Ben Gilhespy, Director of Operations at CDEMN talks about the problems facing procurement in the engineering and manufacturing industry and how to overcome it.
Many smaller engineering and manufacturing businesses are looking to break into larger companies but fall foul of a complex purchasing protocol. This is frequently only realised after their initial engagement which went “really well” only to discover that the decision maker is not the person they met, or there is a central procurement office into which they now need to make inroads but have no contacts. Obviously this can lead to incredible frustration not to mention what can appear to be a great deal of lost time and associated costs.
So how can this be overcome, or at least prepared for?
Clearly different sized businesses have different protocols ranging from small companies with an autonomous Managing Director who can make immediate decisions, mid-sized businesses where there may be a spend limit beyond which further approval has to be sought or large national / international businesses who have a centralised procurement facility to whom you must apply for ‘approved supplier’ status before you can even provide a proposal.
The key here is understanding this before spending valuable time providing costs to someone who has good intentions, will ultimately benefit from your product or service but can’t approve the spend. Having that honest conversation upfront to understand their process is critical and can save a fortune in lost time, real costs and dashed hopes. These honest conversations can reap dividends as they could reveal such factors as a previous suppliers shortcomings, areas in which value can be added or even spend thresholds which could all add to adjustments of your proposal. Obviously in these cases we need to be careful not to push the limits of any relationship and respectfully accept ‘any’ help they may give on a subject as some will be more amenable than others.
All said and done however, there is perhaps a more critical part of this process which follows once the work is awarded, order number is issued and work begins – Contract Review.
This is one area in which most sleep will be lost and greatest costs can be incurred if it all goes wrong. It has seen many relationships crumble and even businesses fall where there is a major misunderstanding on certain aspects of delivery.
Sales aren’t just about providing a quote and receiving an order, ongoing account management will ensure that costly mistakes aren’t made during the delivery process. It may seem like a laborious prospect but engaging the customer throughout delivery is critical. Time and time again we hear of contracts lost for poor performance or businesses not having new orders placed and wondering why, by which time its frequently too late. Reviewing any request throughout the delivery process against the original specification ensures that the customer receives what they requested, it also allows for any changes, no matter how small, to be discussed, logged formally and agreed. The formal logging part of this process being critical along with sharing any changes with ‘all’ stakeholders as sometimes a specification variation, delivery date alteration or cost change if not understood by all could lead to major issues at a later date. In many cases the change may be requested in good faith by one stake holder without the full understanding of other parties involved.
Once embedded in a business culture the need for contract review can be plainly seen, and where implemented before there is a need can actually be quite a simple process. By contrast back tracking through emails, meeting notes and specifications looking for your ‘get out of jail free’ card can prove to be an impossibility as frequently the vital change was never logged and therefore cant be found.
This isn’t rocket science but sometimes a new prospect is so exciting that we jump the gun and make fundamental mistakes that we later regret. Whether we employ one person or a thousand, having documented procedures for the entire sales process through to completion and delivery ensures that we all follow the plan or are at least reminded that there is one.