Wednesday, 31 August 2016

[Guest Blog] Five Takeaways from 20 years in Contracting and Procurement

Bruno Alvarez is regarded in Latin America and the Americas as one of the Leading Contracting and Procurement Experts in the region. Bruno’s background comes from the Energy and Gas industry and working at global “Fortune 500” companies such as Royal Dutch Shell, Duke Energy, ICI and Zeneca.


Being a procurement professional for the past twenty years has been very interesting. Exciting in a sense that I have had the chance to negotiate a very wide set of goods and services. From small things like office supplies to complete power plants. From simple consumables to radioactive equipment which need a very complicated stewardship to import into Central America. Many of these experience have left me with some takeaways, here are five of them.

1. No matter how beautiful the strategy is, don’t forget to measure the results

When there is a need to put ideas on the table we have ways to get that strategic cap on and produce beautiful, creative, inventive solutions. Which is great! But in my experience, the hard part is following up, implementing and measuring the solution. Perhaps it is because what comes after the strategy is not as glamorous or fun as developing the strategy itself, or that nobody likes to follow up. Yet if you neglect to do so, then you are doing nothing. Because how can you expect to have results, if you don’t track what you are doing? Going blind on a winding road is not the way to do contracting and procurement. Set up your KPI´s from the beginning, monitor closely, and, adjust when necessary.
2. Do your research before a negotiation

You might not believe it, but many many procurement professionals go into negotiations every day with very little knowledge of the terms, market trends, historical data, etc. Take time to prepare before going into any negotiation and when I say negotiation I mean in the broad sense of the word. Not just a one to one session, but in contracting any service or product. Before conducting RFX events or asking for a price quote, gather all the information you can get your hands on whatever you are going to acquire. Failing to do so is more harmful than anything else. 

3. Create a collaborative relationship with stakeholders based on communication

When I do workshops on contracting and procurement best practice, I dedicate a whole chapter to communication. For a procurement professional, it is essential to make all information flow to the right level of stakeholders. Map out your stakeholder matrix and make sure everyone there, gets the right information timely and with no exceptions. 

4. Develop relationships with your key vendors

There was a time back in the days that you would see your vendor on the opposite side of the table and treat them like an opponent. Old school negotiation practices taught how your “opponent” will or will not out-power you. It was all based on leveraging power. Now we have come to realise that vendors are allies. Obviously, this makes sense because vendors depend on your business and you depend on their product or service. The best procurement practice now proven and widely used is to get close to your vendor and work together in a relationship. Synergy is more powerful than leveraging on power amongst each other. Work on your vendor relations at all times.

5. Always ask for a discount

Being born in Guatemala, Central America. We learn to negotiate everything. Negotiation is basic for survival in Latin America. You can get fresh produce from the street markets and many other products from vendors that will price according to how much “they think” that you can afford. That being said, we learned the importance to ask for that last time additional discount on everything. To my amazement, there are times when vendors are withholding a little bit just in case, and because of that, you lose for not asking. On top of that, it's good practice to test if you are actually getting the best price and believe me, this one is a good one to open to debate with your peers’ procurement professionals. Remember, just don't forget to ask

Contracting and procurement is a function that requires a lot of communication, relationships, problem-solving and creative thinking. These five takeaways are examples of such skills that can easily be put into action. I hope that as procurement professionals you can relate to them and remember to use them when encountering such scenarios in your everyday work.

Bruno Alvarez
Procurement Professional - SS&PK
LinkedIn: Bruno Alvarez

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