Paperclips Are Like, So Last Year
That’s right. A career in procurement no longer means you’re “in charge of paperclips”. In somewhat provocative terms, the Financial Times (subscription required) reckons that procurement has undergone a revolution. It’s no longer a career dead-end. No longer a mere support service. The modern procurement department is experienced, professional and respected, and it’s being unleashed on an ever wider array of goods, and services. Not just stationery, furniture and laptops, but lawyers, accountants and consultants.
But at the same time as procurement spreads its wings to tackle services, it’s also getting more sophisticated. The best procurement teams know that a good deal on services is not just about getting the lowest price. Sure, price matters. But in services, relationships matter too. As Gartner VP Mark Hollands writes for CIO, “the relationship will determine the success or failure of a deal, not how little you managed to pay.” His advice to CIOs: don’t screw your supplier too hard to the floor – it can be a career limiting move in the medium to long term.
One risk with doing bottom dollar deals is that you might fall victim to what Hollands calls “land and expand” strategies. Vendors take a bath on the first deal to get a foot in the door, then cast their net for more profitable work to recover their losses. Over time, the A Team is replaced with F Troop, as big vendors feel the pressure to hit their own profitability targets.
So the challenge for the procurement team is clear. Use your skill and knowledge to get a good price and deliver savings. But don’t squeeze so hard that good relationships turn into unpleasant, adversarial ones.