I recently came across this piece in E-Sourcing Forum excerpting an article from Paladin Associate's new newsletter, Checkmate News which you can sign up for here (it's not available on-line as far as I can tell). The article is one of the more entertaining, original and downright accurate pieces I've read in recent memory. In it, Paladin Associates describes how sales people try to circumvent procurement in what are often nefarious ways. Indeed, "there's a silent war going on between salespeople and procurement where one side does not even know they're being targeted." But Paladin argues that it's possible to gain the upper hand back from your supplier's sales team by understanding exactly the types of techniques they're using in the first place.
To this end, a smart sales guy might "offer up an agreement on a price that is less than first offered but then is fixed for a period of time, even when industry prices are dropping. Another twist on this strategy comes up when a salesman knows there will be changes to a product mix and quotes lower prices for certain SKUs knowing that they will change when actual orders are placed … salesman might attempt to influence the RFP process by offering to write or guide aspects of its creation -- obviously in their favor -- or might simply offer a "best and final" offer prior to a competitive negotiation with a promise to withdraw it prior to an actual face-to-face discussion or online bidding event." All in all, it's probably the most informative few minutes I've spent reading an article in the sector this year.
As an after thought, these clever circumlocutions of modern spend management systems may actually be the product of antiquated sales compensation structures. Vendors that steadfastly adhere to near 100% 'straight commission' for their sales force -- believing that it is cost effective and the best motivator -- may really be stepping on their tails when it comes to partnering with their customers and establishing precious long term relationships. Disclosure: Paladin Associates is a sponsor of Spend Matters Navigator.
- Jason Busch