Selling to Big Pharma and Big Food

Big Pharma (all the largest pharmaceutical companies in the world) and Big Food (all the big brand companies we know and love) have all adopted, in one form or another, an approach to purchasing called category management. This isn’t new but it is very well embedded and it has some serious implications for the way in which sales teams need to approach these businesses.

 

Category Management asks the customer to work across their organisation as a team to clarify their needs and wants at a good level of detail, to identify the most appropriate way forward to acquire the products or services and to seek the broad delivery of value from the imply chain and the use of those products and services. Of course, there’s more, but the fundamentals are pretty much the same. Some categories may value areas like risk avoidance and low price more than innovation and development, or have an entirely different mix of needs and wants.

 

Of course, their needs and wants will be influenced by their business strategy; growth and expansion drives a different set of behaviours and needs than contraction and withdrawal. Equally, their approach will be influenced by their current position and historical activity, and the current internal stakeholders engaged in the conversation.

 

Further, the approach defined will be dependent on the way in which the customer perceives the marketplace to be working. Understanding of the boundaries and dynamics in a marketplace will be built into any approach which is developed for future purchases.

 

As such, an organisation which has to sell to a business which has a developed category strategy will require a different approach than selling to a business which does not have such a strategy. The best way to sell is to address the content of that strategy and demonstrate how the products or services offered best meet the category strategy.

 

The big question is whether a sales team can either access or imagine the category strategy. Asking for a synopsis would be a good start, but if it’s not available, it may be possible to develop a good approximation of that category strategy – after all, it was put together by a similar group of bright motivated people who were following a well described process.

 

To do this, the sales teams needs a similarly constructed process, which allows key insights to be developed about the customers strategy, and identifies the way in which the sale needs to be positioned to maximise the chances of success.

 

This may sound impossible, but much of the required information will already be available, just not assembled in a way that allows a possible customer strategy to be identified. As such, getting a degree of guidance on how this might work is a sensible step. Remember that your own procurement team may have insight and understanding in how this works and could be developed.

 

Working in this manner, a number of sales teams have dramatically increased their success rates in replying to customer needs, by having a very clear focus. Without this, the reply to a customer will be based on something other than their strategy, and therefore has far less chance of success.

 

Mark Hubbard thinks about sales and procurement at http://www.smartbrowndog.com

 

 

 

 

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Unilever, Linked In and Sales Process

Over on Linked In, there is a long debate going on in  one of the sales forums about two linked activities; does anyone use a sales process, and is there any coaching for sales teams anymore? From the perspective of someone engaged deeply in purchasing, this is a really interesting thought process. On the purchasing the debate about whether there is a need for a procurement process is long since over; the only debate is about how deeply approaches such as category management are applied.

However, there’s no sign of that as a concept in the wider sales community. Examples of well developed and embedded sales processes do exist, such as those employed by Unilever (who seem to be pretty good at selling their products and services). However, the debate in the Linked In forum got as far as both decrying what a process is (going from a proscribed set of steps, and therefore anathema to the need for flexibility in sales, to a loose direction which can be followed at the level required to achieve success, and therefore not a process) and whether the individual brilliance and natural read of human character available to all great sales people is unnaturally constrained by having to even glance at a process.

A small number of commentators recognised the imbalance between the rest of the departments in their organisation (imagine manufacturing, or accounting, with no process to follow), suggesting that perhaps some level of process might be helpful in getting a degree of repeatability. An even smaller number get the opportunity to concentrate on elements known to help sales activity and to get better at this.

The parallel discussion reflecting on the lack of coaching in sales was equally illuminating, particularly when read in parallel to the lack of process. Coaching is tough to do, but when there’s no underlying guiding principles to work on, it tends to fall back on ‘do it like me’  – which can be fine, as long as a previous coach hasn’t used an entirely different approach. The linkage between the two areas – an adequate process, and a developed coaching approach, seems to be invisible to many commentators.

So, what does this tell the procurement community? Firstly, if there is no generally accepted or built approach, we shouldn’t expect any consistency from sales teams. If the person changes, the approach changes. Further, don’t expect an understanding of procurement processes in large businesses. If there’s no coaching or explanation of how this is done, they won’t know. Interestingly, this adds a whole twist into how we need to explain things to suppliers. We need to be up-front in communicating the procurement process to them, so they know what to do.

There is a huge area of alignment between sales and purchasing. Both sides need to understand the business requirements which need to be met; purchasing, so they can explain them, and sales so they can fulfil them. Perhaps if there is a concentration on this area as a start, it will both help Procurement get the best from sales, and help sales accelarate the process of meeting those requirements.

Mark Hubbard thinks about Procurement and Sales at www.smartbrowndog.com

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How to Read an RFP for greater sales success

Chatting to a friend last week who gets involved in big RFP’s from a sales side raised an interesting point: do sales teams really understand what an RFP is for?

