Strategic Sourceror TipsAs a procurement service provider, we are often asked what are the inhibitors and challenges to the success of a strategic sourcing initiative.  While every company is unique, and every industry has its own quirks, the reality is the reasons for failure or challenges to success are often incredibly similar.

This is a topic that could lead to a list of hundreds of items and a ton of heated discussions and excuses, but I wanted to focus on just a dozen of the most common objections and hurdles that procurement teams face.  Keep a sharp eye, as unfortunately you may see some items that you yourself are guilty of (and you may not even realize it).

  • "Don't worry, you will not lose the business" The Maverick Deal - This is when someone, whether it is an end-user or high-level manager, is doing the end-run around the sourcing team and is either establishing a side deal with the supplier or tipping them off as to how to maintain or win the business.

  • "That's not how we're measured" A suprisingly common objection, particularly when dealing with individuals who control (are responsible for) spend; yet are not tied to the purchasing team.  Simply put, the decision maker does not care what the price is or what the ultimate cost is to the organization, as their job performance (and compensation) does not specifically hold them accountable for lowering their budget. Often, this is tied to antiquated or unfair metrics that are assigned to a department without ultimate consideration of the organization as a whole.  For example, a internal print shop manager must turn around all internal requests within 4 hours - yet the goal was originally established when the company had more people and was more reliant on paper than it is today.

  • "We have a special relationship with our suppliers" We don’t want to jeopardize our supplier relations.” - This one is all too common.  Many people feel that they have special relationships with their suppliers, and in fact, they do.  However, if that supplier is truely your business partner, then they will need to support your initiatives as much as any other supplier that is willing to take that business.

  • "Don’t have time… I’ll get back to you." Sadly, this is sometimes an honest objection, people are time and resource crunched.

  • "At the sound of the beep, leave a message." This is taking the objection above a step further, it is when someone (whether a team member, end user, or supplier) avoids your call and your emails.  Among other suppliers, certain small parcel carriers take this to the extreme and simply do not respond for months to your requests for infomation, knowing that their are only two choices in town and that they can come in at the last minute with a slightly improved deal to retain your business.

  • "I need to check this with…" Either the person isn't empowered to make a decision (hint: you are talking to the wrong person), or they are delaying you in attempt to make you give up and go away.  It is seen equally often from your own coworkers as well as that sales rep that you asked to lower her price.

  • "We're already doing that" When an idea, opportunity or question is raised, yet they refuse to demonstrate it to you or allow you to audit the process.

  • "Not Me, Not Here" Yes, our company is wasteful and we need help lowering our spend and our operating costs or we will have layoffs. BUT... don't look at my department, everything is fine here, go somewhere else.

  • "We've already tried that, it didn't work." Without any regards for the changes in the industry, supply base, suppliers themselves, technology, processes or anything else that has evolved since it was last attempted 11 years ago.

  • "Why do I need help, I have been doing this for 18 years" Yes, you negotiated a reasonable telecommunications agreement for us once every 3 years or so.  So, you actually only did it 6 times, the last time being 3 years ago. Surely nothing has changed in a market that technology changes by the minute.

  • "I already did it, or I already negotiated HUGE savings." Then what is the harm in letting someone else lend a fresh set of eyes?

  • "The computer system (insert Ariba, Ketera, SAP, etc. here) got us the best deal"
    Although this is a relatively new excuse, we see this often enough.  Entire procurement teams rely exclusively on the results of some electronic reverse auction as justification that they have the best possible supplier at the best possible price for their organization.
What other common complaints/objections and sourcing roadblocks did I miss?
Next week, in part 2, I'll offer some high-level advice on how to overcome some of these challenges.
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William Dorn

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