Procurement & Sales Collaboration
Improve Collaboration Between Sales and Procurement Teams
Sales vs procurement: is there bad blood between them? A SpendMatters survey indicates that sales function is procurement’s biggest critic amongst the corporate world.
Why it is difficult for sales and procurement functions to cooperate?
Sales and procurement are, by nature, fierce opponents. They are used to being on opposing sides of the table and their goals differ by 180° the moment they enter the negotiation room.
- Price protection.
- Long-term contracts.
- Volume commitments.
- Lower payment terms.
- Extended lead times.
- Price reduction.
- No or minimal commitments.
- Longer payment terms.
- Reduced lead times.
In addition to these strategic polarities, sales teams also tend to be more agile and they often need to be very quick with their responses, while procurement teams work more systematically and tend to make more thorough analyses before giving out any replies.
Effective companies praise collaboration and teamwork and understand that most value is created once all functions work collaboratively. In reality, this is not always the case.
The following blog post aims to investigate this issue and brings some insights into how to enhance collaboration and why it is important for sales and procurement teams to work side by side.
Collaboration by definition is a formation of groups or people working together to reach a common goal. Usually collaboration is limited by time period and will last until the goal is achieved.
Roberts (2004, p. 33) uses the metaphor of an orchestra to describe the systems nature of the individual components of a collaboration: ‘Each of the musicians in an orchestra is a specialist, but they all have to work together to perform a piece of music. Every person’s instrument has its own unique voice and role. Each is significant. Each contributes. The result would not be the same if even one was absent. Yet when they all play together, the result can be cacophony or music. It all depends on the score and the conductor. The conductor must ensure that the musicians understand all the parts and how they fit together to make a coherent whole.’
The following points are the main benefits of collaboration; obviously, depending on the nature of the business, there are often even more advantages of collaborative teamwork:
Better alignment with internal and external stakeholders - if processes can be improved based on input from external and internal stakeholders then this boosts alignment significantly.
Employee motivation - we do not want to have demotivated staff as motivated employees work better and deliver good results. This is why it is important to understand what problems employee demotivation brings to the entire organisation.
Innovation - drives companies forward, helps to outperform competitors and can open up new markets. Collaboration sometimes creates too many ideas and shifts direction, but it also creates really innovative ideas and without these it is very difficult to develop.
Increased productivity - when teams use tools or processes that improve teamwork and communication, individual goals are met faster and with better results.
Reduced time to market - when teams work collaboratively and share a common goal then it is possible to improve overall time to market. Agile working methods deliver continuous results.
Improved flexibility cross company - teamwork and collaboration are the foundations of work methodologies such as agile, which allow teams to be more flexible and responsive. Therefore, changes in requests, orders etc. can be handled more easily and these do not cause any business disruption.
Better employee engagement - engaged employees are more motivated. They get better results and they improve companies’ inner culture.
Why it is Important that Sales and Procurement Collaborate
Custom B2B (business-to-business) deals require functions to work together.
Sales and procurement collaboration will help to set the correct price point and, additionally, make sure that there is a decent margin.
Since procurement works closely with suppliers, then this also means that suppliers can be involved directly or indirectly in these deals. Supplier-led innovation could mean that out-of-the-box functionality is embedded into the deal offer and this could result in even better pricing structures. Without sales and procurement collaboration these opportunities could be never discovered. When procurement works hand in hand with suppliers they can ensure an accurate delivery time, which is often a critical component; the sales team often tends to offer the customer a delivery time that is not always realistic.
Think about collaboration benefits when working in discrete manufacturing, building turnkey construction projects, organising large events or major outsourcing tasks.
The procurement team should join the sales team when visiting key customers and understand customers’ business needs directly and what customers expect from them.
The supply chain is per se linked to what the customer wants and how the business is going to deliver it.
Collaboration between functions is more than simply getting along well and communicating with other departments. In order to start actual collaboration and move from the communicating stage to the collaboration stage, the following conditions should be established.
- Trust - It is very basic and has ancient roots, but without trust collaboration is not possible. Long-term and strategic collaboration can only happen once team members know they can count on others.
- Transparency - Highly linked with trust, but not solely. No hidden agenda; no misleading actions or cover-ups. What is great is that most of the collaboration tools have activity/action/update feeds which provide excellent transparency; everyone knows who did what and what is the latest status.
- Involvement - The team is formed early enough so that everyone who needs to work together are on-board as soon as possible. Quick standups, weekly plans and reflections help to build involvement and team motivation.
Besides these building blocks successful collaboration needs to:
- Use collaboration tools - Email is not a collaboration tool it is for communicating. Therefore, an engaging, simple and intuitive tool is a must to start collaboration.
- Encourage feedback - It’s important to foster a culture of providing and accepting constructive feedback framed in a way that focuses on the circumstances or on a team member. What is important is to have a culture that accepts feedback and learns from it even if it is directed towards a person.
ProcurementFlow.com is a digital workspace and collaboration platform that brings clarity where it’s most needed. It connects sales, procurement and suppliers and introduces an agile way of working to day to day business. It effectively maintains process status and uses a logical workflow to move procurement projects quickly forward. Collaboration between different functions is embraced, supports supplier-led innovation and, most importantly, ensures that everyone in the team is always on the same page.