A few years ago I applied for and was asked to interview for a Procurement Manager role. Basically the ‘poacher turned gamekeeper’ idea that rested on the fact that there were many similarities between sales and procurement, such as understanding customer requirements and using commercial acumen and people skills to secure the best outcomes from contract negotiations.
In the end I didn’t interview for the role, for reasons that relate to ‘Dragons Den’ (I’ll leave that there!) but given the business that I’m in provides procurement for our customers I have remained close to the buying world. A substantial part of what I do is referred to ‘solutions selling’ and it struck me recently after a conversation with Peter Smith, the former editor of ‘Spend Matters’, that the significant differences between solutions selling and more traditional pen selling are also clearly manifest within procurement also. At the point of writing however the term ‘solution buying’ doesn’t seem to be in common parlance, so this is my bid to get it out there!
‘Solution Buying’ would appear to be a good way of describing procurement professionals that truly seek value for their stakeholders based on a detailed understanding of organisational needs, as opposed to those that purely seek cost reduction. The description of ‘solution selling’ in Wikipedia is detailed below:
Solution selling is a sales methodology. Rather than just promoting an existing product, the salesperson focuses on the customer's problems and addresses the issue with appropriate offerings (product and services). The problem resolution is what constitutes a "solution". Solution selling is usually used in sales situations where products are just one of the elements that lead to a solution. Often the real solution develops after the sales process—as with software or large plant engineering and construction projects. It is typical for solution selling situations that the buyer only rarely purchases such a solution and instead needs the knowledge of the solution partner.
Given this pretty accurate description of solution selling you can quite quickly see how solution buying can be translated with just a few words changed:
Solution buying is a procurement methodology. Rather than just focussing on cost reduction, the buyer focuses on their stakeholder's problems and addresses the issue with appropriate offerings (product and services). The problem resolution is what constitutes a "solution". Solution buying is usually used in procurement situations where products are just one of the elements that lead to a solution. It is typical for solution buying situations that the buyer only rarely purchases such a solution and instead needs the knowledge of the solution partner.
The practice of solution buying already exists of course, but not in name – I have met with many procurement professionals who employ this approach – my aim here is to delineate these individuals from the ‘pen procurers’ as I think that it is important to make the distinction.
Pen Sales and Pen Buying
Before I talk about how solution selling relates to solution procurement, it’s probably a good idea that I establish the link between traditional ‘pen’ sales and ‘pen’ procurement. Pen sales for me is the practice of selling using predominantly features and benefits. The reference to ‘pen’ is purely borne out of the interview technique that say ‘if you’re a salesman, sell me this pen’.
Normally the pen salesperson relies on aggressive selling and charm, is less reliant on listening and is very likely to want to close a deal quickly, placing an emphasis on features and benefits. In procurement, the pen buyer is heavily reliant on their aggressive negotiation skills, less reliant on listening and very likely to want to close the deal quickly, placing an emphasis on features (you get the contract or get to keep the contract) and benefits (you give me savings). In both instances, the intention of the seller or buyer is transparent – they want your money!
Solution buying therefore places an emphasis on understanding stakeholder’s problems and identifying an appropriate solution to meet their needs. This means that the solution identified may not deliver (on the face of it) the highest level of savings, but does deliver the right amount of value, determined by benefit minus cost.
Which is the right approach?
Arguably, the skilled procurement professional should be able to switch between the two styles, depending on the category being procured. There would be little point in over-engineering a simple procurement, as the outcome may be to miss out on savings and efficiencies. Conversely, applying the pen buying approach to a solution buy may also prove to be a bad idea and result in negative impacts being created for stakeholders ie them not being able to their job – which may in turn result in negative impacts for you as the buyer, such as the stakeholders choosing to buy off contract, and your credibility as a buyer compromised.
The growth of solution buying in the future
In many ways the emergence of solution selling and solution buying reflects the rapid development of technology and its ability to offer new efficiencies and smarter ways to work. This is why my business Comensura came to market and this premise continues to drive what we do to this day.
New ideas, new approaches and new technologies show no signs of slowing down, so it’s entirely likely that solution selling and solution buying as practices will continue to grow, particularly where ‘low hanging fruit’ cost reduction opportunities have been exhausted. We’re starting to see market testing exercises where buyer and seller meet over white board sessions to develop requirements, and expect this trend to continue going forward.
I’ll be outlining how value is delivered in the contingent staffing space using the eight ways outlined in http://spendmatters.com/uk/procurement-value-its-not-all-about-savings/ at a later date, so keep an eye out!
Getting solutions buying into the mainstream
As I mentioned earlier, a quick internet search at the time of writing on ‘solutions buying’ generates no relevant results. Personally I think it’s quite a different approach to other alternatives to traditional ‘pen’ buying including strategic sourcing as it reflects current market conditions, and hopefully it will become part of the mainstream in the future.
Let the debate begin!