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What's wrong with my client?

Recently I met a senior buyer, he advised to read the book "wat bezielt mijn klant" van Gerco Rietveld. Interesting reading that I want to share with you...


  • The actor gives you an insight in what triggers companies today and why buyers put the pressure on their suppliers.
  • He tackles the topic on the a mismatch between procurement and sales?
  • This book offers you different ways to escape from the pressure mainly coming from purchase and evolve to a constructive collaboration.
  • Finally the autor advices you on how to raise the hit rate/success  in your offers/bid management.




First of all: what is happening?:

Over the years we've seen that big compagnies adopt the following strategy: gather volume and increase (force) competition. Now we see that this strategy is scooped out completely. Prices are at their lowest level. Procurement is completely isolated. Today  we see that business credibility and business relevance are subject of discussion.

So procurement is at a turning point. 


Every transaction has two sides: Performance and Price


Business managers are not uniquely intrested in cost cutting. They are driven by 
  • products that are developped
  • the customers and markets to serve
  • technological developments and processess
This is the main  reason why the business and procurement don't understand each other.

Effect on the suppliers
Idealy you should be a part of your client busness model.
Suppliers act as an extension of their customers business they offer the complementary compentences.

A few statements to remember

Economies of scale:The smaller the organisation the more attractive it is to do business with.
Professionalism: say goodbye to compagnies who time after time pressure you into price reductions


Mismatch between sales and procurement

  1. discrepancies between buyer and seller are hugh
  2. Conflicting strategies

From sales perspective
  • Key account: is the type of customer you prefer. You can develop a long term strategy, create a partnership based on mutual respect and trust
  • Uitbaatklant: these type of customer are interesting from a financial point of view. Try to attract as much as volume and margin.
  • Development client: develop a top relationship, there is a future potential, a potential key account!
  • marginal, negligible customer: pain in the ...customer

From procurement perspective

  • strategic supplier/vendor: high value supplier with high risc delivery. This is the type of supplier who offers for instance raw materials or intellectual property. If the number of suppliers is also limited than the risc of delivery is hugh. Customer could be dependend of this type of suppliers (from historical point of view, eg investments in IT platforms)
  • leverage supplier: this is the most interesting supplier for procurement. Competition (alternative bidders) easy exchangeble
  • critical supplier: delivers products with low value but indispensible and few in the market. Strategically procurement seeks alternatives for less dependence
  • commodity supplier: few products limited value, procurement seeks for easy routine, automated transaction proces.

conclusion

if you combine the two profiles you can see 16 possible combinations.
Today's procurement strategy is to develop a partnership with their vendor of choice. Advantage of being a key account for you supplier is that you receive a supplier who is highly motivated and will service you on all levels possible.
Important to know is which classification your customer gives you. 20% of the suppliers in the upper layer create 80% of the purchase revenue. Annual reports can give you an idea on the total volume of your customer to determine the 80% border.
Detremine your turnover in sales and then you know where you are. However it is the customer who finally determines if you are a strategic supplier in the end. You are only a strategic supplier if this is confirmed.
Assume that you are a commodity supplier unless you know that your products are unique and not available through other suppliers!

And now 

Stop selling!
If your sales goes down, it's because you're talking and not listening, it's because you don't get it

The ideal customer portfolio

relational excellence the new perpective: 
  • be curious and be interested in your client. Involve your CEO and business managers in your contacts with strategic and development clients.
  • develop a professional client service organisation for operational excellence and long tail customers
  • focus on the targets of your customer and make them your own (find the right balance)
  • let your customer be succesfull
Relational excellence versus operational excellence
  • Sell your products and services become an experience
  • Understand downstream opportunities: what drives  the customers of your customer
  • Sell solutions
  • Analyse the success formula of your customer. Try to find out what drives your customer and embrace these chalanges. Try to find out what your client wants to optain
  • Offer workshops to your client: downstream (stakeholders talk about their challenges and developments) and upstream (our experts talk about new technological developments
  • Develop a strong process connection with your client processes
  • focus on continious cost reduction

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