At a surface level, there’s a bunch of questions that the procurement team are asking, but it’s important to understand what is driving those questions. Much of the design of an RFP can be understood by considering a series of thoughts, which give can give the overall context and flow of both the reasons for the questions, but also the flow of answers which are required to maximise success in the RFP process.

Here’s a series of ten areas which, if used well, will reveal the inner workings of RFP design.

  1. Assess the quality of the RFP as a whole, and the process it is being used in.
  2. Read the whole thing if possible ( note: some on-line systems completely prevent the development of context, much to the detriment of the process)
  3. Understand the context of the RFP within the customer as a whole
  4. Why were you asked to participate?
  5. How will it be assessed?
  6. What’s the business need or want for each question?
  7. Who’s on their team?
  8. What’s the process going forward?
  9. What does your procurement department say?
  10. What’s the depth of answer needed?

Lets look at these in more detail:

  1. Assess the quality of the RFP as a whole, and the process it is being used in.

As a starting point, how does the RFP feel?  Good ones stand out from bad ones in significant ways, both in terms of the way it arrives with you and is positioned, and in the way it is written in general. Anything that smells heavily of cut and paste should be regarded with a degree of suspicion, particularly as soon as questions become entirely irrelevant. Examples include industry specific irrelevance,  (e.g. FDA compliance questions if you’re selling steel..), clearly wrong geography. However, also think about the quality of the process; if you’re given a very short period to complete a complex document, what is that indicating? If a poor quality process or document is suggested, consider how the rest of the process will go, and if that qualifies out the effort. If you’re keen to progress, then it may be worth checking quality / timings with Procurement senior management, although there’s a risk of self exclusion within that.

2. Read the whole thing if possible ( note: some on-line systems completely prevent the development of context, much to the detriment of the process)

Getting a sense of the overall direction and approach being used gives a sense of the narrative which you’ll need to be delivering within the RFP. Questions are sometimes repeated, or reinforced; sections might be written by different groups with no cross referencing; something surprising might be hidden in later sections. For each, make a note for yourself of the general approach to answering the question and the amount of detail needed. Once you’ve got to the end, then you should be able to tailor the edit to both minimise input time but optimise the story being told. The caveat here is system; some RFP systems won’t help you do this. See if you can get an Excel version of the whole thing to peruse to make it easier.

3. Understand the context of the RFP within the customer as a whole

Although there may be a discrete introduction, there may not be. How does the RFP fit into the recent history of the business, such as profit warning or increased orders, new territory activity or contraction, new brooms sweeping clean; if you have that overall arc of narrative clear, you should be able to link your replies back to that to make more sense of the whole.

4. Why were you asked to participate?

The sub-context here is ; is this a complete surprise? It helps to feel that you’re a likely competitor in the marketplace, or are you there as a make-weight or a stalking horse, aiming to draw a better price out of your competition. Now we’re getting into the realms of game theory: if you’re there to help pressurise an incumbent, is this an opportunity either to win the work ( with the costs of change associated with that) or are you now in a position to hurl a completely curved ball at a competitor? If it feels right and wholesome, then perhaps there is a real competition going on, particularly if it looks like the business is ready for change and challenge, and it’s a high quality process. Big indicator here, though. If the RFP process is cheap and shoddy, the chances of big change happening are remote, as the procurement capability is unlikely to be able to get a big change to happen

5. How will it be assessed?

This is a beauty. RFP’s need to be designed to be assessed. As such, they must be both readable and scoreable. If there is no way of analysing and weighing your answer to a question, likelihood is that it won’t be taken into account. If it feels like there is a way of assessing the answer (besides weighing the amount of print) then make sure you’re answering in a way that impacts that score. Bear in mind that sometimes the assessment is along the lines of ‘they sound like they are really thinking about this’, so being erudite and coherent is always a good policy. Beware questions that are so badly written that ‘yes’ is an entire reply.

6. What’s the business need or want for each question?

Grab your hats. this is the core of the issue. Each question should be targeted at a specific need the customer has, and therefore, analysing that need or want will help you understand the underlying thrust of the RFP. As an example, questions about consignment stock are unlikely to be there for amusement; a core drive to stock elimination is in place and answers which allude to that both directly and indirectly help. However, there needs to be a balance maintained, as some requirements will have more weight than others. Trying to build a picture of that balance, and getting your story to match, is a key to this.

7. Who’s on their team?

If you can, work out who’s been involved in assembling the RFP. Knowing the key players gives you a sense of how the evaluation might be done and the way in which the answers need to be structured. It also balances against your view of priorities developed from understanding their needs and wants. If it all ties together, you’ve got a direction. If there’s something that stands out as odd – try to test why what is.

