bba ang 02 - organisat. purchasing v3 13-04-08

7/30/2019 BBA ANG 02 - Organisat. Purchasing V3 13-04-08

1/38


2/38

H. Faucher page 2

Business Purchasing Behavior

Understand who decides on

purchasing, and learn how to

investigate about it Evaluate the balance of power

and initiative between the supplier

and the customer in the BtoB

relationship

Visualize the importance ofunderstanding your customers

strategy

Objectives


3/38

H. Faucher page 3


MALSTON BAKERY:

Whos Leading?

Who Decides

on Purchasing?

Organizational

Buying Strategies

How your Customers

See you

Issues


4/38

H. Faucher page 4


MALSTON BAKERY:

Whos Leading?

Issues


5/38

H. Faucher page 5

Malston BakeryWhos Leading?

1. How to represent the situation graphically?

A systemic Approach

Who are the actors?

2. How to sketch the past on each side

Malston Bakerys side?

Ross Mills side?

3. Where does the new business initiative come from?

Supplier?

Customer?

Reverse Marketing:when the customer shoots first


6/38

H. Faucher page 6

Reverse MarketingProcess

Analysis and Development of Purchasing Strategy

Planning Reverse Marketing Effort

Implementing Action Plan

Evaluating and Controlling Outcome of Relationship


7/38H. Faucher page 7






Analysis of organization and markets

Analysis of suppliers

Reverse marketing strategy








Formulation of objectives Specification of activities and decision points

Development of internal support








More supplier analysis

Focused sales effort and mobilization of the project champion

Negotiation and signing the contract








Control Evaluation

Projections




MALSTON BAKERY:

Whos Leading?

Who Decides

on Purchasing?

Issues



Purchasing DecisionsWho decides?

The RECYCLA case

Gerard Top, President of RECYCLA, looks at a stack of proposals recently received from

several truck companies. Among them, TRUCK offer trucks on a lease basis, while three

other dealers, among which LOREX, want RECYCLA to buy their trucks. Top has always

purchased the trucks so far

You are the Sales Rep. of one of the two main truck suppliers.

2. Who plays a role at the customers end?

3. List the roles that the individuals are playing in this informal group

4. Who is most important in the decision process? Why?5. What are the risks from the perspective of each person involved?

6. How to deal with the above information to win the deal?



Purchasing DecisionsThe RECYCLA Case

Characteristics TRUCK (TR34) LOREX (GX 2000)

Capacity 16 000 liters 20 000 liters

Pumping Speed 200 liters / 10 mn 200 liters / 5 mn

Consumption 36 liters / 100 km 30 liters / 100 km

Maintenance Record ++

Safety --

Contract Leasing Sales


14/38

H. Faucher page 14

Purchasing DecisionsThe RECYCLA Case

1. Observations - Who does what?

2. Action - How to go about it?

Name Position RolePreference

(T/L)

Power

(1 5)Motivation

G. TOP

D. PARC

Action Plan to Whom Say What? Do what?

Action 1

Action 2

Action3


15/38

H. Faucher page 15

The Buying Centeror Decision Making Unit (DMU)

Decision Makers

Users

Gatekeepers

Influencers

Purchasing Agents

Initiators

Controllers


16/38

H. Faucher page 16

The Buying CenterComposition

Decision Makers

Make the final decision

Three

Types of

DMUs

A key individual makes the decisionExample : In small businesses, it is often the boss or the owner

(especially for the large investments)

Authoritarian

Some form of an internal democracy (you dont

always know why the decision was taken)Example : cooperatives, institutions, government bodies

Consensus

An appointed decision maker (often the

commercial buyer) makes the decision, based

on the view of the key influencers of the DMUTypical of the large companies

Consultative

Source : Cheverton, 2004


17/38

H. Faucher page 17


Purchasing Agents

Are formally responsible for the negotiation

process

Purchasing function : now highly strategic

Have lost the privilege of last decision makers, but

Are now positioned as experts in supplier markets, purchasing

process managers and co-managers of the total cost of

ownership of value of purchases.

At DANONE, above the BU buyers and the factory buyers, the Category

Sourcing Managers, are worldwide upstream market experts on specific

product families (sweeteners, cocoa, coffee,). They have a strong

prescriptive / influencing power


18/38

H. Faucher page 18


Influencers

Everyone who influences the purchasing decision

(either directly or indirectly)

May recommend one or several given supplier(s)

May also influence the evaluation of the needs

Can be from inside or outside the company

The architectof a new building plays the role ofexternal influencerif he/she

recommends architectural elements which only one contractor can deliver(Grande Arche / Bouygues?)

