I must have heard it dozens of times from suppliers.
“We don’t participate in eSourcing because we don’t want to commoditize ourselves.”
While some of these suppliers simply meant that they didn’t want to provide a competitive price, others meant something else. They meant that that eSourcing doesn’t give them the opportunity to communicate their differences or advantages.
I’ve had some interesting discussions with these suppliers. I explained that eSourcing provides transparency and a level playing field. All suppliers are evaluated on the exact same criteria.
And suppliers have argued back that this “buyer-knows-best” approach isn’t always best. That ideas were being left on the table.
Of course, purchasing professionals today are smarter than ever. They really know their commodities and their markets inside out, moreso than ever before.
But, in some cases, I do feel that the buyers can learn from those suppliers. That ideas are indeed being veritably rejected by requiring only certain information and nothing more on RFP forms and eSourcing screens.
So, there is a balance to be struck. A balance between making a pragmatic decision based on the measurable, the financial, the easily comparable, the objective and making a slightly more subjective decision based on the intangible yet important. In purchasing, we tend to lean very strongly towards being totally pragmatic.
In many cases, this is definitely the way to go. However, in some cases, it isn’t.
What really reminded me of the need to help other purchasing professionals solve this dilemma was a little home improvement project.
For this project, my wife and I wanted to replace the 10+ year old carpet in our room known as the “play room.” It’s where our kids – aged 5 and 7 – spend the bulk of their indoor time.
This isn’t the nicest room in our house (after all, why try to have nice things in an area inhabited by young kids and their friends, right?). It has old burgundy paneling and a drop ceiling.
We had grey carpet in the room and thought we’d go with a slightly darker shade of grey. For just a playroom, we wanted to keep the cost of the project on the low end.
So we had Empire Today come in and also paid a trip to Home Depot. Both showed us their various variations of grey carpet. This wasn’t a very inspiring project, so we were leaning towards having price be the main consideration.
We decided to check out one more place, just for the sake of comparison. It was Rusmur Floors, a family owned chain with a regional presence here in Pittsburgh. What we found at Rusmur was quite different than Empire Today or Home Depot.
The salesperson – Susan, I think – didn’t just show us her various shades of grey carpet. She asked questions about the room: the size, the colors of the walls, whether or not their was a fireplace, etc.
She then walks away and returns with a carpet sample. It was a beige with hints of burgundy. It was far from the grey carpet we were seeking. But it looked really nice. She let us take it home for a day so we could see what it would look like in our room.
Quite frankly, it looked magical.
We actually got excited about a project that we decided to do just because we felt it had to be done. The carpet has since been installed by Rusmur and makes the whole room look fantastic!
(Of course, given a few months, I’m sure our kids will impact that a bit.)
Susan brought expertise to the table. Empire Today, on the other hand, was more like the very definition of a commodity.
While we may have paid a slight premium on a cost-per-square-foot basis (even after negotiation) for this carpet, the fact of the matter is that we got a much better value from our purchase because we opened ourselves to a supplier’s idea.
Would it have been unethical to take Rusmur’s idea and share it with the less creative folks from Empire Today and Home Depot for a competing bid on a uniform specification?
I say that it would be unethical.
So heading back to the corporate purchasing profession, I believe that a lot of value is left behind by not allowing suppliers to bring ideas to the table. By “commoditizing” them.
That’s not to say that “commoditizing” shouldn’t be done ever. It absolutely should be done in many, many situations.
But some more tricky procurements require more of an open mind. Fortunately, I have had a lot of experience in my roles in getting suppliers to communicate their value. I will share some of these experiences in the months ahead.
In the mean time, I encourage you to evaluate each procurment situation you face. Are you limiting your ability to extract value from the supply base? What can you do to identify value-building opportunities without overly sacrificing what’s best for your organization’s stockholders?
Things to think about…
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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