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Frustrated By The Formalities of Buyers? Why Sellers Must Start:
Playing By The Rules
There are many things about modern buying that frustrate, even annoy, salespeople. But top of the list is buying rules and procedures. But this frustration is futile, even counterproductive.
In this whitepaper we will look at rules and procedures from the buyer’s perspective. In doing so, we will see why sellers should stop resisting the inevitable and learn to play by the rules.
“…sellers don’t understand why the buyer’s rules are needed…”
Complaining About The Rules? Sellers regularly complain of buying procedures that result in more paperwork, uncertainty and cost. Indeed, buyers tell us that sellers often vent their frustration at the requirements of buying process/rules – something that can amount to a red card offence. This happens not only because these sellers don't understand why rules are necessary, but cannot empathise with what the buyer's must do to get the purchase approved. But what is the point in sellers getting frustrated or annoyed with buyers who are simply doing their job?
Rules Are A Fact Of Life! Sellers shouldn't feel so hard done by - they are not the only ones affected by the rules and procedures that govern buying in large organizations. A senior public sector buyer provides a window onto a day in the life of a buyer bound by rules. Let's let her explain in her own words: ‘The number of calls to my office has doubled or tripled in the past 12 months’. ‘We have in effect become a procurement helpline!’ ‘People from right across the organisation ring up to ask ‘Can we do this?’, or ‘How do we do that?’ with respect to a purchase they must make. ‘They want to know what rules are involved, which ones can be bent and which ones cannot. The only problem is that they often don’t like what I have to say.’ ‘Some ring up looking for forgiveness… they are half way through a buying process but skipped a vital step. They are looking for absolution – an ‘…it will be ok this time, just don’t do it again…’ The result is one of disappointment. ‘ P a g e |2 © The ASG Group 2011
“Why get annoyed with buyers who are simply doing their job?”
‘Is that a new regulation?’ the callers will ask. ‘No’ I answer ‘it is not new… it is just that it has not been consistently applied in the past’. 'In recent years our budget increased annually and there was considerable autonomy over spending. Now, the pendulum has swung the other way, perhaps too far. From buying toilet paper to computer systems you must follow the rules!‘ 'All this can mean that procurement does not win you too many friends, but that is the new realities of buying (particularly in the public sector)' she concluded. As this example shows; the rules impact on buyer and seller alike.
The Rules Must Be Obeyed! Just how important are the rules to buyers? Well, the words spoken by a newly appointed University President to his Head of Procurement provide a clue: '...your number one job is to keep me out of the law courts'. The job of the procurement manager, although narrowly defined, was clear. Given that lawyers accounted for up to 30% of the attendance at a recent buyer symposium, the University President's concern for avoiding litigation would appear to be well placed. ‘There is often a zero tolerance and zero risk approach to buying, where adhering to the rules is more important than saving money' exclaimed a central bank buyer who had just moved from the private sector. For those more familiar with public buying this is understandable.
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Here is a sample of the paperwork from a University procurement team – in case the professional buyer was in any doubt the form spells it out – it asks for the name and number of the 'accountable' person.
‘If applying the rules is your job then that is what you are going to do, right?’ said the author of a forthcoming best practice buying guidebook. ‘Put it this way’ he continued; ‘the main risk is not a suboptimal choice, or the wrong decision, it is failing to adhere to the rules’. The procurement consultant added: ‘If the wrong choice is made, but the right rules are applied then all is forgiven... You can pay 5, 10, or 15 times more for it and even make the newspaper headlines, but as long as you follow the rules then you are safe.‘
Rules Pose Challenges For Buyers Too! ‘The rules pose challenges for buyers too’ said another procurement manager, adding that 'there is no question but they increase the cost and complexity of buying. This is particularly the case in the public arena, where the burden of regulation is causing high levels of confusion, even frustration for many buyers'. 'In the public sector in particular, there are aspects of the job that have become quite painful in recent years' said one long serving public procurement manager. 'Before life was easy – you could pick who ever you wanted. Now everything that you do is in fear of possible future litigation' he added. A consultant with one of Europe’s largest procurement consulting companies went even further to say; 'the rules have taken the fun out of buying'.
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“The main risk is not a suboptimal choice, but not following the rules.”
Buyers Must Impose The Rules Without Favour! Salespeople may struggle to understand the bureaucratic zeal of the modern buyer, but so too do buyer’s own internal colleagues. Indeed as the speaker at a procurement conference said recently 'procurement is often seen (in large organizations) as the auger – as being inflexible, bureaucratic and unforgiving in the application of the rules'. 'It can be difficult to tell a manager that he or she must follow a set of rules and procedures' explained another procurement manager. 'However as procurement manager, you have to stand your ground, in the face of both internal and external pressures' he added. 'Even though managers may have their favourites in terms of suppliers you have to ensure that the process remains fair and transparent. To an incumbent supplier the thaw in relations in the run up to a bid can come as a shock. But ending cosy relationships between managers and suppliers is the job of procurement. In the case of long standing supplier relationships you have to ensure that a certain amount of professional distance is maintained' he concluded.
Blaming The Buyer Is Unfair! Most buyers feel that blaming procurement for having to follow rules was 'unfair', even 'facile'. ‘With enormous pressure on procurement to deliver savings and cut costs, buying is clearly under the spotlight. But you cannot expect procurement to deliver results if the rules laid down are not going to be followed’ said one prominent buyer.
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Buying Risks Require Buying Rules! Buying rules are the antidote to buyer risk. The regulations that govern buying in the public sector and buying process in the private sector are designed to manage the risky business of spending somebody else's money. Salespeople inevitably get frustrated by vacillating buyers and delayed or stalled buying decisions. However, impatient to close the sale they can easily fail to appreciate the importance of buyer risk. That is buyer risk on many levels, including: The risk that the buying decision will not get sanctioned. The risk an internal stakeholder will with-hold support. The risk that the purchase will lose out to another project competing for the same resources. The risk for the sponsor of making the wrong decision. The risk of choosing the wrong vendor. 'Most procurement managers are poor risk takers and there is a reason for that' said one manager. 'That is because you may have bought millions of pounds with great savings, chosen hundreds of good suppliers, but it is the bad deal that you are going to be remembered for' he added. More to the point 'buyers must act today knowing that their actions could result in a FOI enquiry in 6 months time, an internal audit, or a legal action' explained another procurement head. These are the reasons why buyers so zealously follow the rules.
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“Rules are designed to manage the risk of spending money badly…”
The Science Behind This Paper These insights and tools are based on: 1. Buyer Research – our ground-breaking research into how modern buying decisions are made and the implications for sellers. 2. Best Practice Research – Over 1 million pages of best practice sales case studies, books and research. 3. Common Practice Research – Our peer comparison benchmark of 1,000s of your competitors and peers.
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There are many things about modern buying that frustrate, even annoy, salespeople. Top of the list is buying rules and procedures. In this w...