The Marketing Department often plays the role ofinternal influencerfor the

purchase of packaging or advertising services


19/38

H. Faucher page 19


Gatekeepers (Negative influencers)

Control information into and out of the

buying group or between members of the group

Act as gatekeepers : The Purchasing Department Assistantwhich prevents the Sales Rep. of

a supplier to get in touch with the user or the decision maker relative to a

new service;

The Technical Executive who, as the first contact for the supplier of a

technical product, controls information before deciding about transmissionto decision makers;

The Quality Executive who obtains agreement from the Management

Committee to request ISO 9000 certification for future suppliers (a non-

certified candidate will not be considered )


20/38

H. Faucher page 20


Users

Use the product or service

May contribute to the establishment of the initial Performance

Specification document (example : laboratory equipment)

May be Initiators (identifying the needs)

Their importance widely varies with:

Seniority(executives rather than technical operators)

National culture (strong influence in Scandinavia and in Japan. Weakerinfluence in southern countries and United States)

Company size: large companies generally better integrate users needs in

decisions processes. Small businesses too.


21/38

H. Faucher page 21


Other Members

Controllers

Control or establish the purchasing budget

Initiators

Submit the Purchasing Request

Identify the need (often, but not always, users of the product)


22/38

H. Faucher page 22

The Buying CenterVariations with the Purchasing Cycle

ORDER

C


23/38

H. Faucher page 23


1. INTELLIGENCE

2. NEED IDENTIF.

3. SPECIFICATIONS

4. SOURCING

5. ANALYSIS

6. SELECTION

7. ORDER

8. EVALUATION

Purchasing Cycle

Need recognition

Definition of the characteristics and quantity of item needed

Development of the specs to guide procurement

Search for and qualification of potential sources

Acquisition and analysis of proposals

Evaluation of proposals and selection of suppliers

Selection fo an order routine

Performance feedback and evaluation

Th B i C


24/38

H. Faucher page 24


The Buygrid Robinson and Faris (1967!)

1. INTELLIGENCE

2. NEED IDENTIF.

3. SPECIFICATIONS

4. SOURCING

5. ANALYSIS

6. SELECTION

7. ORDER

8. EVALUATION

++ +

++ ++ + ++

++ +++ + +++++ ++ + +

+++ ++ ++ +

++ + +++ +

+++

++ + + ++

Buyer Influencer Gatekeeper Decision User

Th B i C t


25/38

H. Faucher page 25Source : Saporta, 1994

Modified

Rebuy

Straight

Rebuy

New

Task

Degree of Novelty:purchasing issuestotally new. No experience,lack of evaluation criteria for the different solutions. "Make or Buy

issue. High risk.

Information Need: High. Requests for experts advices

Customers Attitude: No preconceived ideas. Interest for new ones

Degree of Novelty:issues already known, but modified within(cost reduction scheme) or outside the organization (suddendefection of one of the current suppliers...).

Information Need: moderate. Infos on suppliers and technology

Customers Attitude: reconsider existing situation

Degree of Novelty:weak, almost none. Stabilizedsupplier / customer relationship. Supplier base is not

challenged ( in suppliers)

Information Need:minimal

Customers Attitude:often static (negligent?)

Buying Center

Mkg., Tech.,

Qual., Prod.,

Purch.

Purch., Tech.,

Qual., Prod.

Purch.

The Buying CenterVariations with Purchasing Situations

Th B i C t


26/38

H. Faucher page 26

1. Who?

Who are the actors of the Buying Center?

What are theircultures? theirexperiences?

2. When?

In which buying situation is the customer? Where in its purchasing process / cycle ?

3. How?

How do they evaluate suppliers?

What are the power games among them?

How do they take decision? What are the environmental and/or organizational constraints?

The Buying CenterImplications


27/38

H. Faucher page 27


MALSTON BAKERY:

Whos Leading?

Who Decides

on Purchasing?

Organizational

Buying Strategies

Issues

Th P h i F ti


28/38

H. Faucher page 28

Purchasing Elaborates purchasing policies,

budgets, objectives

Participates to the definition of purchased

products and services with the suppliers

Understands the needs, and builds up expertise

on supplier markets and key suppliers

Inquires, negotiates,

contracts with suppliers

Controls supplier

performance

Deals with complex

contractual conflicts

Action

- Mid- and-Long-Term

- Towards outside the company

The Purchasing FunctionA function that has become highly strategic

Replenishment Deals with the calculation

of needs

Processes the purchasing

requests

Orders, and Follows up on delays

Managesproduct flows

(quantity and quality checks)

Follows up on payment

of Invoices

Deals with conflicts on

quantity and lead times

Action

- Rather short-Term

- Towards inside the company

I C t Sh


29/38

H. Faucher page 29

In your Customers ShoesPurchasing Strategic Levers

Develop Partnerships Strengthen relationship

with suppliers Long-term view

Integrate Suppliers ReengineerSupplier

Processes Mutually increase

efficiency and profitability

Improve Specifications

Standardize, substituteorreengineerthe products

Design-To-Cost Functional Analysis,

Value Analysis

Globalize Sourcing Develop the Supplier Base

worldwide Expand Sourcing internationally Permanently update the Supplier

Base

Evaluate Best Prices

Re-negotiate prices,contracts and agreements

Specify tenders in greater details

Concentrate Volumes Increase the negotiation power

Reduce the number of suppliers

Standardize products

Consolidate needs

Strategic SourcingSix Levers


30/38

H. Faucher page 30


MALSTON BAKERY:

Whos Leading?

