Selling Into Procurement Ohio Valley Business Travel Association

Transcription

1 Selling Into Procurement Ohio Valley Business Travel Association

2 Understanding Procurement

3 Why CEOs Like Procurement 100% ~ 60% ~ Purchased goods and services can be more than half of a firm s total revenue Reduced pricing falls right to the bottom line 25% 10% 5% without layoffs 8% Total Revenue Purchased Goods and Services Salaries, Wages and Benefits Taxes, Depreciation and Interest Profit Before Profit After

4 How does Strategic Sourcing work? Buyer Buyer Fragmented Suppliers Consolidated Suppliers

5 Seven Basic Procurement Steps Consolidate Spend Specify Quality Set Targets and Strategy RFP or Tender Analyze and Negotiate Decide and Contract Implement and Track Works well for most every category, including Travel

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7 Supplier Rationalization

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9 It s all about

10 Commoditization

11 Impersonal Relationships

12 Reverse Auctions

13 Pooled (Consortia) Buying

14 Buying in Bulk

15 Benchmarking

16 Negotiate against Yourself

17 Supplier Development

18 Supplier Conditioning

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20 Travel Is a Signal Category

21 Travel is not a commodity right? Common Points We Could Be Talking About It s a significant expense category. The spend is very hard to control. It touches most employees. You can t just switch suppliers like you can with office supplies. It really affects sales and/or productivity but you can t quantify it. Travel or Health Benefits or Advertising or Enterprise Software or I.T. Consulting Travel isn t as different as we might think

22 Sourcing Travel Isn t Very Hard Sourcing Complexity Simple Moderate Complex Carpeting Laptops I.T. Coal Temp Labor Advertising Cars Airlines Hotels Agencies

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24 The Procurementinfluenced Organization

25 The Procurement-based Travel Management Model Travel Category Manager Sourcing Team Buy the specified quality of travel Set guidelines for purchasing Evaluate supplier quality and cost Manage selection process Negotiate contracts Quantify potential savings Operations Team Manage travel agency Implement new programs Implement new technology Manage supplier performance Manage travel policy compliance Resolve traveler problems Each team has very different goals

26 Travel Sourcing Team Travel Sourcing Team Travel Manager Procurement Finance Consultant

27 Travel Council Travel Council Finance HR Sales Ops Procurement Travel Sourcing Team Travel Manager Procurement Finance Consultant Travel Council s roles Modify/endorse travel policy changes Provide guidance on supplier selection criteria Endorse sourcing team s recommendations to senior mgt.

28 Steering Committee Strategic Sourcing Steering Committee C.F.O. Chief Procurement Officer 1-2 Senior Executives Senior Consultant 1st wave Travel Council P.C./Laptop Council Lab Supply Council Printed Material Council Travel Sourcing Team Steering Committee s roles Push hard for savings Remove organizational roadblocks Ratify supplier selections

29 Procurement Manager 101 Typically career procurement folks Very process-based (often not category experts) Often handle multiple categories at a time, and/or have sourced many different categories Skilled at dealing with stakeholders Will make fact-based recommendations

30 Myths about Procurement Mgrs They treat Travel like widgets A few do. The rest want you to believe that. It s all about price It s all about value credible value. They ll gladly over-commit share They do care about good contracts Pricing tied to volume or share makes sense Accustomed to price penalty clauses

31 Travel Category Stereotypes Airline pricing isn t rational Travel managers are too cozy with suppliers And coziness causes high prices Travel policy compliance shouldn t be a problem Travel people sure like to hug a lot

32 SELLING INTO PROCUREMENT

33 What Procurement wants you to do Educate me about your business Understand my goals and concerns Believe it takes a low price to win Propose credible solutions Overcome my fears (a.k.a. objections) Create value for both of us

34 Test for your differentiated value Differentiated means you versus your nearest competitors on key features such as: Schedule and network, or hotel features and brand/chain fit Traveler comfort, productivity Traveler confidence Traveler loyalty and rewards Waivers and favors, ease of doing business Without these, you ARE a commodity

35 What s this?? A question mark, yes? but also an upside-down fish hook! Use questions to catch and control buyers

36 The Buyer s Needs Hierarchy Confidence Subjective Assessments Decision data Framework for Supplier Decision Understand the Supplier s Business

37 The Seller s Opportunity Hierarchy Build Educate Influence Confidence Subjective Assessments Decision data Framework for Supplier Decision Understand the Supplier s Business Calibrate Learn

38 Shop Your Results Travel manager Procurement manager Senior execs Great way to engage the buyers and strengthen your non-price values

39 By the time you get the RFP, it s too late

40 Ways to Differentiate Yourself Show that you understand the account Key goals, main concerns, your reputation Understand Procurement s role Delivering high-value contracts Focus on the core issues Respect the procurement process

41 My Contact Info via LinkedIn Join me on LinkedIn Subscribe to my free blog: Gillespie s Guide to Travel+Procurement