8. What’s the process going forward?

Understanding what happens next is key. The RFP is going to be read in depth by a small number of people; one is a possible answer here. So, going forward, there will be some level of assessment, a reduced group is likely to be invited to a beauty parade, and that’s what you need to get to. If that isn’t the process, this may be your only chance to impress ( actually, even if it is the process!). Try to get some idea of steps and timings, which allows you to build answers that both allow an evaluation but also provide a hook into your next presentation, and the key areas you want to address. The big issue for sales teams at this stage is often not having in place a way of asking questions of the customer from which a general direction can be identified; this is why RFP analysis is so critical.

9. What does your procurement department say?

If you’re stuck for ideas, go talk to people in your business who do this stuff; walk them through it and get their ideas (or call me!) There may be wrinkles in the whole process that are worth thinking about, so getting an Inside Track may be an appropriate thing to do, and your procurement team are your in house experts.

10. What’s the depth of answer needed?

From all the above, you should now be able to build a picture of what is required, from the direction of response required, through to the depth of answers needed, and the individual take-aways for each section and answer. Remember, the recipients need a way of evaluating the answer and as such, there needs to be an answer that is clear enough for that purpose. Attaching a marketing sheet to the document can work as an addition, but less so if it’s the only thing available.

With all of that to think about, often in limited time frames, it is amazing that good quality RFP’s are created and replied to at all. However, taking time to think about the process which sits behind the RFP, and the way in which the best replies can be created, is clearly core to increasing our chances of advancing a level in the sales process.

Mark Hubbard has worked in Purchasing and Procurement for more than 25 years and thinks about how this and sales interfaces at www.smartbrowndog.com

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Ryanair and the risk of the race to the bottom

Our previous observations on the benefit of having a clear strategy, using Ryanair as an example of clarity and the way that drives choices, had one predictable outcome: a number of comments on individuals perception of the service provided by Ryanair.

This does highlight one of the challenges of using a clear and easy to understand direction as a means of driving other decisions. When an absolute becomes the driving guide (the cheapest, the largest, the fastest..) then that can be used to override other considerations. Where it works well ( such as driving an adoption of lower cost airports) then it makes sense. When it breaches customer sensibilities, then there can be issues. Even Michael O’Leary has been heard to suggest stepping back from some of the more extreme elements of their approach.

The largest parallel example of this in procurement strategies is where cheap is allowed to overpower other requirements. There are a number of examples where excess zeal in price reduction has led to operational challenges in a number of sectors (names withheld to protect the guilty). This underlines the need for sophistication in the development of strategies,  where a clear balance of approaches is well developed and understood.

This takes us back to the need to be absolutely ruthless in defining and agreeing what the balance of business requirements really are. Disaster awaits where one requirement is assumed to take precedence over others without having tested and agreed that assumption with the owners of the other, and balancing requirements. To do this, there needs to be an established mechanism whereby the various parties involved can discuss and debate the priorities and record the way in which the balance of requirements is worked out. Of course, it’s still open to debate and discussion – this is a fallible and subjective set of concepts, involving organisational politics, rather than a structured scientific process. However, having an agreed approach is far better than having nothing.

On occasion, it is clear where a policy or values driven approach has taken precedent over other areas; often evident in industries where there is a high level of physical risk, then there is an acceptance that Health and Safety will always have priority. Even here it is necessary to reiterate the reasons why this precedence exists to ensure that the underlying issues are both understood and addressed.

So, what can we take away from this?

  1. A clear strategy does help, because it provides some fundamentals against which we can test a variety of possible solutions.
  2. It is likely that we will be dealing with a more complex mix of requirements, even when there is a clear strategy
  3. We need to make sure our understanding of the various business requirements is both clear, and agreed with others involved
  4. It is better to have a structure in which this is done.

None of this is news; however, the thoughtful use of these approaches is less well embedded than we need it to be. Working in this area and getting to excellent outcomes is a fundamental of good delivery.

Mark Hubbard thinks about sales and procurement at www.smartbrowndog.com

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Can Procurement learn anything from the Australian Ashes performance yesterday?

No.

 

Mark Hubbard thinks about Procurement and Sales at http://www.smartbrowndog.com

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The Ryanair Approach to Strategy

Often, when reviewing procurement strategies being developed in businesses, the standout feature common across many is the sheer lack of ambition. There’s often a host of reasons for this, including poor change management, limited time, bad governance, insufficient commitment or understanding, poor training / coaching / mentoring to name a few. Great strategies are often the product of both good quality individual and team thought, but also a range of supporting activities which allow the creative bit to work well.

In amongst all that, there is the need for a good level of creativity to flourish within the team addressing a particular category, and to find ways of throwing away a series of constraints. This can be hard to do from inside the bubble of a particular environment, so it can be useful to look elsewhere to see the way others have tackled issues of ‘breakthrough’.

