Low Information Buying Process = Significant Stakeholders Desired Outcomes (SDO) Erosion!

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I was recently on the phone with the CEO of a software solution provider whom I met at a recent conference (Hi Russ) in our profession and we started talking about how the process of engaging with suppliers is inefficient and ineffective.  While I’m sure that every person who has ever been on the sell side has held that opinion, the movement towards relationships and collaboration between suppliers and customers must be supported by similar movement in the underlying processes.

We both reminisced about potential opportunities where we declined to even respond because it was clear that it was a very “paranoid” process that did not provide nearly enough details about the needs and precluded any further discovery about them.  A pretty challenging situation for any supplier to recommend the best solution.  Other situations where no information is provided regarding  the timeline  for the selection process, who will be making the actual decisions along with  their desired outcomes, how many invitees there are and how many will be culled out at each stage of the process, make it almost impossible for the sell side to determine what the real  opportunity is and what level of resources to commit to the response.  The implication for the buy side is that the best solution is not being presented for consideration.  While you may look at that as a lost opportunity for the sell side, it is equally a lost opportunity for the buy side to get the best solution.

While we have made this point before, it is worth repeating.  If the goal for the buy side is to find the absolute best solution available in the market that will exceed their Stakeholders Desired Outcomes (SDO) , then any process that does not proactively produce the best potential suppliers for consideration has failed and failed miserably?  Processes that encourage potential suppliers to de-select themselves and not respond and/or treat the opportunity as a “C” and not an “A” opportunity and invest in the sales cycle commensurately, will clearly fail in their objective.  Processes that block legitimate exchange of information between suppliers and procurements’ stakeholders mean that the contracting process will not address all of the SDOs inevitably leading to significant dissatisfaction post contract?  Processes that are inherently adversarial in nature and feel heavy handed and one sided accompanied with overly aggressive behaviors during negotiations will never deliver collaboration post contract.  Incidentally, most of the time the people who run the process on the buy side are not the ones who manage the relationship post contract which makes it even harder.

It is safe to assume that the suppliers are also ranking and grading their prospects and customers. Having been on both sides, I can personally attest to that.  Yet it feels like the buy side does not factor that into their processes under the assumption that their business is so attractive that the best sellers will flock to it.  The assumption made by the buy side is that all the leverage is with them.  While that may be marginally true pre-contract, it is not remotely true post contract.  By the way, the leverage is only available if the suppliers “grant” that leverage and the best suppliers may not be willing to grant that leverage and choose to not even participate.

While sharing too much information may mean giving up some negotiating leverage, it is clear that not sharing enough information is significantly worse.  We would love to hear from both sides and start a conversation.

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Dalip Raheja
Dalip Raheja is President and CEO of The Mpower Group (TMG). Dalip has over 30 years of experience managing large organizations and change initiatives. He has worked across the spectrums of supply chain management, strategic sourcing, and management consulting.
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2 Comments

  1. This is a consistent issue especially acute in long product cycles coupled with long RFI/RFQ to award process(es). I agree that the leverage gravitates towards the supplier after the award.
    The customer has the ability to get a more favorable cost outcome by being more open with potential suppliers in the RFQ process . There is a “cost” (perhaps not always clearly quantifiable at the outset) to not being transparent in the process.

  2. Pingback: Expense/Cost Management – Brave New World or Back to the Future? - News You Can Use

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