitigation. This presents unique hurdles for sales professionals, as they must navigate the intricacies of procurement processes and demonstrate the value their offerings bring.
Company Culture & Values
Company culture is a major factor in determining the role procurement plays. Culture refers to the shared values, beliefs, attitudes, and behaviors in this example relating to the procurement function within an organization. It encompasses how procurement professionals interact with each other, other departments, and external stakeholders. A strong procurement culture can significantly impact the effectiveness and efficiency of procurement activities.
Some elements that contribute to a positive procurement culture:
- Collaboration and communication: A healthy procurement culture fosters collaboration and open communication among team members and stakeholders.
- Ethical practices: A strong procurement culture promotes ethical behavior, transparency, and fairness.
- Continuous improvement: A proactive procurement culture encourages continuous learning and improvement at the individual and team levels.
- Supplier Relationship Management: A positive procurement culture recognizes the importance of building and maintaining strong supplier relationships.
- Innovation and Adaptability: An effective procurement culture encourages innovation and adaptability to address changing market conditions and emerging technologies.
- Recognition and Rewards: Celebrating success, acknowledging exceptional performance, and providing career growth and development opportunities contribute to employee engagement and motivation.
A company’s culture should align with the overall organizational culture and values while also considering the specific requirements and challenges of the procurement function.
The industry can influence Procurement’s role
The industry in which a company operates can significantly impact the role of procurement. Different industries have distinct characteristics, dynamics, and requirements that influence how procurement functions and the specific challenges they face.
Here are a few ways in which the industry can impact procurement:
- Supply Chain Complexity: Industries with complex and global supply chains, such as manufacturing or retail, often require procurement teams to manage a vast network of suppliers across multiple regions involving logistics, country-specific regulations, and varying supplier capabilities.
- Margins: Highly cost-sensitive industries, such as healthcare or construction, strongly emphasize procurement's role in cost management. However, trade-offs must be managed, e.g., negotiating favorable pricing while optimizing supplier contracts and finding cost-effective alternatives without compromising quality.
- Innovation and Technology: Industries driven by innovation, such as technology or automotive, require procurement teams to be actively involved in sourcing cutting-edge technologies, identifying strategic suppliers, and managing intellectual property rights. This comes with a heightened awareness of information security concerns.
- Sustainability and CSR: Industries focusing on sustainability and corporate social responsibility (CSR), such as consumer goods or energy, often require procurement to incorporate sustainable practices into supplier selection, evaluate environmental impacts, and drive initiatives for responsible sourcing.
It is crucial for all parties - sales and procurement - to understand the industry dynamics, specific challenges, and regulatory requirements to effectively perform their roles and contribute to the success of the “We” outcomes.
Maturation of the Procurement function influences their engagement model
As procurement matures, it often moves from a transactional and tactical role to a more strategic and value-added function. The evolution of the function has a profound impact on its engagement model as follows:
- Strategic Alignment: Mature procurement functions align their strategies with the overall goals and objectives of the organization. Procurement can proactively identify opportunities to deliver the right business outcomes by understanding the business strategy.
- Influencability: As the procurement function matures, it gains greater organizational influence. Mature procurement teams are involved in early-stage decision-making, collaborating with other departments to identify sourcing needs and requirements. Their expertise and insights are sought after, and they are often considered a trusted advisor and business partner.
- Cross-Functional Collaboration: Mature procurement functions actively collaborate with other departments, such as finance, operations, and marketing, to achieve shared goals.
- Supplier Relationship Management: Mature procurement functions prioritize supplier relationship management (SRM) as a strategic initiative.
- Performance Measurement and Reporting: Mature procurement functions establish robust performance measurement and reporting mechanisms. They track key performance indicators (KPIs), such as cost savings, supplier performance, and contract compliance, and communicate the results to stakeholders.
- Executive Support: The maturation of the procurement function often coincides with increased support and recognition from senior executives.
Overall, the maturation of the procurement function enhances engagement by aligning its activities with organizational goals, increasing influence and collaboration, and demonstrating its value through performance measurement and continuous improvement efforts.
Aligning with the Ideal Customer Profile (ICP) and Persona
To combat the above factors, sales teams must align their strategies with the right ICP and persona within the procurement function. Understanding the individuals involved in the purchasing decisions and their motivations is crucial. What drives and motivates them? What are their imperatives? How do they get measured? By answering these questions, sales professionals can tailor their approach and messaging to resonate with the needs and priorities of the procurement team.
Other factors to consider:
Centralization, Decentralization, and Hybrid Approaches
Another aspect to consider is the structure of the procurement function. Is it centralized, decentralized, or a hybrid model? This knowledge can provide valuable insights for sales teams. Centralized procurement functions often have streamlined processes, allowing for easier engagement and negotiation. Decentralized structures may require engaging with multiple stakeholders, each with its own priorities. Hybrid models introduce a mix of centralization and decentralization, necessitating a flexible approach.
Direct and Indirect Procurement
Sales professionals must also understand whether procurement primarily operates through direct or indirect channels. Direct procurement involves the sourcing of goods and services that are essential to a company's core operations. Indirect procurement, on the other hand, focuses on non-core goods and services, such as office supplies or software licenses. By grasping the nature of the procurement channels, sales teams can tailor their offerings and engagement strategies accordingly.
The traditional adversarial relationship between sales and procurement is evolving into a more collaborative and synergistic partnership. By recognizing the shared goals and complementary roles of these functions, organizations can harness the potential for mutual success. The engagement between sales and procurement is influenced by factors such as company culture, industry dynamics, the maturation of the procurement function, and alignment with the ideal customer profile and persona. As procurement matures and becomes more strategic, it aligns its activities with organizational goals, enhances cross-functional collaboration, and establishes robust performance measurement mechanisms.
Sales professionals can overcome the challenges of selling into the back office by understanding procurement's role, embracing collaboration, and tailoring their approach to align with procurement's imperatives. By adopting this collaborative mindset, organizations can foster a highly engaged and productive relationship between sales and procurement, driving efficiency, better decision-making, and overall business prosperity.