This webinar will give you insights

and a tool to help you manage the

customers that generate most of

your revenue or most of your profit.

Procurement: Challenging

Sales Propositions from

Value to Price

What leading companies are doing to respond

effectively

Which is the best value?

If I offered to hire you for one month (30 days

straight!) and offered to pay you:

$ 500,000 in the hand right now

or

1 cent on the first day, but double

your wages each day,

Which would you accept?

Which is the

best value?

Total payout

$500,000 vs.

$5,368,709.12

Suppliers need to be able to

articulate which option is

really the best value.

Collaborating with suppliers like Jones Lang LaSalle.

Reduced shared services costs as % of sales by 33%.

Delivering 75% more scope than 7 years ago.

36,000 documented & customer validated case studies.

Deep & broad engagement with customers.

Extensive customer operational data & insights.

Used UPS expertise in telecommunications to write

specification saving US $600,000 in

telecommunications consultancy costs.

Pricing Pressures

Long-term strategies to reduce costs

Increasingly knowledgeable buyers

The rise of procurement

Products & Services

Becoming harder to differentiate

Product innovation slowing

Competition

Intensifying

Price focused

Big getting bigger

Niche & generics

Customers

Revenue from a small

number of large customers

Different decision makers

Demand for

information & insights

Strategic forces in business

Your

company

The rise of Procurement

2000

Less than 20% of

spend managed by

procurement

Today

More than 50% of

spend managed by

procurement

78% of CPOs

report to C-Level

Avg ROI 280%

Best in class 700%

Direct

Indirect

Services

“We (Procurement) never buy

value. That’s not our role.

We are there to drive costs down.”

3 lessons from the best

How are

procurement

measured?

What do procurement care about?

Logical Issues Emotional

“We would never buy on

price alone. Price will

never make up more than

50% of our criteria for a

buying decision”

Head of Procurement

$70b retailer

“We need help from

suppliers to articulate

value delivered (to

Treasury, who only want

savings)”

Government Procurement

Executive

Avoid getting trapped

Accou

nt’s B

usin

ess C

on

tacts Y

our In

tern

al R

esourc

es

Procurement Contact

Procurement want to control the relationship: One-to-Many

Avoid getting trapped

Accou

nt’s B

usin

ess C

on

tacts Y

our In

tern

al R

esourc

es

Broad/deep relationships so you can communicate value: Many-to-Many

Does price = cost?

Price vs. Total Cost –

Price $10.00Price $15.00

Increased Lubrication

Increased Energy

Increased Inventory

Longer Installation

Less Uptime

Lower Reliability

TCO

Less Lubrication

Less Energy

Less Inventory

Faster Installation

Longer Uptime

Higher Reliability

TCO

$87.25

$57.00

$5.00 Investment Creates $30.25 in Increased Customer Value

$30.25 VALUE

It’s about measuring

all the factors…

• Not in terms of product and service

features…

• but in terms of delivering Results

How do your customers

define Value?

Improved

Customer Outcomes

Improved Operational

Productivity

Improved Asset

Productivity Reduced Risk

“We (Procurement) never buy value. That’s

not our role. We are there to drive costs

down.”

“That doesn’t mean we (the Company)

would never buy on value.

Procurement would never stand in the

way of a line executive who felt they

had identified the business solution

they needed.”

3 lessons from the best

1. Know how procurement are

measured

2. Avoid getting trapped

Maintain focus on

Value

“Opportunity is missed by most

people because it is in overalls

and looks like hard work”

Thomas Edison

“There is no silver bullet.

Organisations must do many things

well to respond effectively to the

rising influence of procurement.”

Mark Shonka & Dan Kosch

Selling Value in the era of Procurement

www.gordianbusiness.com.au