It is always a good thing to know what makes your opposite number tick. In this article, Matjale Matsaung, Pretoria-based Head of Procurement and Contracting for GIZ South Africa, Lesotho & Eswatini, explains the experience of small suppliers doing business with big corporate buyers, and what can be done for their mutual benefit. SmartProcurement would appreciate comments from our readers on both sides of the coin.
The journey of doing business with big corporate buyers is a lot more challenging for small suppliers. There are some realities which need to be acknowledged, changes to be made in approaches and advice which should be shared in the interest of achieving social procurement objectives.
SMEs simply do not have the resources that larger commercial suppliers have but in the long run, will be measured on the same terms and compete for the same business. For small suppliers, here’s a simplified view of how to go about doing business with large buying firms (LBFs).
1. Find the Right Buying Team
Knowing the Decision-Makers
Trying to locate the right buyer to build a working relationship with in large companies can be frustrating. The good news is that there are several avenues. You can take the LinkedIn and forwarded email thread route, meet with the nearest office or attend related conferences. Now would be the best time for a small supplier to use all the networks possible in locating key decision-makers because here lies the challenge: it is not always the Purchasing/ Procurement team that’s responsible for awarding business to small suppliers. If the organisation has a separate Supplier or Enterprise Development team ultimately not reporting into a Procurement leadership, you may need to find the responsible team under the Finance, Sustainability, CSR or Corporate Affairs leadership. Then let the courting begin.
2. Understand Buyer Priorities
Demystifying Tender Winning Criteria
There are three broad metrics based on which you will be awarded business: Cost, Quality and Service. Anything mentioned in addition to this still falls under one of the areas above. For example, specifications, capacity, capability, payment terms, lead-times, EOQs, discounts/rebates, sustainability, flexibility, responsiveness, etc. are all covered by those broad umbrellas. Various industries and organisations have a different ordering or prioritisation of these criteria, specific to their supply chain strategy.
Supply chain strategies and corresponding procurement priorities deserve a separate article but knowing your buyers’ priorities and objectives is critical – if there’s any piece of knowledge priceless in the buyer-supplier relationship, it is this. The quickest way to know buyer priorities? Ask.
3. Prepare to Compete
Bring your ‘A’ Game
Ask about the next tender cycle, supply start timings and what the process looks like. Literally. Request a dummy tender of the previous year to help you prepare well in advance. In the era where supply chain digitisation is a thing, check your end-to-end technological abilities to become a supplier to that customer from proposal to payment. The reality is that there’s little room for error for new suppliers, let alone small ones that a buyer could operate without. Take your configurations and match them to the buyer’s strategy. For example: buyers desire to reduce supplier complexity, often by reducing their number. 100 new small suppliers add to that pain point. How do you propose to creatively resolve this upfront?
4. Choose the Relationship Strategy
Beneficiary or Business Partner?
The mindset of value chain actors engaged in doing business with SMEs – including buyers themselves – is a hot topic. For SMEs, resist the comfort of remaining the beneficiary of any small supplier programme. Whether Enterprise and Supplier Development (Enterprise Development, Supplier Development and Supplier Diversity/ Preferential Procurement) or otherwise. You may choose this as a route to entry but if you’re aiming for a long-term, sustained business relationship with that entity, it is in your best interest to be treated as a business partner. Strive to be a commercial equal who brings and creates value, rather than a service provider being given business as part of a mandate, irrespective of one’s offering. The process of earning your seat at the table enables you to keep it long-term no matter who’s in charge – now that’s Future-proofing.
5. Establish your Reputation
Retain your Identify and Values
In a desperate bid to get a foot in the door, I’ve seen smaller companies attempt to bribe large buying firms. Do not resort to any illegal or unethical means to win business no matter how desperate the situation can seem for you as a small supplier. Bribery is industrial suicide. Treat every transaction with transparency and integrity. If you find yourself in a compromising situation where it is the buyer perhaps proposing dubious avenues to commercial gain, officially and firmly decline their offer. Stay your course and remember that your values could be your competitive advantage. The key to differentiation amongst a packed supplier portfolio or category.
6. Consistency establishes Credibility
Keep Delivering and Performing Reliably
Consistency, consistency, consistency. Scoring high on the supplier performance dashboards in one year isn’t the only yardstick to winning business in the next. Performance from previous years still counts. Once you have the business, never stop meeting and better yet, exceeding customer expectations. Behave like the “marriage” is new, year in and year out and building with a long-term, resilient partnership in mind. Winning a buyer over to your side is simple but also be aware that when a buyer moves on, your story (the ‘good, bad and the ugly’) and records are transferred to his/ her successor. Often impeccably so.
7. The Buyer’s on Your Side
This is not the Story of David and Goliath
A good buyer wants their suppliers to succeed. When a supplier fails to deliver ‘OTIF’, it creates significant challenges for the entire value chain. As the responsible manager and owner of the supplier relationship, the toll on a buyer professionally and personally when a catastrophic supply event occurs is a tale insufficiently told. It’s a tale of lost jobs, ended careers and poorer health/ wellbeing because of what appears to be a simple supply interruption. Salespeople who have lost a key LBF account due to poor supply chain management tell the same story. Therefore work together with your buyers – you’re on the same team. A single supply chain competing against other supply chains. It might not feel like it during the tough negotiations but at the end of that dance, you still need to remain trusted partners.
In the famous words of one of the most gifted writers of our time,
“Giants are not what we think they are. The same qualities that appear to give them strength are often the sources of great weakness.”
Malcolm Gladwell, – David and Goliath: Underdogs, Misfits, and the Art of Battling Giants
By: Motjale Matsaung
Don’t forget to add value with your comments, please! If you are a procurement professional, what advice would YOU give to small suppliers trying to do business with your company?