Who Decides

on Purchasing?

Organizational

Buying Strategies

How your Customers

See you

Issues

S ti S li M k t


31/38

H. Faucher page 31

Segmenting Supplier MarketsPurchasing Matrices

Objectives for the customerAdapt the purchasing strategy to each purchasing category

Define purchasing categories through pertinent criteria

Determine where to spend the purchasing functions time and

effort

Select the best sort of relationships to develop with suppliers

Identifying key suppliers

Interest for the supplierAdapt the way to address customers needs

Manage own energy and resources to expected returns

Source : Adapted from Cheverton, 2004

H Y C t S Y


32/38

H. Faucher page 32

How Your Customers See YouAnd your supplier response

The case ARWOOD

1. Where to place the different purchases on the purchasing matrix?

2. What would be the service characteristics most likely sought and the risks most likely

feared by ARWOOD in the purchase of each of these products?

3. What should be ARWOODs corresponding preferences for each purchase, regarding the

following dimensions: Ease of transaction, Price, Frequency of customer meetings,Product differentiation, Safety in replenishment ?

4. How should suppliers adapt their own marketing strategies, especially

ARWOOD is a small but well-known furniture making enterprise, whose activity is currently

soaring. In particular, this business is exporting a large part of its production from its workshop

in London, by contracting with transportation services that are adapted to the fragility of its

creations, which allows it to limit the occurrence of customers complaints (/)

H Y C t S Y


33/38

H. Faucher page 33

How Your Customers See YouPurchasing Matrix

Low

High

Low High

Criticity

Relative Spend

H Y C t S Y


34/38

H. Faucher page 34


Low

High

Low High

Criticity

Relative Spend

Exotic wood sheets Intl transportation

Nails &Screws Industrial wood

Strategic

Security

Strategic

Partner

Tactical

Make Easy

Tactical

Profit

Product Categories

How Your Customers See You


35/38

H. Faucher page 35


Low

High

Low High

Criticity/Depen

dency

Relative Spend

Strategic Security Strategic Partner

Tactical Make Easy Tactical Profit

Customers Expectations

Fault free security

Consistency

Loyalty

Time and attention

Technology co-devpt

Innovation

e-commerce

Automatic replenisht

Price

Price, and price, and price

Consistency in quality

Volume assurance

Exotic wood sheets International transportation




36/38

H. Faucher page 36


Low

High

Low High

Criticity/Depen

dency

Relative Spend

Strategic Security Strategic Partner

Tactical Make Easy Tactical Profit

Suppliers Response

Consistency, no default

Long-term contract

Consignment stock

Time and attention

Understanding needs

Understanding strategy

Remote ordering syst

Light relationship

Low admin,

Lowest costs in town

Try to differentiate

Show presence

Exotic wood sheets International transportation




37/38

H. Faucher page 37

How Your Customers See YouImplications

Act in Conformity with Customers True ExpectationsWhether you like it or not, your customers classify you with

respect to their activities or their strategies

Strategic suppliers are not limited to the North East (+/+) part of

the matrix The customers vision of your offer is perhaps not your own one

(What?... My product? Not a strategic one?)

To become a strategic supplier, first do what is expected from

you, where the customer sees you



38/38

Business Purchasing BehaviorWhat are customers running for?

Purchasing function: same

importance by nature as the

Marketing function

Buying Center: a complex informal

organization.

The decision makers are not

necessarily those you thought about

Where does the customer

stand in its purchasing

cycle? This will impact the

Buying Centers dynamics!

Straight Rebuy, Modified Rebuy, New

Task These Buying Situations affect

the Buying Centers dynamics

(hence, my sales approach)

Where does my product-service

stand in the purchasing matrix of

my customer / prospect? This will

affect my sales tactics!

You think your offer is the

best? Perhaps your

customer does, too But

(perhaps) she just doesnt

care!

Buyers:supply market

specialists (sourcing), and

organizers of the purchasing

process (but not necessarily

decision makers)

bba ang 02 - organisat. purchasing v3 13-04-08

Documents