Ryanair is a great example to think about, as it shows how a simple idea can be delivered through a host of transformation activities. The core of that simple idea is low price fares delivered through a low cost operating model; they are generally recognised as having some of the lowest price fares and the lowest cost operating model.

This simple vision then drives a whole series of approaches to get to that lowest cost operating model. As an example, Ryanair have a younger fleet than most airlines, giving fuel efficiency benefits (possibly the largest cost driver being faced until recently). They also have identical planes: all 737-800 which provides a significant benefit in negotiating position, servicing and maintenance and spare parts acquisition. They go to less popular airports and have leverage with the airport owner. Their approach to luggage and boarding times is legendary. As is food. However, the whole effect is coherent and drives a simple aim the customer can understand: get the ticket price down.

Clearly, get the price down is a very focussed target, and may not work well in all category strategies. However, finding a focus in a category can be very helpful as it really determines the general direction.

To do this well, we really need to have a strong grip on the business requirements: what are we really trying to do in this category. An absolute focus on maintaining supply (at all cost) drives a different approach to an absolute focus on price. Getting to that clarity as early as possible, and working to understand the different possibilities which will absolutely drive in that direction, gives a very potent way of getting alignment.

The challenge is usually to get the true alignment and focus on the requirements for a category of spend and make sure that is aligned to the business needs. Recent experience suggests that the clarity of business strategy can be lacking (or, worse, is perceived as meaningless management speak) which dilutes the rest of the activities which are driven from it. Where this is perceived as a problem, getting back into the detail of business direction will be time well spent.

Some categories, by their nature, will run across a broad spread of business strategies. Car fleet and property both run across environmental, image, H&S, HR strategies, so any category strategy has to work effectively across all of these. Direct categories need to take into account innovation, risk, time to market, customer requirements. There is clearly some complexity in working through how all these areas impact on a category, and the easy default is get the price down.

We need to do better than that. By exploring and challenging in detail what the category needs to do to align to the actual business requirements, we can really test if our ideas progress those requirements or not. The best category strategy drives the largest number of business requirements forward.

Mark Hubbard thinks about procurement and sales at www.Smartbrowndog.com

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The Killer App for Procurement

There’s a whole internet meme out there about Killer Apps for different products and different uses. Historically, I can recall Supercalc 4 being the miracle app for PC’s;  the Microsoft suite took over at some point; whole sets of word processing software surfed the wave, and fell off. SMS arguably was the killer phone app before smartphones.

In all of this, what’s the killer app for procurement? It could be SAP, but it so isn’t. There’s no procurement equivalent to salesforce.com. It might be one of the multi- solution platforms combining e-auctions and eRFX. But I bet it isn’t.

Truth is, there is no killer app for Procurement that stands out. Understanding why that is the case perhaps goes to the root of understanding the challenges facing Procurement, and could guide the development of something truly useful.

To get there, we need to understand what Procurement truly does. There’s a whole set of beautifully crafted phrases, which seem to boil down to ‘helping the business get the best possible value from its supply chain (by re-engineering whatever it takes to do that)’.

‘Helping’ is perhaps the most difficult phrase. As procurement buys almost nothing for itself, it is always working for a mix of stakeholders. The best it can do is to sell a great story about why a change is a great thing. As such, a way of telling a compelling story, with simple but great visuals, is a massive part of a successful, procurement led change program. The limited capability that many organisations, and people, have in this space is sometimes amazing to witness, and is one where dramatic coaching and practice is truly necessary.

The other big area is re-engineering whatever it takes. The best procurement outcomes have always had big change associated with them. to do that, the largest stumbling block is getting brave during the creative part of the category management process. Many fall at this hurdle. Indeed,  one nameless contact felt that developing innovations and options wasn’t necessary as surely the answer was clear ( before driving in another 2% price down).Leading a disparate group through the development of a change program is a big ask for many Procurement folk, and again, an uplift in skills in being able to do this bit is seriously needed.

So, is there an app for that? Both the areas identified need an approach which is personally acceptable, rather than systematically driven. Being brave in the creative part of the process is often about courage and individual comfort with addressing difficult areas, and leading others through it. So a range of both facilitation skills, and creative thinking approaches will help, together with the self possession to use them.

The communication element is tough ( and many apps are surely about communication). Seeking ways to get ideas over more powerfully, in a way that gives leaders the core ideas and issues, and stands out from PowerPoint death, is surely a killer app.

There’s nothing leaping out in the market at the moment, although new Adobe approaches to communications and better brainstorming approaches, linked to mind mapping and planning, are great.

Of course, there’s lots of other areas people need to look at: data gathering, market triggers, price movement, raw materials, rainfall in Idaho; perhaps one of these is a better target.

Procurement is a complex world; the silver bullet isn’t yet available. But we need to keep looking!

Mark Hubbard thinks about Procurement and Sales at Smart Brown Dog ltd.

www.smartbrowndog.com

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