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Selling Procurement to Sales Personnel in a Project Business Environment

Posted 04-27-2010 at 11:08 PM by 95th Annual
In his afternoon session (“Selling Procurement to Sales Personnel in a Project Business Environment”), Michael G. Haynes CPSM, C.P.M. MBA, head of procurement for Siemens Building Technologies Ltd. (and the first-ever CPSM recipient), asserted that sales and procurement personnel must work together during the design and development stage to guarantee success in a project business environment.

His session used a firsthand experience — a Siemens regional procurement team which increased the percentage of cost reduction dollars to total direct project spend from 5 percent to 17 percent over a four-year period — to demonstrate successful and early collaboration.

A key piece of this achievement was the appointment of a Siemens procurement project manager, or PPM. As Haynes explained, salespeople previously considered this individual a roadblock — someone who would drive down the sales price and, in turn, the salesperson’s commission on that sale.

“They had no idea the value internal strategic procurement resources could bring to the sales effort,” he recalled for attendees. “These resources were new to the organization, and salespeople were being asked to relinquish some level of control and leadership over developing costs for a project.”

As evidence of this ambivalence, Haynes cited a review of the organization’s Western region’s 2006 savings documentation wherein 30 percent of these savings were contributed to value engineering and 70 percent to final negotiation savings. “Procurement integration was at procurement touch-point six rather than in the sales phase of the project workflow,” Haynes said. “As such, the procurement team had to ensure the solution answered the ‘What’s in it for me?’ question for [the sales staff].

“The bottom line was that the procurement team had to become as good as — or better — at selling their procurement value solutions than the district sales teams,” Haynes added. Part of the solution, then, was to establish credibility and confidence in the PPM as a member of the district management team.

To do this, opportunities were developed for procurement’s value to be demonstrated and relationships with the sales team built and nurtured. This included ensuring both factions shared the same key performance indicators (KPIs) and goals. Additionally, PPMs were provided desks in the sales areas of their district offices; access was provided to district sales funnels; salary incentives were provided to PPMs based on the attainment of their districts’ financial goals; and procurement was allowed input on go/no-go decisions in the sales phase of the project workflow.

Moreover, internal skills development and training for PPMs focused on sales training, which helped early integration, and a lot of effort was devoted to marketing and selling the PPM solution. Haynes put together a regional procurement newsletter, The Hot Sheet, to market successful sales and procurement collaboration outcomes to associates in sales, service and operations.

In the end, Haynes said, he gained a handful of key sales lessons: find, fix and sell your solution to the CEO (or uppermost decision-maker in your business unit); sell solutions, not products, policies or procedures; listen to your customer (i.e., the salesperson); let the customer think it was his/her idea; and ensure your solutions answers one vital question: What’s in it for me?

“If the sales staff invites you to meet with the external customer or comes to your office for support, you’ll know you’re gaining traction,” he concluded.
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