Change Management in a Dog Eat Dog World

on Wednesday, February 8, 2012

A man walks down the street. It’s a street in a strange world.
Maybe it’s the third world. Maybe it’s his first time around.
He doesn’t speak the language. He holds no currency.
He is a foreign man.
He is surrounded….

-Paul Simon, “You Can Call Me Al”

The role of an indirect spend procurement professional is not an easy one. You walk into every meeting with a new stakeholder or end user with a target on your back that says “Get Rid of Me”. The one common element that binds most organizations – from HR to Marketing to IT, is a loathing of procurement’s involvement with their suppliers. Even Finance, the department that most likely identified the need for an indirect spend procurement group, started to question that decision once you started talking about the cost of the yearly audit or treasury service fees.

The initial questions and comments from a new stakeholder are always the same. “What about the QUALITY? What about the SERVICE? You can’t get this kind of service from other suppliers, we know, we tried before and failed. And besides, we know we already have the best price. Why do you think you can do any better?”

After that meeting you get a call from someone higher up in the organization than you saying, “You know, maybe we shouldn’t look at advertising costs. After all, the marketing team did issue an RFP to two suppliers 4 years ago. They ended up sticking with the incumbent with only a small increase in price. And we have that big ad campaign coming up next year. Probably not the best place for us to look right now.”

In no other area of business are things looked at as subjectively as indirect spend. The qualitative aspects of the spend are difficult to define, the supplier relationships are personal, and everybody likes to think they got the best price.
So what is an indirect sourcing manager, in a department where he has no authority, without category expertise, and surrounded by coworkers that do not want procurement’s involvement, to do? The key is to know what you are getting yourself into, and preparing for it.

Know the market, at least a little bit
It’s improbable, if not impossible, for an indirect sourcing manager to know the ins and outs of every spend category before starting a new project. It just doesn’t make sense to commit the time and effort into learning about the property/casualty insurance market until you need to. But as a sourcing manager, you know what to look for. What is the market doing? Who is the competition? What are the key attributes that drive cost? These are things you can research before going into a meeting with a new stakeholder. Look for new market intelligence or relevant news items and come prepared to talk about them. Chances are you might have information the stakeholder wasn’t aware of. As I like to tell the consultants in my office, if you know one thing the other guy doesn’t know, you are the expert.

Pre-empt the pushback
Before going into a meeting with marketing, you can easily predict some of the feedback you are going to receive. “Our agency already negotiates ad costs, we don’t need help there…the value our partnerships provide from a revenue standpoint far exceeds any cost savings we can produce….this isn’t office supplies, you can’t just change vendors.”

Knowing the issues stakeholders will raise gives you a chance to address them before they bring them up. It also allows you to pre-empt the pushback with their superiors. In this example, before you go into a meeting with the marketing team you can meet with their boss (and yours) and talk about all the issues you expect to encounter. Then, when the marketing team tries to go around you to cutoff the project, your superiors will know what to expect and how to address challenges to the project and process.

Show your expertise
Ultimately, what you are selling to stakeholders isn’t your knowledge of their industry or your ability to pre-empt their B.S., it’s your expertise in spend analysis, strategic sourcing and negotiation best practices. You make deals and negotiate with vendors every day, they don’t. If a buyer was about to purchase a new car, they would probably love to have an expert negotiator sitting on their side of the table. Why should those same buyers think any differently about their business requirements? One thing you can do to show your expertise is to provide case studies of the value you brought in other areas of the organization. Maybe you had a big win with the IT department or with Human Resources. Have those stakeholders meet one on one with the new group to talk about the experience. If you were successful, they should be able to talk to your ability to collaborate and the value you brought to the process. Maybe they can even say how the vendor relationship improved, because you played the role of the “bad guy” to make sure costs were reduces and service levels were enhanced, while they continued to operate as the “good guy” for normal day to day activities.

The job of the indirect sourcing manager isn’t an easy one, and you can’t expect to do it alone. But you also can’t expect support without asking for it – and being accountable for it. Theoretically, cost reduction is always a good idea, but ensuring you’ve built up your own network of sponsors, and given them the tools they need to address pushback, is necessary to ensure your success.
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