Procurement Wars: Winning the Hunger Games
The Hunger Games, the bestselling novel by Suzanne Collins, introduces audiences to a horrific, post-apocalyptic world. In the book–the first of a trilogy, and the inspiration for an upcoming movie)–a repressive “big brother” regime forces candidates from different districts to battle to the death for the entertainment of the regime, with only one victor allowed.
If you sell into companies that manage their selection processes for possible suppliers through centralized procurement or purchasing departments, this may all sound disturbingly familiar.
Having once written a book with the title "RFPs Suck," my biases may be rather obvious. I believe that the structured buying processes required by many companies for their larger contracts are vampire-like and counterproductive. They force price-driven contests that eliminate viable candidates and snuff out opportunities for value discussions and innovation.
In the novel, participants are forced to play. You may feel the same way about your customers' procurement games. I have seen companies try all sorts of strategies:
- Don’t participate
- Participate only when you are the incumbent or write the specifications
- Participate in all and try to get lucky
- Participate based upon how busy your response-writing people are
These are not real strategies for success, though. They don’t chart a course; they just respond to circumstances.
How to Win the Procurement Hunger Games
In a world where structured supplier selection processes are becoming the norm for commercial purchases, you need to have a better approach. So if you really want to win these procurement smackdowns, try one of these strategies instead:
Get the low-ballers excluded: Often if there is a company in the mix who is outside of the pricing cluster of the credible main respondents, that vendor will not be able to provide the stated levels of quality and service. If you work with customer to alter the process specs–to exclude either the lowest provider or any bid that is wildly outside of the norm–you can contain this wild card. Interestingly, there are an increasing number of large companies that are writing supplier rules to address this issue.
Know the difference between commodity and value: Often we want to be seen as different in every way from our competitors. A more objective evaluation would say that less than 20 percent of what we do is truly unique, however–the remainder is at best better execution. Concede the commodity quickly, so you can focus on the value. Include a statement in your presentation or written submission that says, “Like the other top providers you are considering, we also provide ...” and then list the other elements you consider to be commodity. That diminishes the importance of those elements in the consideration, and helps you shine a bright light on those items you can now address as true value.
Use any access you have: Don’t be fooled; someone is getting access to influencers and decision-makers in the buying company. You need to do everything that you can to leverage whatever access you can get, too. The winner will not have been silent or unconnected through the process.
Refuse to play: In any purchasing process, there are blinking warning lights that you ignore at your peril. Make a clear list of what they are for your business and then use these to avoid spending time with companies or in processes that you cannot win.
The real answer on strategy is not saying yes or no, but focusing on the question, “Under what conditions?” Define upfront what RFP conditions will favor you, then stick to that list and execute.