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Partnership, Pricing, and Patience – The Three Advantages of Partnering with a SME

By January 11, 2022No Comments

Do you have any idea how lucky you are to work in procurement? Who else can understand a business by taking it apart and putting it back together again from the bottom up and the top down? Who else understands the unbelievable network of suppliers and service partners that are required to make a supermarket run, build a car from nothing, get a new pharmaceutical through trial and to market, or design the best new components for sale?

I recently cleaned out and recategorized all of the content in the Buyers Meeting Point site. I have been writing and posting there for 12 years this month. Do you have any idea how many blog posts and articles that means? And that doesn’t even touch upon the guest posts, book reviews, event recommendations, etc.

Here’s what’s really funny: guess what we were talking about 10 years ago? Transformation. Sure, it was procurement transformation and not digital transformation, but it was transformation all the same. We were also talking about negotiation, supplier relationships, risk, and collaboration. And now – yes, we’re still talking about negotiation, supplier relationships, risk, and collaboration. It doesn’t matter that we’re doing it with the help of AI, machine learning, and RPA. We’re still focused on the same things.

I’ll be honest, my initial response to this realization was sadness and a touch of embarrassment. How have we been talking about the same things all this time and not completed them? Did we fail?

Each time procurement manages a new category of spend, we have to stop and think about the need for specific expertise. In some cases, a generalist procurement approach is enough. This is likely to be the case when volume is enough to trigger savings, or when the business already has that expertise themselves.

In other cases, however, neither procurement nor the business has expertise in the category, opening the door to partner collaboratively with suppliers or to find a third party expert to substitute for internal knowledge.

Art of Procurement ran an AOP Live session with SupplyLogic, a tech-enabled marketing procurement and execution managed services provider, and one of their customers, the University of Massachusetts. Philip Ideson had the opportunity to ask David Cho, UMass’ Chief Procurement Officer and Managing Director, about what lessons he and his team had learned about the advantage of working with a third-party specialist.

He talked about partnership, pricing, and patience, and UMass’ ability to keep their pricing competitive in a constantly changing market based on SupplyLogic’s nuanced familiarity with cost drivers. 

Although category expertise is important during sourcing and supplier performance reviews, there are times in between these milestones when changed should be triggered by market conditions – although procurement naturally can’t expect suppliers to raise their hands and volunteer that it is time for a decrease. 

Because SupplyLogic manages this one specific category of spend, they can suggest proactive ideas and tap UMass on the shoulder when they should reach out to suppliers. Much like procurement has begun to rely upon technology for risk monitoring, partnering with a dedicated category expert is like having built-in opportunity monitoring – even in between sourcing events.

Listen to the full podcast here:

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