Monday, 24 November 2014

Movember...time to grow some whiskers for procurement and supplier executives?

Authored by Richard Hogg, General Manager - BravoSolution

We’re coming towards the end of November, and the annual Movember charity initiative started by those crazy Antipodeans is hitting home with some really ‘interesting’ facial sculptures trotting round the streets (and offices) of many towns and cities.

So, what’s this got to do with procurement and supply?

It’s the hairy issue of the two-way buyer / seller commitments, documented and/or otherwise.


A couple of recent conversations have highlighted the relevance of growing whiskers - in the appropriate context, naturally. We’ll focus on one perspective here, from that of a supplier, and follow up with a different buyer perspective shortly:

Supplier A has a contract extension imminently looming for a complex, ground-breaking product / service that she believes is strategic for her customer, and which she knows it is incredibly important for her growing business (an SME that employs local people and pays local taxes).

She has, with overwhelming and unanimous feedback from the customer, over-delivered time and again against all the initial expectations of the contract for the last several years. She values the relationship, treats it as a partnership, and continues to invest in improvements to the product / service without asking for increased prices despite the increased scope and compound effects of RPI / inflation and the like clearly affecting margins.

Certainly doesn’t sound like a tactical, or indeed leverage, position for the buyer in any 4-box portfolio matrix, right?

Wrong. The customer wants significant double-digit % off the price to continue the contract. Despite it being Movember, apparently it’s time for a haircut. Short, back and sides.

Dilemma.

Either she:
a) Fully supports Movember, and grows some whiskers.
b) Takes a haircut.

What do you think? Share your comments below.

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