Procurement Game Show Series (5): Beat the Clock, Dog Eat Dog, and Match Game

Remember the game show Beat the Clock? The whole premise of the game was to be able to complete certain stunts, prior to the allotted time running out.

In the business world we often are asked to play contestant in Beat the Clock. How often have you heard a sales representative say "It is our quarter end, so we can give you really a good deal if you act now!" Reminds me of the hawkers of the Ginsu knives --"But wait! If you act now you also get this special meat cleaver as a special incentive!"

How often do we fall prey to this type of pitch? The intent of this time limited offer is to get you to make decisions prior to being able to determine whether this is the right direction for your company. Hurried decision making is the dream scenario for those vendors who do not necessarily believe that they can win the deal on their own merits. The reality is rarely is there a time limit on any deal. If a vendor is truly interested in your business, that "lowest" price or additional options will be available whenever you are ready to make a decision -- and you can ensure there is a true match between your needs and the offering of the supplier.

Which brings us to Match Game! Gene Rayburn was the master of the six celebrities who were asked to match their answers to completed sentences with contestants. The contestant who had the most "matches" got to choose a celebrity for the "final round" and could win what at that time was a reasonable amount of money. What was interesting is that for the final round, Richard Dawson was most often chosen celebrity for this "match". Why? Well similarly, as we are trying to wend our way through the multiple pitches and responses from sales representatives, we are striving to find those companies, who most often seem to understand how we think and understand our business issues. We are playing an intense Match Game throughout the decision making process -- from choosing who is to be invited to respond to an RFP; through evaluation of responses; negotiation; and finally contract award. If Richard Dawson was in sales, he most assuredly would often be the Last Supplier Standing!

Unless of course another company has learned its strategy from the game show Dog Eat Dog -- wherein the contestants are asked to perform outrageous stunts and dares, but mapped into the process is a significant level of smarts and strategies. Often, when you least expect it, the sidelined contestants actually end up defeating the so-called top "dog." How is this related to the procurement process? Well, unfortunately, too often, when a supplier knows that they have been sidelined, as they did not present the most comprehensive, cost effective proposition, they attempt to come through the back door, use senior level relationships to sway decision making, or attempt to use the reciprocal business card (even though in many award decisions this has already been taken into consideration). Knowing that their value proposition was not compelling to get them to the negotiation table they rework their offering and attempt to get back into the game by finally answering the questions correctly. We would all like to believe that firms immunize themselves against this type of questionable ethical effort, but the reality is these suppliers too often get a second chance. It becomes imperative for corporations to question how this supplier will be as a long term partner, if they opted not to put their best foot forward when it truly counted!

So let's stop playing Beat the Clock, ensure that we chose the right option through Match Game, and let's keep the Dogs in the Pound!

Game Show Series (4): You are the Weakest Link...Goodbye!

How many times did Anne Robinson the host of the Weakest Link say this to contestants who then walked out sheepishly, head hung low, wondering how they ended up in this situation.

When considering the Supply Chain, an organization is only as good as its weakest link, and many corporations today are finding that this can result in significant issues for them from a client delivery and revenue impact perspective.

Too many businesses see their supply chain only as the procurement and fulfillment piece through distribution centers to the client, but supply chain is much bigger than just the logistics piece. If one truly wishes to understand a supply chain it begins with a client need and ends with invoicing of the goods to hopefully a satisfied customer.

So what does this mean? Actually that all aspects of the organization are in fact part and parcel of the supply chain. The Sales teams are intimately involved in the process and with the client they establish demand that drives the entire system. Of course even prior to sales is the Marketing group, which works with sales to determine what items should be focused on and be front and center in the marketing efforts. Then there is Finance who works with both the procurement arm, sales and marketing to define an appropriate go-to-market pricing strategy that ensures the continued profitability of the firm, taking into account all costs, and issues surrounding what the market will bear....and so on, and so on...etc.

Usually the weakest link in a corporation is the communication that lacks between these various teams, not understanding the close linkages each of them has to the other and that only by working together can a corporation be ultimately successful. Ad hoc communication cannot replace formal structures that ensure full cooperation and information sharing by all.

To view Supply Chain only as procurement to fulfillment is like putting blinders on a horse...trying to discount other factors that could potentially render a direction unpalatable.

Eventually a blinder view of Supply Chain will result in an corporation's epitaph being: "You are the Weakest Link....Goodbye!"

Procurement Game Show Series (3): The Price is Right so Let's Make a Deal

In the long running game show series The Price is Right, contestants vie for the opportunity to win prizes by coming the closest to what the true price of the product is. In many ways the procurement process reflects aspects of this but hopefully only when all the other components have been negotiated.

Unfortunately too often organizations weight the price of a product or service too highly compared with the quality and other aspects that severely affect the total cost.

You see cost and price, although often lumped together are two infinitely different parameters from which to define the best alternative.

Price focuses only on the actual dollars paid, while a cost matrix considers all elements which can eventually render the actual price meaningless.

In procurement, price should never be the deciding factor -- it should be what is called the total cost of ownership(TCO), or the total deliverable cost (TDC).

What goes into TCO or TDC? Items such as:

• Quality of product or service, which can be determined through references, piloting the product/service etc.
• Warranty provisions
• Total scope -- is one firm only providing the basics and then "nickel and diming" you on minor additions to the scope?
• Flexibility to adjust to changing business needs
• The ability to re-negotiate pricing throughout the term of the contract based on fluctuating demands and also the price that the product demands in the market place
• Servicing of the account -- response to issues
• etc., etc., etc.

When Monty Hall asked contestants to pick Door Number 1, 2 or 3, they did so blindly and often they could end up with a donkey and cart (with Jay in whatever weird costume he was in at the time). This could very well end up being the door an organization chooses if they focus on the price rather than all the other parameters that go into defining the cost!

The Procurement Game Show Series (2): Lingo and the $64000 Question

The game show Lingo asks contestants to guess five letter words when originally only given the first letter. If you begin to calculate all the combinations and permutations, it is sometimes amazing that anyone every gets through the game board, and not surprising when they don't.

We often encounter "Lingo" when dealing with suppliers for product or services that have are more technical in nature and it is inherent on the procurement professional to ensure that the supplier tries to speak in "lay man" terms, so as to provide a complete understanding to the entire team, and not just those technically oriented. Too often the "razzle, dazzle" of the high tech terms can leave many scratching their heads, or sometimes, unfortunately, believing that they have understood what was said, when in effect they truly didn't.

When negotiating a deal for a higher tech product or service, it is not necessary to understand all the widgets and do-hickeys and how they work. But it is important to understand the basic logic flow and not be concerned about asking for further explanation.

The $64,000 question is not necessarily answered by those who are experts in the field, but sometimes by those who are following a thread of conversation and are unable to make sense of the logic flow. It is at those times when a procurement professional can utilize self-deprecating humor such as "I'm not a rocket scientist like the rest of you, so can you please bring it down to my level and explain it in terms I can understand!"

Several times in my career this has resulted in winning not $64000, but much, much more, as it is when these type of explanations occur that the veil is often lifted off the jargon and the true nature of the product or service is revealed. In some instances disputes have been resolved because often when using "Lingo", there is an inherent believe that each side understand each other, but when looking on the board, several of the letters are still missing. It is the individual without the technical knowledge and by asking questions that can cause those missing letters to fall into place, and often the word that is spelled in not the one that everyone thought it was.