Are there savings available to your company that you are not getting? Are you using best practices in strategic sourcing? Who selects your suppliers? Who awards the contract? Are these decisions made objectively? Is the price that you are paying the best price available for the required service levels? How do you know?

Periodically we find that suppliers have offerings that can benefit an organization, but they are overlooked because they are detrimental to the individual that is responsible for the spend. Suppliers are smart. During the year, there are tickets to sports events, lunches, dinners, trips, conferences and other benefits of the supply relationship that go to the individual and not the company. These benefits are often considered to be relevant to "building the relationship".

We have seen extreme cases of supplier preference, often while hearing what a great job the supplier is doing. One case involved a large telecommunications contract. The internal team at the client that "owned" the spend was the network support group. At the start of the sourcing project the "team" cited their rationale for staying with the incumbent supplier. It was a long standing relationship in which the incumbent had done a great job. There was a cost of change etc etc.

Noting all of their specifications, needed service levels, requirements and concerns, we executed on the agreed to sourcing strategy. What were the results?

An alternate tier 1 supplier proposed a completely managed solution that yielded almost $1 million in hard dollar savings. Since it was a managed solution, the network support group could eliminate 3 people from their team further increasing the savings for the company. What was the reaction of the network support group when we showed them our findings?

"You get what you pay for"! "Where did you find this deal"! "There must be something wrong"! We heard all the reasons why not. No one even wanted to explore the supplier's offering in detail.

Needless to say, we took our findings to our executive sponsor who was very interested in the potential savings. After considerable political effort and overcoming all of the objections from the network support group (some bordered on the ridiculous), the executive team agreed to the change in suppliers. The new network is up and running and the client is benefiting from a better solution at a lower cost.

Much the same way that Batman has to struggle with moral dilemmas, many corporate "Dark Knights" have to make decisions that are for the greater good (the company) even to their own personal detriment. Many times, executive management is in the dark when it comes to evaluating and benchmarking their costs. Procurement Service Providers can provide a cost effective and objective "look" at operational spend. They can spot the wolves and help you to drive savings even when people are telling you about the great relationships, value and service that you are getting. When a supplier has something to offer outside of the commercial relationship, we tell them to "put it in the price". This helps to eliminate some of the subjective decision making it easier to compare offers across suppliers.
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Steve Belli

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