I recently read an interesting Blog written by a Sales Professional. The Blog claimed that the “relationship” Buyer has been in steady decline in past years. According to the Blog, a “relationship” Buyer is one who shows trust in the supplier and, in return, the supplier determines what and how the Buyer wants to procure. In short, a business transaction that’s a win-win for both parties. Everything’s warm and fuzzy. No games. Group hugs.
The author goes on to state that the “relationship” Buyer from the past is now being replaced by the “economic ” Buyer. The Buyer who trusts no one. The Buyer who only buys on best price and not best value. The Buyer who is a ruthless pain in the butt. The Buyer who plays games and is more interested in the bottom line than a silly relationship.
After reading the Blog a few times I have to say that I categorically, absolutely, 100% AGREE with the author of that article. He is right on. He has defined today’s business relationship between Buyers and Sells . . . BUT ONLY IF YOU READ HIS ARTICLE FROM THE BOTTOM UP!!! Because regarding the progress from “relationships” to “economics” the author had his facts straight . . . it’s just his timeline that’s backwards! We’re not moving from a “relationships” to “economics” business trend. Rather, it’s the other way around.
For those of you who’ve been in business for a while, think back to the golden era of buying and selling: The 1970′s where purchase orders were corruptly awarded at the 19th hole. The 1980′s where recessions and economic failures resulted in reduced budgets and supplier bankruptcies. The 1990′s where people like General Motors’ global purchasing chief, J . Ignacio Lopez, started wars with the supply base by imposing unilateral price cuts thereby destroying supplier relationships.
Now think about today’s environment. Global competition has made companies rethink their buying strategies in terms of partnering with vendors. Technological advancements and quality initiatives have driven purchasing to buy from capable companies and not necessarily the cheapest company. Customer expectations have precluded Purchasing from buying on price alone and must now think of future sales. All of these events have changed the way procurement departments think and act. “Best price” has been replaced with “Best value”. Putting the supplier out of business has been replaced with ensuring suppliers remain financially sound to provide product. Buying the cheapest from third-world countries has been replaced with buying the most efficient even if it means a local supplier.
I know that there are always exceptions to the rule. There are still Buyers and purchasing groups that maintain the “Lopez” strategy. There are still companies who prefer larger bottom lines to an adequate supplier relationship. And guess what, there always will be. I have no intention of working for a company like that because odds are they won’t be around long. But compared to the strategies and practices of yesteryear, the vast majority of companies have traded “economics” buying with “relationships” buying. That’s not to say that the relationship is always healthy. What relationship is? But when measured against the past, it’s better than it was.
Client companies have slowly woken up to the fact that low-quality products based on the cheapest component-pricing results in low volume sales and lost customers. They’re come to realize that browbeating the supplier for every penny can result in either shortcuts made by the supplier thereby resulting in quality issues, or a financially-strapped supplier who can no longer provide product because they closed their doors. And a bankrupt supplier is the greatest fear of a Buyer, something that will be the focus of a future Blog.
Of course you yourself will judge my own Blog on your own experiences. Some will read this and agree, and some will indignantly shake their head and disagree. I think what it comes down to is the complexity of the product and the sophistication of the Buyer’s customer base. After all, retail companies who buy in high volume employ Buyers who continue to nickel and dime the supply base to death. Retail selling can be brutal. Yet as a customer of these retail stores we enjoy paying bargain prices for life’s necessities, not even thinking about the hell the poor Sales Rep had to go through to get the order and provide the products we just placed in our shopping cart. Maybe that’s why I have such a high regard for Sales Professionals. Now, how about that group hug?